Businesses that favor the product orientation philosophy assume that product quality is a determinant of demand in the market. In other words, they believe customers will purchase a product based on superior quality, performance, or features – regardless of whether the product suits their individual preferences. Therefore, Product orientation is a marketing management philosophy where the promotion of high-quality products is used to generate sales.
Aspect | Explanation |
---|---|
Definition | Product Orientation is a business approach where a company’s primary focus is on the design, development, and continuous improvement of its products. It places a high emphasis on creating innovative and high-quality products that meet or exceed customer needs and expectations. The primary goal is product excellence rather than customer preferences. |
Key Concepts | – Product-Centric: The company’s core focus is on the product itself, often believing that a superior product will naturally attract customers. – Innovation: Constant innovation and product development are central to staying competitive. – Quality: High-quality products are a priority to ensure customer satisfaction. – Market Agnosticism: The company believes that a great product will find its market. |
Characteristics | – Product-Centric Culture: The company culture revolves around product development and improvement. – R&D Investments: Significant investments are made in research and development to enhance product features and quality. – Limited Customer Input: Customer feedback may not be the primary driver of product development. – Risk of Tunnel Vision: Overemphasis on the product can lead to missing changing market trends or customer preferences. |
Implications | – Product Excellence: Companies following this approach often produce high-quality and innovative products. – Market Risks: There is a risk of developing products that do not align with changing market trends or customer demands. – Customer Acquisition: Success depends on attracting customers solely based on product superiority. – R&D Costs: High costs associated with ongoing research and development. |
Advantages | – Product Innovation: Continuous innovation often leads to cutting-edge products. – Quality: High-quality products can create customer loyalty. – Differentiation: A focus on product excellence can set a company apart in the market. – Brand Reputation: Successful product-oriented companies often have strong brand recognition. |
Drawbacks | – Market Ignorance: May miss opportunities or fail to address changing customer needs. – Customer-Centric Gap: Risk of not aligning products with customer preferences. – Costs: High research and development costs can strain resources. – Competitive Pressure: Competitors may adopt more customer-centric strategies and outperform. |
Applications | – Technology Companies: Often prioritize product development and innovation, such as Apple with its focus on the iPhone. – Luxury Brands: Emphasize the quality and uniqueness of their products, targeting niche markets. – Pharmaceuticals: Invest heavily in research and development to create innovative drugs and treatments. |
Conclusion | Product Orientation centers on the creation of superior products through innovation and quality. While it can lead to exceptional products and brand recognition, it carries the risk of missing shifts in customer preferences. Striking a balance between product excellence and customer-centric strategies is crucial in today’s dynamic markets. |
Understanding product orientation
Product orientation is design-focused and commonly associated with research and development, so it is perhaps no surprise that many product-oriented companies are tech companies.
They can innovate with new technologies to address customer needs and generate market demand. Sometimes, the customer needs are unknown or yet to be identified.
Product orientation is sometimes called the “no fear strategy” because there is the implication that the business is bold, proactive, and comfortable with risk.
By prioritizing what it is good at, the business also assumes customers will adapt to whatever product it releases on the market.
Product orientation remains a successful strategy today – particularly in product areas where quality and innovation are of the utmost importance.
Since consumers are not aware they need a product or indeed that such a product can even exist, extensive research is required to ensure that an invented concept can translate to a product that sells.
Many of the products consumers take for granted in the modern era were developed in this way. Think televisions, cars, MP3 devices, computers, smartphones, and even the internet itself.
History of product orientation
Product orientation began to emerge in the late 19th and early 20th centuries in response to increased competition among businesses and strong consumer demand.
Before this period, businesses catered to demand with mass-produced, low-cost items that did not cater to customer needs and wants. Products were also of a dubious quality.
When consumers became more discerning, businesses faced declining sales and were forced to become more customer-focused.
Price as a market differentiator thus became replaced by an inward focus on product quality.
General Motors (GM) was one of the first companies to adopt a product-focused, customer-centric approach.
It introduced new features such as power steering and air conditioning in its vehicles and released a range of models to suit different tastes.
In 1927, GM also became the first automotive manufacturer to standardize the design process in product development.
Innovation
The product orientation approach gained momentum in the 1950s and 1960s as mass production matured to a point where innovative products could be made at scale.
During this period, companies started to focus on developing products that were not only high quality but also technologically advanced.
They also realized the importance of investment in research and development to stay ahead of their competitors.
