1. International Journal of Retail & Distribution Management
Emerald Article: Retail market orientation: a preliminary framework
Ulf Elg
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To cite this document: Ulf Elg, (2003),"Retail market orientation: a preliminary framework", International Journal of Retail &
Distribution Management, Vol. 31 Iss: 2 pp. 107 - 117
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2. Introduction
Retail market Previous studies have stressed that market
orientation: a orientation has various implications
preliminary framework depending on the type of business, market
and company (Cadogan et al., 1999;
Greenley, 1995; Harris and Piercy, 1999;
Ulf Elg
Mavondo, 1999). This makes it especially
remarkable that studies on market orientation
focus so much on manufacturers and that the
predominant frameworks of Kohli and
Jaworski (1990) and Narver and Slater (1990)
appear suitable mostly for large
manufacturing companies with no regular or
personal customer contacts. Retailing
involves a number of characteristics and
The author challenges that makes it a business that is
indeed different from most manufacturing
Ulf Elg is Associate Professor in the Department of
industries (Dawson, 2000a; Gilbert, 1999).
Business Administration, School of Economics and
For one thing, the total offer to the customers
Management, Lund University, Lund, Sweden.
is different and more complex, involving a
mix of services, facilities and products, and
Keywords
the challenge to give the consumer a unique
Market orientation, Retailing, Alliances and distinct combination of this (Burt and
Carrelero-Encinas, 2000). Retailers also get
Abstract more central positions in many industries due
to an increasing degree of concentration and
Existing market orientation frameworks are based mostly
internationalization, the successful launching
on studies of manufacturers. Therefore, there is a need of
a modified approach that acknowledges the special
of retailer brands, and the fact that overall
conditions for retailers. A framework is presented that
they control more and more of the value-
includes both internal and relational aspects. Inter-firm
adding functions within the distribution chain
market orientation is presented as especially relevant for
(Burt, 2000; Dawson, 2000b; Harvey, 2000;
retailers. Antecedents to market orientation on a Wileman and Jary, 1997). In all, this
relationship level are also considered. Kohli and emphasizes the need of a better
Jaworski's three basic components are used, but the understanding of market orientation in a retail
paper then discusses indicators that are especially useful context.
in order to capture market orientation in a retail context. Retailers are also networking organizations.
The suggested framework is further developed using a The fact that products come from a large
case study of a major British food retailer. number of suppliers and that a retailer's total
offering to a large extent depends on its ability
to coordinate a vertical chain of activities and
Electronic access
actors, makes it even more different from
The Emerald Research Register for this journal is manufacturing (Dawson, 2000a). This also
available at implies that a market-oriented retailer cannot
http://www.emeraldinsight.com/researchregister focus only on internal aspects, but also has to
The current issue and full text archive of this journal is consider how inter-firm activities and external
available at relationships influence market orientation.
http://www.emeraldinsight.com/0959-0552.htm Therefore, this paper emphasizes inter-firm
An earlier version of this paper was presented at the
11th International Conference on Research in the
Distributive Trades, Tilburg, The Netherlands,
27-29 June 2001. The author wishes to thank
The Swedish Council for Research in Humanities
International Journal of Retail & Distribution Management
Volume 31 . Number 2 . 2003 . pp. 107-117 and Social Sciences, Jan Wallander's and Tom
# MCB UP Limited . ISSN 0959-0552 Hedelius' Foundation and Torsten and Ragnar
DOI 10.1108/09590550310462001 Soderberg's Foundation for financial support.
È
107
3. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
market orientation, referring to activities background, and the suggested framework.
performed together by more that one firm in Intra- and inter-firm market orientation in a
order to make the retail system more market retail system is then discussed based on the
oriented (see also Elg, 2002). Little attention explorative case study. The last part presents
has yet been paid to market orientation with some general conclusions and especially
regard to inter-firm systems such as marketing discusses indicators of market orientation in
channels (Frazier, 1999). Being one of the retailing that can be useful in future research.
