How do firms create value?

For the last 30 years, the dominant paradigm for understanding how firms create value for consumers has been market orientation. Market orientation refers to the “the organization-wide generation of market intelligence, dissemination of the intelligence across departments and organization-wide responsiveness to it” (Kohli and Jaworski 1990, p. 3). By this, we mean that organizations create value by generating information and disseminating this information throughout the firm in order to properly respond to it. This is done by generating and responding to information about customers, or what is referred to as customer orientation, and generating and responding to information about competitors, or what is referred to as competitor orientation. For this reason, marketing academics and practitioners typically aim to identify and respond to customer needs as well as examining and responding to their competitors’ efforts. Being market-oriented has been found to be necessary for a firm to compete in markets effectively (Kumar et al. 2011). For this reason, we will cover both customers and competitors in the first few chapters, and the strategic framework offered in this textbook is centered around answering customers’ needs, goals, and desires, ideally more effectively than the competition does.

Now that we have defined the bases of marketing, we turn our attention to change brought about by the internet and how it transformed the ways that firms create value for consumers.