This period also marked the point at which the post-war production boom caused supply to outpace demand.
Consumers had become tired of the hard sell tactics prevalent before the war where they were marketed products they didn’t necessarily want or need.
In response, product orientation took somewhat of a backseat after companies became more aware of identifying customer needs before the product was developed.
However, several successful product-oriented companies did operate in this period. In 1964, for example, IBM introduced the revolutionary mainframe computer known as the System/360 which, in the company’s words, was “revolutionary in concept and unprecedented in scope.”
As technology became more advanced in subsequent decades, product orientation became an increasingly important driver of business success.
Examples of product-oriented companies
Some examples of mostly product-oriented companies include:
Apple
A company famous for envisioning products before consumers knew they needed them.
Apple relies on quality and innovation to enter new markets and create demand with products such as the iPod, iPhone, and iPad.
Netflix
Though technically a service, Netflix made companies such as Blockbuster obsolete by giving consumers easy access to movies and television shows.
The company capitalized on faster data speeds and recommendation algorithms to provide something consumers would not have thought possible.
Robinhood
The Robinhood investing app revolutionized trading for the average investor by making the market more accessible.
The company developed an innovative product by removing the once prohibitive brokerage fees for retail investors and enabling them to trade in smaller increments.
Advantages of the product orientation approach
Higher product quality
Businesses that use the product orientation approach devote less time and energy to marketing and sales and more to product development.
Product teams with a quality-first mindset are also free to work without restrictive deadlines that cause development to be rushed.
Continuous innovation
By its very nature, continuous innovation enables a business to become the first mover in a new industry and importantly, maintain that advantage.
What’s more, businesses that demonstrate the ability to innovate regularly tend to enjoy a brand following that is hard to replicate.
Increased efficiency
When a company focuses on a limited range of high-quality products, it can sometimes streamline its production processes, reduce waste, and increase efficiency.
This can lead to lower costs, higher profitability, and faster turnaround times for orders.
Disadvantages of the product orientation approach
Competition
While Apple will always have the premium end of the consumer electronics market cornered, there do exist individuals who balk at the price tag of Apple products.
This has allowed competitors like Samsung and Sony to leverage Apple’s innovation and introduce cheaper alternatives.
Product failure
The product orientation approach can be successful, but it is by no means infallible.
With less credence given to consumer feedback, there is a risk the new product fails when released to the market.
Ultimately, trends do sell, and some businesses make money by simply giving consumers what they asked for.
Cost
The product orientation approach can also be costly since high-quality products tend to be more expensive to produce.
These costs are passed to customers, which can make the company’s products less competitive.
Product orientation may also require a significant investment in research and development that may be problematic for smaller companies with limited funds.
Product orientation vs. market orientation
Whereas in a product-oriented approach, the company focuses on growing its customer base with a set of new products.
In a market-oriented approach, the company focuses on understanding what product might help develop a whole new market.
The difference might seem subtle, yet in a product-oriented company, growth happens bottom-up by shaping customers’ behavior as they use a product.
In a market-oriented approach, a company also tries to shape demand by changing consumer behaviors.
Both approaches, depending on the market’s landscape can be effective.
And indeed, using a hybrid formula with a product-oriented approach, where you build the “bottom-up engine” and then infuse it with demand generation can be a powerful formula for scaling a company.
Product orientation examples
Let’s now discuss some additional product orientation examples
Airbus
The products Airbus sells need to meet consumer needs like any other company.
Unlike most other companies, however, Airbus operates in the dynamic aviation industry where research, development, and innovation are key to remaining competitive.
Airbus commercial aircraft are made from premium materials and components to increase the two important metrics of performance and safety.
This culture of innovation positions the company as one that is concerned about passengers and indeed the Earth on which we live.
Happily, these are also desired by the company’s commercial clients who desire faster, more efficient ways of transporting customers around the world.
One of the many product innovations developed by Airbus is a sustainable aviation fuel that can reduce CO2 emissions by as much as 85%.
It has also developed the Trent XWB turbofan which is lighter and more economical than its predecessors.
The success of products in the Defence and Space portfolio (such as satellites and on-ground infrastructure) also rely on Airbus’s product-centric approach underpinned by premium materials and high precision and functionality.
Dyson
Home appliance multinational company Dyson was established in 1991.
However, the impetus for the company came in 1974 after eventual founder James Dyson experienced a loss of suction from his Hoover vacuum cleaner.