few to recognize the significance of market
orientation in a distribution channel, Siguaw
et al. (1998, 1999) discuss how the degree of The theoretical framework
market orientation of one channel member
will influence the market orientation of Most market orientation studies derive from
another. They also discuss how market the Kohli and Jaworski (1990) or the Narver
orientation is related to other relevant and Slater (1990) framework, or a
distribution channel characteristics. By combination of them (Cadogan and
regarding channel market orientation as the Diamantopoulos, 1995; Deshpande and Â
sum of the market orientation of each of the Farley, 1998). A prevailing research theme in
interacting companies they do, however, the 1990s has been market orientation's
ignore any inter-firm activities that companies impact on performance in different contexts
carry out together. (Appiah-Adu, 1998; Greenley, 1995; Hart
The discussion above stresses two aspects and Diamantopoulos, 1993; Jaworski and
that need to be further investigated in order to Kohli, 1993; Ruekert, 1992; Narver and
understand market orientation in retailing. Slater, 1990; Pitt et al., 1996). In general, a
First, there is a need to investigate the specific positive link has been found. Lately, the direct
activities in retailing that contribute to market link has been questioned and different factors
orientation, because these can be expected to have been suggested as mediators, such as
be different from manufacturing. Second, innovation (Han et al., 1998; Hurley and
there is a need to consider the relationships Hult, 1998), stakeholder influence (Greenley
that the retailer is involved in. This includes and Foxall, 1998) and learning (Baker and
the inter-firm activities that retailers, suppliers Sinkula, 1999). All these studies have,
and other actors carry out together to improve however, focused only on market orientation
the retail system's market orientation. It also of single firms and none has especially
refers to relational characteristics that may recognized the difference between
influence the degree of market orientation. manufacturing and retailing companies.
The purpose of this paper is thus to investigate The two main approaches to market
in what respects market orientation in retailing orientation are similar in that both highlight
demands a modified approach. It encompasses an organization's capability to follow the
both the inter- and intra-organizational levels, marketing concept, and stress the impact of
and discusses the characteristics of market market information within the organization,
orientation at these two levels as well as but there are also fundamental differences.
relational antecedents to market orientation in To a large extent, the Kohli and Jaworski
a retail system. When discussing channel approach focuses on behaviour and actual
relationships below the paper refers primarily activities that influence an organization's
to retailer-manufacturer relationships. market orientation, whereas Narver and
Nevertheless, the notion of inter-firm market Slater's framework treats market orientation
orientation should be applicable to other as a form of organizational culture (Becker
channel relationships as well. and Homburg, 1999; Harris and Piercy,
The suggested approach is based on 1999). This paper is based on the Kohli and
previous market orientation and network Jaworski approach. First, on an inter-firm
research. It also draws upon an empirical level it appears more feasible to capture
study of a major British food retailer. This behaviour than cultural aspects. Furthermore,
study illustrates the suggested theoretical previous studies have supported the
approach and helps to identify activities that applicability of the MARKOR-scale of Kohli
are specific for retailing and that can serve as et al. (1993) in different contexts (Hart and
indicators of retail market orientation. The Diamantopoulos, 1993; Selnes et al., 1996)
next section presents the theoretical and also in retail and marketing channel
108
4. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
settings (Harris, 2000; Harris and Piercy, degree of market orientation. In fact, it is
1999; Siguaw et al., 1998; Soehadi et al., likely that all three components suggested by
2001). However, these studies have not Kohli and Jaworski can be found at the inter-
re-investigated the nature of market firm level as well, and especially within
orientation in retailing with regard to the channel relationships. Once again, however,
specific characteristics of this business. their indicators will be context-specific.
On the single firm level, market orientation Intelligence generation may take place
is therefore regarded to involve: through joint activities involving several
. . . the organization-wide generation of market different members of a distribution network.
intelligence pertaining to current and future When studying this it is important to capture
customer needs, dissemination of the all the arenas where company representatives
intelligence across departments, and
cooperate in order to gather customer data.
organization-wide responsiveness to it (Kohli
and Jaworski, 1990, p. 6). One example is when a trade association
gathers general information about, for
These components have been used in a large instance, consumer trends, shopping
number of studies made at the organizational behaviour or demographic conditions.
level (e.g. Deshpande and Farley, 1998;
 Another one is jointly owned ventures
Harris and Piercy, 1999; Kohli et al., 1993; responsible for intelligence generation and
Ruekert, 1992). This paper explicitly takes a environmental supervision in order to develop
retailing perspective. On the individual firm new products. These vehicles for intelligence
level, it is assumed that the three components generation can easily be neglected when
proposed by the Kohli and Jaworski focusing only on the behaviour and attitudes
framework are also valid for retail firms. This of individual companies.
