Balancing Customer and Competitor Orientations

Whether a company is a market leader, challenger, follower, or nicher, it must watch its competitors closely and find the competitive marketing strategy that positions it most effectively. And it must continually adapt its strategies to the fast-changing competitive environment. This question now arises: Can the company spend too much time and energy tracking competitors, damaging its customer orientation? The answer is yes! A company can become so competitor centered that it loses its even more important focus on maintaining profitable customer relationships.

A competitor-centered company is one that spends most of its time tracking competitors' moves and market shares and trying to find strategies to counter them. This approach has some pluses and minuses. On the positive side, the company develops a fighter orientation. It trains its marketers to be on a constant alert, watching for weaknesses in their own position and searching out competitors' weaknesses. On the negative side, the company becomes too reactive. Rather than carrying out its own customer relationship strategy, it bases its own moves on competitors' moves. As a result, because so much depends on what the competitors do, the company does not move in a planned direction toward a goal. And it may end up simply matching or extending industry practices rather than seeking innovative new ways to bring more value to customers.

A customer-centered company, by contrast, focuses more on customer developments in designing its strategies. Clearly, the customer-centered company is in a better position to identify new opportunities and set long-run strategies that make sense. By watching customer needs evolve, it can decide what customer groups and what emerging needs are the most important to serve, then concentrate its resources on delivering superior value to target customers. In practice, today's companies must be market-centered companies, watching both their customers and their competitors. But they must not let competitor watching blind them to customer focusing.

Figure 18.4 shows that companies have moved through four orientations over the years. In the first stage, they were product oriented, paying little attention to either customers or competitors. In the second stage, they became customer oriented and started to pay attention to customers. In the third stage, when they started to pay attention to competitors, they became competitor oriented. Today, companies need to be market oriented, paying balanced attention to both customers and competitors. Rather than simply watching competitors and trying to beat them on current ways of doing business, they need to watch customers and find innovative ways to build profitable customer relationships by delivering more value than competitors do.

Figure 18.4	Evolving company orientations