Frustrated at the performance decrease, Dyson took the machine apart and noticed that a layer of dust inside the vacuum bag was impeding suction across the fine mesh.
While working in an unrelated role, Dyson then observed centrifugal separators that were used to collect dirt and dust in industrial contexts such as sawmills.
Despite claims from some that the separators would not be cost-effective if applied on a smaller scale, Dyson nevertheless constructed a prototype, connected it to his Hoover, and found that it worked satisfactorily.
Over the next five years, he refined his prototype but struggled to find a licensee in the United States.
Indeed, most considered his product a threat to the profitable vacuum bag market which was then worth around $500 million.
Dyson would eventually find a licensee in Japan by the name of Apex Ltd. in March 1985.
Using income from the deal, he founded Dyson Appliances Limited in 1991 with the first vacuum cleaner sold in the UK in January 1993.
Dyson’s product-oriented approach continues to this day and has been applied to develop other household items such as bladeless fans, heaters, air purifiers, and lights.
Over recent years, however, the company has also incorporated aspects of market orientation to better serve and satisfy its customers.
Gillette
Gillette has been around for more than 100 years, and one of the keys to its success is its product-orientated approach.
The company is best known for inventing the first safety razor with disposable blades in around 1895, a product so visionary and innovative that it did not encounter serious competition until 1962 when Wilkinson Sword released a similar blade.
When Wilkinson Sword later merged with Schick, it became Gillette’s primary competitor and caused a substantial decrease in market share.
Under successive CEOs in Vincent Ziegler and Colman Mockler, Gillette doubled down on product orientation.
The company’s Atra razor released in 1977 featured a refillable cartridge and lubricating strip, with this model and the later Daisy razor for women increasing the company’s global market share to around 75%.
In more recent times, the company has managed to maintain its dominant position with a strategy based on model improvements released every decade or so.
The popular Mach3 was launched in 1998 touting three blades set on tiny springs that provided a closer shave and less skin irritation.
In fact, the product was so popular that the company sold $1 billion worth in the first 18 months.
Decades later and locked in bitter competition with Schick, the company reasserted itself once more with the release of the Fusion that featured a fifth blade on the back of the cartridge for mustaches and sideburns.
With a considerable brand following and pedigree in personal care products, Gillette can be reasonably confident that when it leads with new products, its customers will follow.
GoPro Cameras
GoPro cameras have revolutionized action and adventure capture. Compact and rugged, designed for extreme sports enthusiasts and outdoor adventurers.
Renowned for exceptional video and photo quality, robust build, and versatility.
GoPro’s commitment to innovation led to features like waterproofing, stabilization, and compatibility with various mounts.
Mercedes-Benz S-Class
The Mercedes-Benz S-Class is the pinnacle of luxury and engineering.
Opulent interiors, cutting-edge tech, and refined performance. Handcrafted details, from leather upholstery to advanced driver assistance systems.
Sets industry standards for premium automobiles.
Bang & Olufsen BeoVision Eclipse
Bang & Olufsen’s BeoVision Eclipse combines design with audiovisual excellence. OLED display for stunning visuals and integrated soundbar for immersive audio.
Crafted with premium materials and meticulous attention to detail.
Enhances the home viewing experience.
Leica Cameras
Leica cameras are revered by photographers worldwide.
Exceptional image quality, durability, and timeless design.
Synonymous with precision engineering and uncompromising quality. Cherished by professionals and enthusiasts alike.
Breville Oracle Espresso Machine
The Breville Oracle Espresso Machine is a coffee aficionado’s dream. Professional-level features and control.
Dual boiler system, precise temperature control, and automatic grinding and tamping simplify espresso brewing. Delivers cafe-quality espresso at home.
Rolls-Royce Phantom
The Rolls-Royce Phantom epitomizes automotive luxury.
Handcrafted interiors, bespoke customization, and whisper-quiet ride. Symbol of opulence and refinement. Unwavering commitment to product excellence.
Rolex Submariner
The Rolex Submariner is an icon among wristwatches.
Quality, precision, and enduring appeal. Robust construction, precise automatic movement, and timeless design. Symbol of status and exceptional timekeeping.
Patagonia Outdoor Apparel
Patagonia is renowned for sustainability and high-quality outdoor clothing. Eco-friendly materials and ethical manufacturing.
Functional, durable, and stylish outdoor apparel. Advocates for environmental conservation.
Vitamix Blenders
Vitamix blenders are highly regarded for powerful blending and durability. Loved by professional chefs and home cooks.