assumption is supported by the research of Furthermore, it is likely that intelligence
Siguaw et al. (1998, 1999). In accordance dissemination in a retail system will influence
with Cadogan et al. (1999) and Cadogan and its overall market orientation. If the members
Diamantopolous (1995) it is thus assumed exchange data about consumers, each of them
that the basic three components of the will gain better knowledge of consumer wants
construct do not change when it is applied and needs. Again, a trade association can be
within a new setting, but that the possible an arena where such interorganizational
indicators and items that should be exchange of information about market
considered will be different. Consequently, conditions, customer preferences, etc., takes
slightly modifying the measures included in place. Inter-firm intelligence dissemination
the original MARKOR-scale as carried out by may be more or less formalized. For example,
Harris (2000) is not sufficient. Instead, we members of a distribution chain may jointly
need to acknowledge more the specific nature decide to develop routines for information
of retailing, involving daily contacts with exchange that involve the whole network of
thousands of customers, the need to manage actors and make the market data that a firm
contacts with a large network of suppliers, the has access to available to all the other
need to cover service aspects, etc. This is companies in the network. Inter-firm
done in more detail in the empirical section. intelligence dissemination can also be
Activities that retailers and manufacturers demonstrated by joint investments in
within a chain of distribution carry out computer based systems that will generate
together can also increase the retailer's market and distribute data that is a basis for quick
orientation. Previous research has shown that and effective market responses in line with,
a supplier's market orientation will influence for instance, the ideas of ECR. There are also
that of the distributor, and that the market several less formalised occasions and settings
orientation of the distribution channel will where representatives of different members of
consist of the sum of the individual member's a distribution network may meet and
activities in this respect (Siguaw et al., 1998, exchange information (Stern et al., 1996). An
1999). The market orientation of the channel example from Sweden is that a
dyad has also been found to be positively manufacturer's sales-force may act as
related to performance. As already stressed, distributors of information during their daily
however, this study also encompasses meetings with individual retailers.
activities that suppliers and retailers carry out Responsiveness can also be more or less
together and that can influence the system's coordinated and collectively performed. A
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5. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
retailer can meet with other firms within the or improving the customer response, and be
distribution chain in order to plan the more open for discussions on their roles to
marketing activities of the channel, decide satisfy different customer demands. The
how different activities of the value chain are market orientation of a distributor and supplier
to be performed and coordinated, or to involved in a relationship has been found to be
discuss how to manage quality problems or positively related to their trust in each other
consumer dissatisfaction caused by the (Siguaw et al., 1998). As a next step, it can
distribution system. Many modern retailers, thus be expected that a higher degree of trust
such as the Swedish company IKEA, also put will make the parties more willing to involve
a lot of emphasis on controlling the activities themselves in joint activities that increase the
of the manufacturers who supply them with level of inter-firm market orientation.
their own branded product. Data on The division of labour between the
consumer satisfaction and consumer companies is also likely to influence market
demands can be a decision criterion when orientation. The fact that it enables firms to
placing orders and evaluating the specialize in performing different activities is
manufacturers' efforts. It can also be a basis considered a major benefit of inter-firm
for demanding a certain type of product cooperation (e.g. Ford et al., 1998; Jarillo,
development from manufacturers. 1988; Webster, 1992). If a distribution
A final question is how the properties of a network involves actors that specialize in the
channel relationship will influence inter-firm functions closely related to their core
market orientation. A number of significant competences it would also support the
properties of inter-firm relationships are
retailer's capability to respond to the market
suggested in the literature. The ones discussed
demands. However, the division of labour and
below have, however, been stressed especially
roles within marketing channels can be more
by most previous research on networks and
or less agreed on by the members, and retailers
channel relationships. Trust is suggested as a
and manufacturers often have different views
main control mechanism for governing
on who is to be responsible for what.
network relationships. It is often regarded as a
According to Ford et al. (1998) it is more likely
rather intangible sentiment or belief about
that routines that facilitate an effective
another party's reliability and capability to live
customer adaptation can be developed if the
up to certain expectations (Moorman et al.,
division of labour has been institutionalized
1992; Morgan and Hunt, 1994). Trust seen in
within the system, because then the actors all
this light will depend on previous experiences
have clear roles and get the opportunities to
and cooperative efforts and on the more
focus on the task they are best at.
general reputation a firm has built up through
Cooperation is an essential and evident part
its earlier behaviour. A complementary view is
to regard trust as a consequence of the long- of most interorganizational activities (Morgan
term advantages that the parties gain by the and Hunt, 1994; Siguaw et al., 1999). Two
relationship being built by making visible the firms that cooperate a lot are also likely to find
long-term disadvantages that the parties would a need to adapt more to each other, exchange
suffer by behaving opportunistically (Buckley more information, learn more about each
and Casson, 1988; Elg, 2000a; Jarillo, 1988). other's markets and customers, etc.
