Marketing Issues in Western Europe

Changes and Developments

Erdener Kaynak

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136437595
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Be prepared for the differences in marketing across European borders!Europe is not a uniform market. Each country is comprised of differing marketing systems of varying importance. Marketing Issues in Western Europe: Changes and Developments clears the fog from marketing practices and strategic issues for this crucial area of the business world. This detailed examination of Western European industries and marketing practices not only clearly explores the shifting trends within the countries described, but can also be seen as a bellwether for neighboring regions on the continent. Respected international experts provide an up-to-date inside look at what the pressing concerns are and what unique strategies work for business in various sectors.The European Union's birth can be traced back to 1951 when six countries of Western Europe banded together to form what was then known as the European Coal and Steel Community. Since then, Western Europe has played a significant role as the nucleus for the important marketing trends and industry changes for the entire EU. Marketing Issues in Western Europe: Changes and Developments provides conceptual frameworks, illustrative case studies, deep analytical insights into marketing issues, detailed empirical data, and thoughtful propositions for future testing. International business researchers, business and marketing consultants, developmental agencies, and companies prospectively interested in investment will find this book to be crucial for making decisions involving marketing in the countries of the EU or the rest of the continent. Chapters are richly referenced, and several include tables and charts to clearly illustrate data.Marketing Issues in Western Europe: Changes and Developments includes:

• a thought-provoking look at the multidimensional state of marketing in Western Europe
  
• a probing appraisal of Pan-European marketing with a proposed conceptual framework
  
• a review of the marketing consequences of internal market unification
  
• an exploratory study of marketing practice and market orientation
  
• a penetrating look at the role of domestic animosity in consumer choice
  
• detailed research describing price strategy in the EU
  
• an exploration of the impact of fear appeal in a cross-cultural context
  
• and more!

Marketing Issues in Western Europe: Changes and Developments is a probing examination of the dynamic marketing developments in Western European countries to give you the insight needed to effectively prepare for the future.

Marketing Practice and Market Orientation: An Exploratory International Study

Roger Palmer

Jaqueline Pels

SUMMARY. Despite the criticism of the role of marketing in the firm, a market-oriented corporate culture is considered as a key element of superior corporate performance, with many studies demonstrating this linkage. A recent study by Matsuno and Mentzer (2000) considers the effect of strategy type on the relationship between market orientation and corporate performance. However, these linkages between market orientation, strategic stance and corporate performance are by no means clear-cut. This paper argues that generic measures of strategy implementation are at too high a level of abstraction. The current study proposes that the CMP (Contemporary Marketing Practice)¹ typology of marketing practice, which explains a wide range of relationship marketing approaches, provides greater insight into the relationship between market orientation and performance.

Various studies have suggested that market orientation influences business performance. It is proposed that business performance is too coarse a measure of the influence of the type of marketing practice. Marketing outcomes are proposed as intervening between marketing practice and corporate performance.

In addition, in this study we investigate further the role of turbulence as a moderator of market orientation by gathering comparative data from Argentina and the UK.

These discussions are summarised by a theoretical model and a series of theoretical propositions. The study seeks to test and refine these propositions as the output of this study and as the basis for further work. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail address: <[email protected]> Website: <http://www.HaworthPress.com> © 2004 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Market orientation, developing economies, contemporary marketing practice, relationship marketing, transaction marketing, cluster analysis

INTRODUCTION

Despite the criticism of the role of marketing in the firm (Brady and Davis, 1993), a market-oriented corporate culture is considered as a key element of superior corporate performance, with many studies demonstrating this linkage (see, for example, Homburg and Pflesser, 2000). Though market orientation-corporate performance and the market orientation-corporate performance relationship are defined differently by various authors, the importance of the core link has been recognised in many conceptual and empirical studies. Kohli and Jaworski (1990), Jaworski and Kohli (1993), Narver and Slater (1990) proposed different market orientation models that allow the operationalization of the concept of market orientation. Since the initial work of the early 90s, the market orientation-corporate performance link has been enriched by the investigation of various modifiers of the relationship, such as the role of strategy and environmental turbulence.

