Product orientation in business: definition and benefits
A company's business orientation is one of the most important decisions for business owners to make. Business orientation refers to how a company approaches its strategies for success. There are several types of business orientation, including product orientation, which is when the strategy for success involves the business focusing on making the best product possible. In this article we explain product orientation in detail, look at some other forms of business orientation and consider the advantages and disadvantages of product-oriented strategies.
What is product orientation?
Product orientation is a business and marketing strategy that focuses above all else on creating the best possible product. The theory behind a product-oriented approach is that the best way to increase sales is to improve the quality of the product. Marketing and promotion of the product focus on its quality. In this approach, quality is the key factor in creating demand for a product. Product-oriented approaches assume that consumers may buy more of a product, or pay more for it, based on its quality, rather than any other factors.
Companies that focus on products differ from those that pursue a market orientation strategy. Market-oriented approaches tend to focus first on the needs of the consumer and develop products and services to meet their needs.
Other types of business orientation
There are several other types of business orientation, which can affect the nature of the business and its overall strategy and direction. It's rare for a company to focus exclusively on one type of orientation. Companies might adopt numerous approaches at the same time, or focus on one strategy for a period of time before moving on to a different focus. Some different types of business orientation are as follows:
Production oriented companies are different to product-oriented companies. Instead of focusing on making as high a quality product as possible, production-oriented firms focus on the production process, and how to manufacture goods as cheaply and efficiently as possible. The overall objective of this type of company is to reduce costs through mass production techniques.
Sales oriented businesses focus on the process of selling their products to their target market. This can be a relatively short-term strategy to take advantage of an opportunity in the market and sell as much as possible over a short period. Sales focused businesses can employ call centres and cold-calling techniques, and the strategy can suit products that consumers don't tend to be knowledgeable about, where a sales representative can guide and influence them.
Market orientation is the process of focusing on the needs of consumers and designing and delivering products that meet those needs. This outward-looking approach to business places a great emphasis on understanding the customer and responding to the demands of the market. This approach can lead to changing or replacing products, depending on the wants and needs of consumers.
Societal marketing orientation
The societal marketing approach emerged in recent times, emphasising social responsibility and human welfare before the demands of profit. A company with a societal marketing orientation may focus on creating a positive, socially responsible image for itself as a means of increasing sales. As society becomes more environmentally and ethically conscious, company owners may choose to adopt a societal marketing approach as a way of standing out from their competitors.
What's involved in a product-oriented strategy?
A product-focused company places a greater emphasis on the development of the product, over other approaches to marketing, sales and promotion. The belief of company owners who employ this strategy is that the higher the quality of the product, the more likely consumers are to buy it. Adopting a product-focused strategy usually means adopting some of the following techniques and practices:
An emphasis on research and development
A company that focuses above all on the quality of its product is likely to spend a great deal of time and money on research and development. The progress of your product development is the most influential contributor to increased sales and the success of the company.
A focus on innovation
Product-oriented companies tend to be innovators, who are seeking to create a new product or exploit a niche in the market. Cultivating an image as an innovative company can be crucial to attracting customers who are interested in exciting new products. Innovative companies continually strive to improve their products, to maintain their reputation as a company that produces high-quality, inventive products.
Marketing and advertising for product-oriented companies tend to focus on the features and detail of the product, and what makes it stand out from its competitors. A good example of this is technology companies. Products such as computers, mobile phones, tablets and other technology tend to focus on new, innovative product features and how these make them stand out from existing products on the market.
Advantages and disadvantages of a product-oriented approach
Product focus is rarely the sole strategy adopted by a business. There are strengths and weaknesses to the approach. Specific market forces or conditions can provide opportunities for the strategy, or limit its success. Product-oriented companies tend to thrive in a market where demand outstrips supply, but they may struggle in a market where supply is high and demand is relatively low. The various limitations of the strategy can lead to combining it with other strategies, to give the business and its products the best chance of success. Below are some advantages and disadvantages of the product-focused strategy:
Advantages of the strategy
Some advantages of a product-led strategy include:
Fewer marketing-related costs: In a product-led company, the quality of the product is the main factor in encouraging people to buy the product. This may mean spending less money on developing creative advertising campaigns and reaching your target market, as there is a belief that customers may naturally favour the best product on the market.
Reduced risk: Focusing heavily on the development of the perfect product may reduce some risks associated with bringing a product to market that isn't ready, or that hasn't been thoroughly tested. Customers tend to trust the products, with a stable customer base who choose the product because of its higher quality.
Increased efficiencies: The process of producing a continually higher quality product can involve innovations and efficiencies in the production process. There can also be economies of scale associated with focusing on the development of one product, or a few high-quality products, rather than producing a greater variety of lower-quality products.
Higher quality products: Ultimately, the objective of a product-oriented company is to make the best products possible. Adopting this approach can help ensure your products are of a higher quality than competitors, who may adopt a different strategy.
Disadvantages of the strategy
Some disadvantages of a product-led strategy include:
Risk of obsolescence: Focusing your time and resources on the development of the perfect product may lead to a risk of the product becoming obsolete if technology changes or develops at a fast pace. The approach requires companies to continually innovate and keep up with technological developments.
Lack of market knowledge: Channelling so many resources into developing a high-quality product can risk neglecting market research and other areas that may help the company understand the consumer and the market. This may mean missing opportunities and market niches.
Difficult to thrive in a competitive market: If the market for your product is particularly competitive, it may not be enough simply to develop a high-quality product. Competitors are likely to be trying their hardest to create a better product, and they may also employ more market-led approaches to meet the needs of the customer.
Customer wants and needs may change: A major risk associated with a product-focused company is that they may be unable to adapt to changes in fashion, taste and need. It can be hard to keep up with the pace of change, and products can be at risk of becoming undesirable.
High research and development costs: The costs associated with developing a higher-quality product can be excessive. Product focused companies tend to spend a great deal on research and development, and it can take a long time to arrive at the final product, that's ready to bring to market.
Potential high prices: The costs associated with developing a high-quality product tend to result in a high price for consumers. In a market where demand is high, this may not be an issue, but where demand is relatively low, higher-priced products may be less successful than lower-priced products.
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