In all, trust can thus be defined as a firm's (Contractor and Lorange, 1988; Ford et al.,
reliance on its exchange partner's integrity and 1998). When the exchange involves, for
propensity to favour the long-term advantages instance, more complex products or
that the relationship provides over short-term technological issues, it can also be expected to
gains achieved by opportunistic behaviour. involve more employees from the two
When regarded in this way, trust will also organizations, and thus the number of
encompass the aspects covered by the contacts and opportunities to exchange
commitment construct as it is presented in market information will increase as well.
earlier studies (Anderson and Weitz, 1992; Cooperation is, however, also about norms
Morgan and Hunt, 1994). In a relationship and expectations (Anderson and Naurus,
with a high degree of trust, the parties are likely 1990; Langerak, 2001). The existence of
to be less hesitant to share information. They norms and structures that reward cooperative
will also be more willing to invest in joint behaviour in general can also be expected to
projects aiming at processing market data and/ support inter-firm market orientation.
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6. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
Like trust, conflicts are likely to have an impact on the retailer's market orientation.
influence on whether two parties in a Finally, it is reasonable to assume that the
relationship are able and willing to exchange more market oriented activities the parties
information and to work together in serving carry out individually, the more likely it is that
the market as effectively as possible. Conflicts there will be market-oriented activities going
occur if a member strives to improve its own on at an inter-firm level as well.
position at the expense of other members in a
distribution network, and at the expense of the
efficiency and the performance of the network An empirical study of a British food
as a whole. On an intra-firm level, previous retailer's market orientation
studies have found that interdepartmental
conflict has a negative impact on market Below, results from a case study of a British
orientation (Jaworski and Kohli, 1993; Selnes food retailer are presented. The aim is to
et al., 1996). One explanation of this result is illustrate the theoretical discussion and to
that people or departments in conflict with identify specific aspects to consider when
each other are less willing to work together in making the market orientation approach
general and to share information. This logic suitable for retailers. The study was
appears reasonable to apply at an conducted during the autumn of 1999. It
interorganizational level as well, at least when involved a series of interviews with managers
referring to dysfunctional or pathological on a product group level, lasting on average
conflicts (Anderson and Naurus, 1990; Stern one-and-a-half hours, complemented by
et al., 1996). secondary data on various aspects of the
Figure 1 summarizes the discussion. A retailer's operations. The interviewed persons
retailer's market orientation can thus be were responsible for the general management
expected to be a result of both the retailer's of a product group, buying, consumer
internal market orientation activities and the marketing, product development,
inter-firm market orientation activities that a merchandising, development of IT-systems
retailer carries out jointly with manufacturers and internal support and coordination
or other partner firms. Here it is suggested between traders, buyers and marketers. The
that the basic components introduced by retailer is among the top five in the UK, but as
Kohli and Jaworski can be used, but that anonymity was promised, further information
indicators have to develop in order to capture cannot be provided. It should be stressed that
the specific characteristics of retailing. the results presented are based on the
Furthermore, different relationship perceptions of the retailer and that interviews
characteristics influence inter-firm market with involved suppliers may have modified
orientation. They can to various degrees the picture. Still, the main purpose is to
investigate market orientation from a retail
stimulate inter-firm activities that contribute
perspective, and therefore the views and
to the level of market orientation.
behaviour of the retailer can be considered as
Additionally, previous research has shown
the most important. First, the retailer's
that the market orientation of the suppliers in
internal activities are discussed, then inter-
the distribution system will have a positive
firm market oriented activities that the retailer
Figure 1 A framework for analysing a retailer's market orientation (MO) carried out with manufacturers and, finally,
relational antecedents stressed by the study.
