Why Being Market-Driven Just Isn't Good Enough Anymore

 

"If Jimmy jumped off the bridge, would you jump, too?"

A recent study in the Academy of Marketing Science Review raises a similar question about how most companies are developing their marketing strategies. They explore the elements that make a market-driving company — one that changes the market — rather than a market-driven company — one that learns, understands, and responds to the market.

The Framework
Organizational culture is the impact of knowledge acquired by employees translated into norms for behavior. From a marketing perspective, organizational culture varies widely along the formality/informality spectrum and on the dimensions of internal-process maintenance with market-position maintenance. Market-driving companies benefit from a less formal, more flexible structure that focuses on improving the organization's place in the market.

Market-driving companies take more risks by basing their decisions about which products and services they offer on what they want the market to look like moreso than on what it is today. They get innovative in the value propositions they create or the systems they design to deliver that value. And they manage the risk and the radical innovation with an intelligence about customers and a confidence in how they can not only respond to the market but change it.

As the demand for innovation and growth grows in the C-suite, the formal organizational structures that have pervaded Corporate America for so long will experience a "loosening up" in order to become market-driving. Marketing's role in this should be a primary one to ensure that the organizational change and coordination of internal stakeholders are rooted in market insights and stay focused on creating superior value for targeted customers. And when customers are exposed to the resulting revolutionary products and services, their reaction provides feedback that adjusts and strengthens the market-driving strategy, creating a virtuous circle. For that reason, market-driving is more likely to emerge in services industries where firms have greater interaction with their customers. A greater customer interaction strengthens the relationship between a market-driving strategy and business performance.

Marketing should also keep a close eye to ensure that a successful match is made between customer value opportunities and the organization's core capabilities. The result is a sustainable competitive advantage that can reshape the market structure slanted towards their own competencies and geared to exploiting the competitors' weaknesses.

To read this entire report, visit www.amsreview.org and look for "Market-driving Organizations: A Framework" by François A. Carrillat, a Ph.D. candidate at the University of South Florida; Fernando Jaramillo, assistant professor of marketing at University of Texas at Arlington; and William B. Locander, the Frank Harvey professor of marketing and quality at the University of South Florida. Their paper appeared in the 2004 Academy of Marketing Science Review.