High-performance motors and precision-engineered blades. Versatile and reliable blending solutions.
Bose Noise-Canceling Headphones
Bose headphones offer exceptional noise-canceling technology and superior sound quality. Immersive listening experience.
Comfortable design, intuitive controls, and innovative features. Ideal for travel, work, or leisure.
Weber Grills
Weber grills are renowned for high-quality outdoor cooking equipment. Precision grilling with even heat distribution and temperature control.
Durable construction withstands years of use. Enhances outdoor cooking experiences.
Sony Alpha Mirrorless Cameras
Sony’s Alpha series mirrorless cameras are celebrated for innovation and high-resolution imaging. Advanced features, fast autofocus, and 4K video.
Continuous technological advancements empower photographers. Capture exceptional moments with clarity.
Steinway & Sons Grand Pianos
Steinway grand pianos are revered worldwide for craftsmanship and sound quality. Meticulously handcrafted with the finest materials.
Rigorous manufacturing ensures tonal excellence and enduring performance. Choice of virtuosos and music enthusiasts.
Tesla Powerwall
Tesla’s Powerwall is a home battery solution for efficient solar energy use. Reflects Tesla’s sustainable energy commitment and tech innovation.
Reduces reliance on traditional energy sources, transitioning to clean, renewable energy. Sleek design and intuitive controls accelerate sustainable energy adoption.
Product orientation vs. market orientation
Whereas product orientation is a marketing philosophy skewed toward developing high-quality products, to generate sales.
In a market orientation approach, the company focuses on customers, thus understanding them, to generate demand and distribution.
Thus, product orientation believes in creating distribution by focusing on product development.
Market orientation believes in enabling distribution or demand to find its market.
A proper business strategy needs to leverage both to create an effective marketing strategy.
Both focus on the product and understanding the market makes it possible for companies to build competitive moats.
Key takeaways
- Product orientation is a marketing management philosophy where the promotion of high-quality products is used to generate sales. Product orientation is designed-focused and commonly associated with tech companies that innovate with new technologies to address customer needs and generate market demand.
- Product orientation is otherwise known as the “no fear strategy” because there is an implication that the business is bold, proactive, and comfortable with risk. Some of the businesses embodying these traits include Netflix, Apple, and Robinhood.
- Product orientation results in higher product quality and continuous innovation, which can build a loyal and devoted brand following. However, innovation can be leveraged by competitors and there is also a risk that the innovative product is not what consumers wanted.
Key Highlights:
- Product Orientation Philosophy: Businesses following the product orientation philosophy prioritize product quality as the primary driver of market demand. They believe that customers will buy products based on their superior quality, performance, or features, regardless of individual preferences.
- Characteristics of Product Orientation:
- Focus on product development and innovation.
- Bold and proactive approach, often referred to as the “no fear strategy.”
- Assumption that customers will adapt to the products offered.
- History of Product Orientation: Product orientation emerged in response to increased competition and consumer demand in the late 19th and early 20th centuries. General Motors was one of the pioneers of this approach, emphasizing product quality and customization.
- Innovation: The 1950s and 1960s marked a significant period for product orientation, with companies focusing on high-quality, technologically advanced products and investing in research and development.
- Examples of Product-Oriented Companies: Notable companies following a product-oriented approach include Apple, Netflix, and Robinhood, which prioritize quality and innovation to create demand in their respective markets.
- Advantages of Product Orientation:
- Higher product quality.
- Continuous innovation.
- Increased efficiency in production processes.
- Disadvantages of Product Orientation:
- Facing competition, especially from lower-priced alternatives.
- Risk of product failure due to limited customer feedback.
- Higher production costs, which can make products less competitive.
- Product Orientation vs. Market Orientation: Product orientation focuses on developing new products to create demand, while market orientation aims to understand customer needs and preferences to generate demand. Both approaches have their merits and can be combined for effective marketing strategies.
- Product Orientation Examples:
- Airbus: Innovates in the aviation industry with a focus on performance, safety, and sustainability.
- Dyson: Known for product-oriented innovation in home appliances.
- Gillette: Dominates the shaving industry through continuous product improvements and innovations.
- Key Takeaways: Product orientation relies on product quality and innovation to attract customers. While it can lead to brand loyalty and a competitive edge, it also faces challenges like competition and the risk of developing products that may not meet customer needs. Combining product and market orientation can create a robust marketing strategy.
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