The retailer's internal market
orientation
In general, the case stresses that intelligence
generation becomes more complex in
retailing. The MARKOR-scale presented by
Kohli et al. (1993) suggests that one
indication of intelligence generation is
whether people in a business unit meet with
customers at least once a year. Retailers meet
thousands of customers every day! The
question, then, is more about how and to
111
7. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
what extent the retailer utilizes daily sometimes technologically difficult task. The
interactions with customers as intelligence use of IT played an important part in linking
that supports market orientation. This was different functions and levels together in the
also emphasized by the study. Apart from distribution of consumer data. The challenge
daily face-to-face contact, retailers have to handle tens of thousands of products also
access to a lot of computer-based consumer makes it particularly essential to have an
data. One important aspect that has to be effective system for processing data and
captured when studying market orientation in distributing the relevant pieces of information
retailing is how this kind of data is processed to the right people. Unlike what has been
and used. The case study suggested that even suggested generally, a high degree of
though there is a lot of potential information, intelligence dissemination does not necessarily
it is still a very big challenge to use it lead to market orientation in retailing; it is also
systematically. Furthermore, the studied a matter of information screening.
retailer used a number of different research The complexity that a retailer has to live
methods and data sources in order to with is also reflected when discussing
understand the customers in greater detail responsiveness. Again, it has very much to do
and to cover the different aspects of a with the coordination of different activities
retailer's total offer. The research agenda and roles. Often, this was facilitated by
included: forming teams that included people who
. Focus groups with certain types of represented different functions and having
shoppers to understand a specific different types of consumer inputs responsible
category or consumer segment. for product development. An important area
. Quantitative research, e.g. the physical where the retailer aims at a high level of
count of shoppers in store. responsiveness is store planning and location.
. Interviews with shoppers about their Here, it is considered especially important to
shopping behaviour etc. consider local consumer segments and the
. Accompanied visits where a researcher demographics of the geographical area where
goes shopping with a customer and home a store is located. The need to recognize
to observe behaviour and ask questions. customer differences in different geographical
. Perception data every four weeks to ask areas, and that different parts of a market
what customers think of the retailer in have different types of populations is not
terms of quality, price, availability, range, considered by more general market
pricing and promotion of brand. orientation frameworks.
. Panels with customers across the UK that Another important part of responsiveness is
reflect how the retailer is performing buying. The retailer tries to consider both
relative to competitors. how attractive a specific product is likely to be
. Quality testing using people from the to the consumers more generally, and the role
retailer and consumers to test products that the product has for different types of
from a category and compare them with consumers. The buying function thus has a
competitors. much closer relationship to market
responsiveness in retailing than in most
For this retailer the coordination of different manufacturing companies. Also, the retailer
organizational levels appeared to play a major cannot look only at the attractiveness of
part in the intelligence dissemination. Apart individual items and products but also has to
from aspects provided by previous research on consider the range of products as a whole.
market orientation, a critical issue is to manage Furthermore, the study stressed the direct
communication between individual store interaction with customers and how to deal
employees who interact with customers, store with complaints. Here, it was preferred to
managers and central decision units. It is thus deal with complaints and dissatisfied
less relevant to limit market orientation to a consumers there and then in the store. This
business unit level when discussing retailers. also means that training employees in how to
Another critical point stressed by the study was handle these direct contacts becomes an
that the extensive computer-based information important matter. As already stressed,
gathered in individual stores has to be retailing involves a number of dimensions and
distributed and used throughout the levels that influence consumer satisfaction in
organization as a whole. This is a costly and different ways. This also calls for using many
112
8. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
different types of information about aggregated trends in the market place
customers when making strategic decisions, supplied by the manufacturer can usually be
as illustrated by the retailer's research agenda valuable even though the more detailed
presented above. information is biased. Personal networks and
contacts were regarded as particularly
Joint market orientation activities with important for the distribution of intelligence
manufacturers between the retailer and the manufacturers.
On the inter-firm level, intelligence Good personal contacts make information
generation may take place in cooperation flow more freely between companies. Another
between different members of a distribution indicator of inter-firm intelligence
network ± such as an ECR initiative involving dissemination is if the actors in a distribution
a retailer and a set of suppliers. One example chain jointly decide to design systems that
from the case study is that the retailer carries enable them to share information more
out joint analyses of the market and of future systematically and openly. One example is
consumer needs together with selected joint investments in computer-based
manufacturers who are considered to be information systems. In this case study, joint
category partners. These manufacturers are systems had been developed for space
involved in making more macro-oriented planning and for sending out daily sales data
analyses as well as micro-oriented analyses and orders for certain product categories.