A recent study by Matsuno and Mentzer (2000) considers the effect of strategy type on the relationship between market orientation and corporate performance. However these linkages between market orientation, strategic stance and corporate performance are by no means clear-cut. This paper argues that generic measures of strategy implementation are at too high a level of abstraction, and that more sensitive measures of company performance are required. The current study has been conducted by members of the Contemporary Marketing Practice group (CMP),² and proposes that the CMP typology of marketing practice offers the opportunity for greater insight into the relationship between market orientation and performance.

In addition, performance needs to be considered not just in relation to market orientation but also to the environment in which the firms operate. With regard to the role of environmental turbulence, work reported by Gatignon and Xuereb (1997) and Homburg and Pflesser (2000) suggests that market orientation results in improved performance in conditions of environmental uncertainty. However, other work has noted discrepancies between the various instruments used to determine market orientation. For example Uncles (2000), proposes turbulence as a moderator of market orientation supported by the empirical work of Homburg and Pflesser (2000), while market orientation was not seen by Greenley (1995) to be advantageous in highly turbulent markets. This paper proposes that these deductive approaches, attempting to measure the relationship between variables and identify causes of variance, are unlikely to ever offer a complete explanation of the role of market orientation in different contexts. In this study, we use an inductive approach to investigate further the role of turbulence as a moderator of market orientation by using comparative data from Argentina and the UK. We propose that there is a multiplicity of variables that are difficult to measure, or are capable of being measured in alternative and possibly non-commensurate ways. By focusing to variables and the relationship between variables the argument can potentially descend into a discussion of definition and measurement. In this way the insight possible from a broader understanding of context can be lost in the detail of debate. In this paper we propose to consider these areas from an alternative methodological perspective in order to gain greater insight.

Various forms of evidence from Argentina and the UK are used in order to test a model that represents an understanding of the mechanisms taking place, rather than to statistically explore the relationship between variables. The study seeks to test a number of theoretical propositions and to refine them as the output of this study and as the basis for further work.

In particular, the paper explores the relationship between market orientation, environmental turbulence, marketing stance as demonstrated by CMP derived typologies, market served, marketing outcomes and corporate performance. We first review the literature concerning the moderators and variables (market orientation, strategy, environmental turbulence and corporate performance). We then explain the methodology used and introduce the theoretical model and related theoretical propositions. We present and discuss the data and close with the conclusions and suggestions for further research.

MEASURING MARKET ORIENTATION

Uncles (2000) states that market orientation “is concerned with the processes and activities associated with creating and satisfying customers by continually assessing their needs and wants, and doing so in a way that there is a demonstrable and measurable impact on business performance.” Market orientation is therefore a component of the overall business strategy, which is seen to contribute positively to business performance.

With a number of different measures for market orientation this also raises the question of which scale most appropriately measures this construct. The original MARKOR scale by Kohli and Jaworski (1990) has been supplemented by others and the debate continues as to which is the most appropriate (Bhuian, 1998; Mavondo and Farrell, 2000).

The Kohli and Jaworski (MARKOR) and Narver and Slater (1990) (MKTOR) models are generally regarded as comparable in terms of output, and have been widely used by other researchers. However, the similarities in reported results belie differences in the detail of the instruments themselves. The Kohli and Jaworski framework considers the generation and dissemination of market intelligence and the associated organisational response. The Narver and Slater model considers cultural underpinnings in addition to the behavioural elements of customer orientation, competitor orientation and inter-functional co-ordination. When considering the choice of instrument to use, validity is a primary concern. This is particularly the case with respect to the study reported here, due to the international nature of the study and the widely varying environmental contexts.

Mavondo and Farrell (2000) argue for the Narver and Slater instrument as being more appropriate for cross-cultural, cross-country, cross-group and cross-industry comparisons of market orientation. However, their study was conducted solely within the context of the Australian market and primarily compared business with consumer markets. Uncles (2000) notes that three other papers reporting cross-country findings, and appearing in the same special edition of a journal dedicated to the subject, did not use the MKTOR instrument. Bhuian (1998) is also critical of the Kohli and Jaworski MARKOR instrument, arguing that it reflected behaviours rather than understandings. By contrast, Sigauw and Diamantopoulos (1995) propose that there are shortcomings in the MKTOR scale of Narver and Slater. Uncles (2000) is less definitive with respect to the Kohli and Jaworski instrument but argues for more work on this topic.

