| A company that takes too much time to respond to a | | | | orientation have a distinct edge over their counterparts. |
| change in the business environment is susceptible to a | | | | They use extensive methodology like brainstorming, |
| shortfall of profits. Sometimes it may result in loss of | | | | anticipating market trends, analyzing customer demand |
| market share due to a competitor already in the | | | | patterns, using sophisticated planning, and encouraging |
| process of implementing the strategy which was being | | | | innovation at all levels in the organization. These firms |
| planned by the company. It may also happen that the | | | | are constantly finding new ways of providing customer |
| company may have to shut down or prune some of | | | | delight by fulfilling the latent needs of consumers and |
| its business lines due to the inability to oversee | | | | hence creating a differentiating factor, which in turn |
| changes in market behavior or a breakthrough in | | | | harness the company's brand image and improves |
| technology leading to the current technology | | | | customer equity. |
| capabilities becoming obsolete. | | | | Organizations like 3M, HP and Motorola have made it a |
| Companies following stringent procedures, in terms of | | | | practice to research and fulfill latent needs of |
| having a strong research capability, a strategic planning | | | | consumers by adopting the 'probe and learn' |
| system in place, proper business intelligence tools to | | | | philosophy and encouraging innovation at all levels |
| help make key decisions and employing specialists, for | | | | within the company. Technology firms tend to be more |
| example marketing coordinators and analysts to | | | | inclined towards a proactive orientation, since there is a |
| predict changes in consumer patterns and the | | | | high scope for innovation and design of value added |
| environment, have a competitive edge over their | | | | features and solutions. Consider industries like |
| competitors. | | | | biotechnology, whose core focus is research and |
| A proactive company is the one who foresees these | | | | development and hence it is primarily proactive in |
| changes and has the action plans ready to face them. | | | | nature. However due to the large influence of |
| These companies are well prepared and have | | | | marketing in today's business environment, a large |
| information from various sources, to counter any | | | | number of biotechnology firms are using a market |
| discrepancies in the business environment. A reactive | | | | oriented approach and they do keep this in mind while |
| company on the other hand responds after the event | | | | moving forward. |
| has taken place and has little preparation or anticipation | | | | A research was conducted to find out which |
| of such changes. | | | | approach was more effective in case of new product |
| However, no company can rely on being either | | | | development. A sample of technologically diverse |
| completely proactive or reactive in its orientation. Ideally, | | | | companies was taken, and the relationship of new |
| a company must use both strategies to respond | | | | product success with both proactive and reactive |
| effectively with a minimum response rate. A reactive | | | | orientations was recorded. It was seen that to create |
| company uses market surveys and questionnaires to | | | | and sustain new product success, only reactive |
| gauge customer insight and satisfaction levels. Based | | | | market orientation was not sufficient and a proactive |
| on the recorded feedback and analyzing consumer | | | | market orientation plays an important role in the |
| trends, the company works on improving their services | | | | success of a new product offering. |
| and products and focuses on the key improvement | | | | A company solely relying on customer responses is |
| areas highlighted by the consumers. For instance a | | | | one step behind and carries a risk of losing both |
| Fortune 500 food company gathers continual | | | | market share and brand equity from a competitor who |
| customer and employee feedback from e-mails, | | | | provides value added latent features at competitive |
| submitted survey forms and other documents. This | | | | prices. The company following reactive orientation is |
| feedback is collected from thousands of disparate | | | | taking a risk of solely relying on customer expectations |
| sources on a real time basis. This feedback is then | | | | and stated needs, which are not necessarily static and |
| analyzed using sophisticated tools, and thereafter | | | | are always changing. It also provides little opportunity |
| strategies and process improvements are designed | | | | for consumers to experience 'delight' and hence loses |
| based upon the observations. | | | | out on customer loyalty and brand equity. |
| This is an example of an effective reactive strategy | | | | However every coin has two sides and so has both |
| used to improve customer satisfaction. It includes | | | | proactive and reactive orientations. There is another |
| understanding and meeting customer's expressed | | | | risk of customer acceptance of these latent features. |
| needs. In fact companies like Mindshare Technologies | | | | Many times it may happen that a customer is not |
| assist large corporations in implementing | | | | willing to pay the premium for these features or does |
| comprehensive feedback mechanisms by deploying | | | | not see it as a significant benefit or a differentiating |
| Enterprise Feedback Management Solutions, which | | | | factor. In this case the company may lose out on |
| captures customer feedback from disparate sources | | | | profits due to additional costs of rolling out the value |
| on a real time basis and has powerful reporting tools | | | | additions and loss of customers. A strong research |
| for intelligent decision making and reporting. | | | | capability reduces this risk and increases the probability |
| Although this is very important and companies must | | | | of market acceptance of these latent features. |
| use this strategy to gain insight and feedback on their | | | | It is important for companies to adopt both strategies |
| products and services, sometimes companies tend to | | | | and follow a total market orientation by strengthening |
| rely too much on this data and hence innovation takes | | | | both its proactive and reactive capabilities. Such |
| a backseat. Most critics argue that reactive companies | | | | companies are well prepared to face changes in the |
| tend to lag behind when it comes to high speed | | | | business environment, and are even pioneers and |
| innovation and satisfying the latent needs of | | | | innovators, who eventually revolutionize the way |
| consumers. | | | | people use a certain product or technology. |
| This is where companies following a proactive | | | | |