concerning particular product items and Sometimes, the retailer appeared reluctant
consumer segments. Consumer research to share information with suppliers, but the
carried out in projects that included difference was significant between suppliers of
manufacturers were managed by the retailer, retailer brands and manufacturers only
however, in order for the latter to be in supplying their branded products. Retailer
control of the gathered information. brands seemed to stimulate information
Furthermore, it should be stressed that these sharing as well as joint intelligence generation.
projects usually included only suppliers of the For instance, the suppliers of the retailer's
retailer's own brands. It appears to be very own brands are invited to discuss feedback
rare for the retailer to make consumer studies from customers, sales developments, etc. At
together with companies who supply only the same time, a disadvantage with
manufacturer brands. The case also gave little manufacturers supplying only the retailer's
support for the existence of joint intelligence own brands is that they might put little effort
generation at an industry level, involving into gathering their own intelligence about the
several manufacturers and retailers and consumers and therefore have little to offer
administered by, for instance, trade the retailer in this respect.
associations. Members of a distribution system can also
Inter-firm intelligence dissemination plan together the marketing activities of the
concerns how different companies in the channel, decide how different activities of the
distribution chain exchange information value chain are to be performed and
about consumers. The case study especially coordinated, or discuss how to manage
emphasized supplier presentations and the quality problems or consumer dissatisfaction
data provided by suppliers concerning experienced by the retailer. These are all
individual products. Suppliers of examples of inter-firm responsiveness. One
manufacturer brands offered the retailer a lot example is when the retailer's product
of input on consumer trends. For natural development was carried out as projects
reasons, the retailer's buying teams are the involving both representatives of different
targets of plenty of information about market functions in the company and of a
opportunities and specific consumer segments manufacturer. The case revealed that it had
that the manufacturer's products might sometimes turned out to be a great success
appeal to. From the retailer's perspective, a when the retailer and a manufacturer worked
critical issue is how the potentially biased together through the whole process from
manufacturer information is evaluated. gathering and analysing consumer
Previous experiences and whether the retailer information to launching a new product. In
has had a long-term relationship with the other cases, a supplier of retailer brands was
manufacturer is an important part. given a brief based on the retailer's analysis of
Furthermore, the information about more consumer data. The manufacturer was then
113
9. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management
Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
expected to match that brief with a provided with the necessary input. This means
proposition for a new product. that the enormous amount of consumer input
Campaign planning and implementation was that a retailer has access to gets distributed
another area of cooperation, basing the more effectively throughout the whole network
activities on consumer data in order to ensure a of companies. The case thus gives several
greater correspondence with the needs and examples that support the argument that the
wants of customers. Here, the retailer also gave development of retailer labels stimulates a
examples of how manufacturer representatives higher degree of inter-firm market orientation ±
were sometimes trained to work with the i.e. more joint activities to generate and
retailer in merchandising. This also explains disseminate consumer intelligence and more
why the retailer found it important that the joint projects in order to respond to the
manufacturer let the same employee handle the consumers' needs.
contacts for a longer period of time. Again, joint The degree of cooperation in more general
activities on the whole involved manufacturers terms also appears to have a significant impact
that were category partners. It should also be on inter-firm market orientation, though this is
stressed once more that cooperating with the not highlighted so much by the case study.
retailer as a team in order to respond to the Nevertheless, by stressing that it is important
wants and needs of consumers appears to be for the retailer to be well-acquainted with the
more common for suppliers of retailer brands. manufacturers and their representatives, and
that previous episodes and activities are
Relational antecedents to market important for the stimulation of new joint
orientation activities, the study supports the relevance of
In all, the investigation stresses the importance cooperation. The study also finds that there are
of trust within a relationship. To a large extent, few clear examples of conflicts between the
this determines the value of intelligence retailer and its suppliers. The retailer
provided by a manufacturer as well as the representatives made it rather clear that if there
degree of joint intelligence generation within a are any long-term conflicts with a supplier, the
relationship. In this case study, trust appears to manufacturer in question will be replaced by
be mostly based on the retailer's own previous someone else. Therefore, relationships
experiences of dealing with that particular involving substantial conflicts were unusual.
manufacturer, and to a lesser extent on the Still, some relationships with major suppliers of
manufacturer's general reputation. The branded products appeared to be a bit infected,
importance of long-term relationships at a even though the interviewed retailer
personal level further stresses the impact of representatives did not make this a big issue. In
previous experiences in dealing with the these cases cooperation and joint market
supplier and its employees. One respondent orientation activities were very scarce. This
stressed that it is important that ``we have a supports the relevance of inter-firm conflicts in
degree of history with previous suppliers and explaining the degree of inter-firm market
that they understand our needs''. One orientation.