Dawes (2000) proposes the view that the various measures of market orientation are composed of aggregate measures. He proposes that it is possible to consider the individual components of each of the various instruments that are available, citing the work of Greenley (1995) whose work suggests different expressions of market orientation reflecting different component parts of the instruments. In addition, exploratory factor analysis showed that the single factor explained only a relatively low proportion of the variance. This therefore provides justification to the various studies that use one or other instruments updated in the light of further work or the circumstances of the study (e.g., Matsuno and Mentzer, 2000; Homburg and Pflesser, 2000).

However, perhaps the biggest shortcoming that Dawes identified in his review of thirty-six studies conducted between 1992-98, is that all but one were cross-sectional in design. He proposes that as a result claims for causality are less robust and that the lagged effect of certain time dependent variables cannot be determined (Bollen, 1989). Overall, this debate is far from closed, both MKTOR and MARKOR have their advocates and critics, and currently there is no agreed standard market orientation measurement. In the absence of consensus on this issue, our use of the MARKOR scale is justified below.

The study reported in this paper uses the original measure of market orientation devised by Kohli and Jaworski, the MARKOR instrument. A modified Kohli and Jaworski scale was used by Matsuno and Mentzer (2000) and their paper serves as a framework against which this study has been developed. The literature review of Olsen (2001) identified that this scale, or modifications thereof, was more commonly used in international studies, particularly with regard to South American countries. The Kohli and Jaworski instrument was therefore used in order to maintain face comparability with other data generated from the Argentine locus of the study.

IMPLEMENTED STRATEGY

Walker and Ruekert (1987) discuss business level strategy as the linkage between the external environment and the firm. Market orientation is one construct that helps to explain this linkage. However, researchers in the area of market orientation commonly adapt scales and seek moderating variables in order to further explain variance. Matsuno and Mentzer (2000) consider the role of business strategy type on the market orientation-corporate performance relationship. The results of their study demonstrated the modifying effect of business strategy.

If strategy represents the relationship between the firm and the external business environment (Miles and Snow, 1978), and market orientation is a subset of that strategy, then this implies that there are many other potential variables and moderating factors that can complicate the understanding of this relationship. For example, this is discussed by Greenley (1995), who investigates the role of moderating variables and questions the positive linkage implicitly assumed between market orientation and business performance, identifying circumstances in which this relationship is unlikely to hold.

The way that we understand strategy can also be questioned. Does this refer to the formulated marketing strategy or the strategy that is implemented? (Mintzberg, 1994; Menon, Bharadaj, Adidam and Edison, 1999). How can this strategy be characterised and does it truly reflect marketing activity, or does it also encompass other aspects of the firm’s behaviour? These could include sound financial control or excellence in production and resource management compensating for otherwise indifferent marketing strategy.

This study takes as its basis that of Matsuno and Mentzer (2000), although the methodology employed is very different. Matsuno and Mentzer consider the moderating effect of the type of strategy on the linkage between market orientation and business performance. In this study, we argue that actual or realised marketing strategy is more closely reflective of a market orientation, and is subject to fewer moderating variables compared to a more coarse-grained reflection of business strategy. Matsuno and Mentzer used the strategy typologies defined by Miles and Snow (1978). The study has progressed by using the Contemporary Marketing Practice instrument that reflects realised marketing strategy, rather than strategy at the level of the firm.

Building on the use of strategy typologies, the study reported in this paper has used a typology of marketing practice developed by the Contemporary Marketing Practice (CMP) group of researchers (Brodie, Coviello, Brookes and Little, 1997; Coviello, Milley and Marcolin, 2001). The CMP typology has several potential advantages in a study of this nature. It represents a finer-grained definition of marketing strategy, as compared to strategy at the level of the firm. It therefore offers the potential ...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• About the Editors
• Marketing in Western Europe: A Monolith or a Multidimensional Market?
• Pan-European Marketing Ten Years After 1993–A Current Appraisal and Proposed Conceptual Framework
• Marketing Consequences of European Internal Market Unification: An Executive Perspective
• Marketing Practice and Market Orientation: An Exploratory International Study
• The Role of Domestic Animosity in Consumer Choice: Empirical Evidence from Germany
• Trade-Offs in Customer–Employee Focus: Implications on Boundary-Spanning Capabilities
• Price Strategy in the EU: Suggestions to Chinese Exporters in the Light of Anti-Dumping
• Impact of Fear Appeals in a Cross-Cultural Context
• Index