Market Orientation of the French and Hungarian Smal and Medium Sized Vineries

The role of marketing orientation in the developmen t of marketing strategies has not yet been explored in wine marketing research. After a brief eview of what is Market orientation, we apply this concept in wine sector with multicultura l pproach (Hungarian and French wineries). First, we adapt the concept to the wine sector. For this we construct market orientation scale by using confirmatory factorial a nalysis. We validate that market orientation has an impact on strategy orientation (communicatio n, target and image strategy) by using structural equation modelling and that there is cul tura differences of the market orientation’s impact on marketing strategies by using multigroup analysis. Introduction The transition from product orientation to market o rientation is a process that has occurred in virtually all mature industries. Proponents of the marketing concept have long argued that creating a satisfied customer should be the primary objective of business (Drucker 1954, Keith 1960, Levitt 1960). The dilemma of the usage of marketing concept by business firms was perceived at the end of the 80s both by the com pany managers and academics. Throughout the past four decades, however, the mark eting concept has not been really a practical basis for managing a business (Day 1994). Consequently, academics in recent years have begun to develop a body of research on "market ori ntation", related to the antecedents and performance consequences of the marketing conce pt (Deshpande and Webster 1989, Kohli and Jaworski 1990, Narver and Slater 1990, Ja worski and Kohli 1993). Market orientation, in contrast to marketing orient ation, puts the marketing emphasis on customers, competitors, and organizational issues a nd has been defined empirically and validated as a way of improving business performanc e. The literature dealing with market 3rd International Wine Business Research Conference , Montpellier, 6-7-8 July 2006 Refereed Paper 3 orientation, however, shows remarkable inconsistenc y i defining the concept as either a business philosophy or management behavior. Narver and Slater (1990) suggest that market orient ation is a philosophy of doing business but also emphasize the behaviors associated with that p ilosophy. The dimensions of market orientation that they identify, customer and compet itor orientations are discussed in terms of the behaviors appropriate to achieve them. In an alternative Kohli and Jaworsky (1990) conside r market orientation to consist of three conceptually similar but different dimensions: the organization wide generation, dissemination and responsiveness to market informat ion. They define market intelligence as having a broader focus than customer and competitor s and suggest that it involves consideration of exogenous factors (e.g., competiti on, regulation) that effect customer needs and performances and current as well future needs o f customers. While the two research team produced slightly diffe ring insights into the behavioral components of market research, they agreed on the f ollowing: Market orientation implies that firms: 1. Seek information about their customers’ current a d future needs, and take actions based this information (customer orientation). 2. Seek information about their competitors’ curren t strengths and weaknesses and their long term strategies, and take actions based on the se information (competitor orientation) 3. Coordinate the actions taken by sharing customer and competitor information internally (intra-firm communication). Narver and Slater and Kohli and Jaworsky have been concerned with assessing the nature and importance of market orientation for large firms in various industries. They have found that while the three components of market orientation ca be analytically separated, in practice they are so interrelated as to be a single construc t. That means, firms tend to manifest similar 3rd International Wine Business Research Conference , Montpellier, 6-7-8 July 2006 Refereed Paper 4 levels of behaviors associated with each of the thr e components: firm which are highly customer oriented tend also to be highly competitor oriented and to place considerable emphasis on intra-firm coordination. In addition to the nature of market orientation, th e effects of market orientation on firm performance have also been investigated. Narver and Slater (1990; Slater and Narver 1994) have found that, controlling for other factors whic h affect performance such as market level growth, concentration, entry barriers, buyer power, s ller power, and technological change, market orientation accounts for a significant perce ntage of the variation in return on assets, sales growth and new product success among large fi rms in diverse industries. They argue that being market oriented is appropriate for all f irms regardless of the context in which they Market responsiveness pertains to the interfunction al coordination of an