consequence of this view is that the retailer is
very restrictive in changing suppliers and that it
tries to limit the total number of suppliers. Conclusions and implications
The discussion of trust is closely related to the
division of labour. The case study reveals that in Much more empirical research is needed on the
particular the responsibility for and the control topic discussed here. It is also relevant to
of the brands is a very important issue. The investigate how market orientation influences
retailer trusts suppliers of their own brands performance in retailing. This is a more or less
more because they have a greater incentive to unexplored issue that is a particularly big
preserve the relationship, to be honest and to challenge in relation to the special difficulties of
pay attention to the retailer's interests. measuring performance in retailing (Dawson,
Furthermore, relationships based on retailer 2000a). However, this paper points especially at
brands call for a greater degree of openness some more general conclusions. The theoretical
because the retailer has to take a greater framework includes the inter-firm dimension
responsibility for product development and and suggests that inter-firm market orientation
customer analysis. In order to get attractive own is an important part. This is supported by the
brand products the manufacturer also has to be empirical investigation. The case gives several
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Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
examples of inter-firm market orientation and makes it necessary to capture intelligence
supports the argument that market orientation generation by assessing the quality of these
in retailing will not be fully covered unless the contacts and how the input is processed. The
inter-firm and relational dimensions are given case also demonstrates that it is not only a
due consideration. The paper also stresses the matter of the quantity of customer data. It is
relevance of including relational factors as also important to consider whether a retailer
antecedents when explaining the degree and uses several different research methods and
character of market orientation in a channel as a types of data, in order to understand different
whole or of an individual retailer. Here, trust consumer groups and different parts of the
was especially stressed, along with the division geographical market. Furthermore, the
of labour and the influence that the own brands
handling of direct consumer contacts becomes
issue has on how the retailer handles market
an important part of the retailer's
orientation and on the interplay between
responsiveness. Retailers are responsible for an
retailers and manufacturers. The case study
assortment of several thousands of products
implies that inter-firm market orientation can
that can be combined and presented in different
be facilitated if the retailer controls the brands.
ways, and the retailing offer includes a number
The study also helps to identify indicators to
work with when studying market orientation in of additional parameters. This makes the issue
retailing. These indicators can be used as a basis of coordination ± both internally and externally
for developing a measuring tool for market ± especially critical. A number of additional
orientation in retailing. Here, several of the aspects are highlighted by the case. A main
more general indicators suggested in previous conclusion, however, is that even though the
market orientation studies can of course provide general components of market orientation
an additional source. The specific indicators suggested by Kohli and Jaworski (1990) can still
suggested for market orientation in retailing are be applied, their implication and content need
summarized in Table I. Retailers are in direct to be considerably modified. This paper is a
and daily contact with their customers. This step in that direction.
Table I Indicators of market orientation in retailing
Steps in the market
orientation process
Retail market orientation indicators Intelligence generation Dissemination Responsiveness
Intra-firm Are different research methods Do managers visit stores to Are data on needs and wants of specific
used to target different aspects discuss market trends? consumer groups used in buying?
and components of the retail Are customer complaints Are market data used when developing
offering? communicated within the different parts of retail offering (product
Does the retailer collect specific company? range, store location and formats, own
data on different consumer Does the retailer invest in and brands, etc.)?
groups? use IT to distribute market data? Are staff trained in how to interact with
Are face-to-face interactions with Are there formalized data customers, handle complaints, etc.?
consumers used as intelligence? exchange routines between
Are sales data used and departments and functions?
processed?
Inter-firm Does the retailer have joint Are macro- and micro level Has the retailer cooperated with
customer research projects with market data exchanged with suppliers in product development,
suppliers? suppliers? campaign planning, merchandising, etc.
Does the retailer and its Are supplier presentations used to satisfy customer needs better?
suppliers collaborate in ordering as customer data sources? Do suppliers consider customer
market data from external Have the retailer and the complaints about their products made in
research companies? suppliers invested in systems stores?
Are trade associations a source that facilitate market data Does the retailer order product
of market intelligence for the exchange? development from the supplier based on
retailer? Are there informal personal market data?
discussions on market trends, Do suppliers help the retailer to respond
etc.? quickly to market trends?
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Ulf Elg Volume 31 . Number 2 . 2003 . 107-117
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