Exploration of proactive and reactive market orientation strategies and their implications for companies

A company that takes too long to respond to a change in the business environment is likely to suffer a profit deficit. Sometimes, it can result in the loss of market share because a competitor is already in the process of implementing the strategy that was being planned by the company. It may also happen that the company has to close or prune some of its lines of business due to the inability to monitor changes in market behavior or an advance in technology that makes current technological capabilities obsolete.

Companies that follow strict procedures, in terms of having a strong investigative capacity, a strategic planning system in place, adequate business intelligence tools to help make key decisions and hire specialists, for example, marketing coordinators and analysts to predict changes in consumer patterns and the environment. they have a competitive advantage over their competitors.

A proactive company is one that anticipates these changes and has action plans ready to deal with them. These companies are well prepared and have information from a variety of sources, to counteract any discrepancies in the business environment. On the other hand, a reactive company responds after the event has taken place and has little preparation or anticipation for such changes.

However, no company can rely on being completely proactive or reactive in its orientation. Ideally, a business should use both strategies to respond effectively with a minimal response rate. A reactive business uses market surveys and questionnaires to measure customer awareness and satisfaction levels. Based on recorded feedback and analysis of consumer trends, the company works to improve its services and products and focuses on key areas for improvement highlighted by consumers. For example, a Fortune 500 food company collects ongoing feedback from customers and employees through emails, submitted survey forms, and other documents. This feedback is collected from thousands of disparate sources in real time. This feedback is then analyzed using sophisticated tools and then strategies and process improvements are designed based on the observations.

This is an example of an effective reactive strategy used to improve customer satisfaction. It includes understanding and satisfying the needs expressed by the client. In fact, companies like Mindshare Technologies help large corporations implement comprehensive feedback mechanisms by implementing enterprise feedback management solutions, which capture customer feedback from disparate sources in real time and have powerful reporting tools for feedback. smart decision making and reporting.

Although this is very important and companies should use this strategy to obtain information and feedback on their products and services, sometimes companies tend to rely too much on this data and innovation therefore takes a back seat. Most critics argue that reactive companies tend to lag behind when it comes to high-speed innovation and meeting latent consumer needs.

This is where companies that follow a proactive orientation have a distinct advantage over their counterparts. They use extensive methodology such as brainstorming, anticipating market trends, analyzing customer demand patterns, using sophisticated planning, and fostering innovation at all levels of the organization. These companies are constantly finding new ways to please the customer by meeting the latent needs of consumers and thereby creating a differentiator, which in turn leverages the company’s brand image and improves customer equity.

Organizations like 3M, HP and Motorola have made research and meeting the latent needs of consumers practical by embracing the philosophy of “probe and learn” and foster innovation at all levels within the company. Tech companies tend to lean more toward a proactive orientation, as there is great scope for innovation and the design of value-added features and solutions. Consider industries such as biotechnology, whose primary focus is research and development and is therefore primarily proactive in nature. However, due to the great influence of marketing in today’s business environment, a large number of biotech companies are using a market-oriented approach and taking it into account as they move forward.

Research was carried out to find out which approach was most effective when developing new products. A sample of technologically diverse companies was taken and the success story of new products with both proactive and reactive orientations was recorded. It was seen that to create and maintain the success of a new product, only reactive market orientation was not enough and a proactive market orientation plays an important role in the success of a new product offering.

A company that relies solely on customer responses is one step behind and carries the risk of losing market share and brand equity to a competitor who provides latent value-added features at competitive prices. The company that follows the reactive orientation risks relying solely on customer expectations and stated needs, which are not necessarily static and are always changing. It also provides few opportunities for consumers to experience ‘delight’ and thus lose customer loyalty and brand equity.

However, each coin has two sides and therefore has both proactive and reactive orientations. There is another risk that the client will accept these latent characteristics. Many times it can happen that a customer is not willing to pay the premium for these features or does not see them as a significant benefit or differentiating factor. In this case, the business may lose profit due to the additional costs of implementing the value additions and the loss of customers. Strong research capacity reduces this risk and increases the likelihood that the market will accept these latent characteristics.

It is important that companies adopt both strategies and follow a total market orientation, strengthening both their proactive and reactive capabilities. These companies are well prepared to deal with changes in the business environment, and are even pioneers and innovators, eventually revolutionizing the way people use a certain product or technology.