organization’s resources to create and deliver superior customer v alue (Narver and Slater 1990). According to Kohli and Jaworsky (1990) market responsiveness includes both planning/design and implementation activities. Response planning and de sign activities include utilizing market research and data in product development, marketing plans of existing products, building relationships with supply chain members etc. Respon e implementation describes the agility and efficiency of a firm’s reaction towards competi tive moves, customer complaints, changes in technology, and regulation. The market orientation in the past few years was me asured in different countries and sectors by the two most important scales in the first place . Almost everybody, Siguaw and Simpson and Baker (1998), Voss, Voss (2000), Langerak (2001 ), Cadogan et al. (2001), could report positive results. Those researchers whose main obje ctive was the testing of the scales looked for answers to the two basic questions: the one is whether the scale on its own, as a measuring instrument, can stand the test of statistical authe nticity and validity (Moorman and Rust 1999). 3rd International Wine Business Research Conference , Montpellier, 6-7-8 July 2006 Refereed Paper 5 Homburg and Pflesser (2000) investigated the cultur al impact on market orientation and developed a multiple-layer model of market-oriented culture. Sung and Joon Yoon and Sung and Ho Lee (2005) defined market-oriented culture a s an entity embedding dynamic interaction among components and conceptualized tha t ese components influence performance as a collective concept. Although by su bstituting their own model with Homburg and Pflesser (2000) model the results prevailed tha t t e previous conclusion that marketoriented activities have a significant influence on firm performance was reaffirmed. Market orientation in Hungary was measured by Reket tye and Gupta (1995), using the scale suggested by Kohli and Jaworski. Hooley and his res earch team conducted empirical researches in Hungary three times (1992, 1996, 2000 ) using the measurement instrument of Narver and Slater. In 1996 they investigated whethe r t validity of the three factors appearing in the model (custumers, competitors, coo rdination between functions) exists. In the Hungarian survey they got opposite results to M o rman and Rust’s positive results (1999). After labeling the factors, rather the construct of K hli and Jaworski seemed to be appeared. The results strengthened the researcher’s previous opinion, that the items of the alternative scales both can measure market orientation (Hooley et al. 2000). In France the framework of market orientation was u sed to investigate the relationship with key accounts. The link between market orientation a nd performance depends on the strength of the relationship (Dubost et Gauzente 1999). We c an extend the impact of market orientation to others stakeholders (marketing parti cipant). The relationship between market orientation and performance was also analyzed in ca se of product development (Gotteland 2005). Even market orientation can explain the deve lopment of high tech firms (Dumeynieuxpetzold 2003). Market orientation in agribusiness 3rd International Wine Business Research Conference , Montpellier, 6-7-8 July 2006 Refereed Paper 6 The discussion of market orientation has implied th at it can be applied to firms of any type, in any industry, and that the behavioral manifestation of market orientation could be assessed in a similar fashion across different firm context. What makes market orientation so valuable to agribu siness? The market structure and dynamic change as a result of concentration, intern alization, and emergence of collaborative schemata in every stage of agribusiness. The retail ing sector provides the most clear cut evidence of this trend as a handful of multiples em erge and prevail in the European food chain. These retail chains, thanks to sophisticated consumer data collection mechanism, are able to deliver value tailored to their consumer pr eferences by coordinating product development processes, logistics, distribution, and in-store promotion campaigns. In addition, the globalization of the markets creates new source s of competitors but to anticipate the moves and competences of foreign competitors. In Hungary Illes, Komaromi and Lehota (1999) and Le hota and Komaromi (2004) have investigated the factors influencing market orienta tion and their measurements of the agricultural companies and wineries. Morgan and Str ong (1997) analyzed the relationship between market orientation and strategic orientatio n. The objective of our research was to investigate the impact of market orientation on str ategic orientation and especially on marketing strategies in the wine sector. Homburg an d Pflesser (2000) investigated the impact of the culture on marketing orientation. In our stu dy we analyzed the cultural differences between French and Hungarian wineries and the impac t of the market