What Is Product Orientation? Activities, Examples & Companies
Product orientation is a business strategy that focuses on developing and designing high-quality products that generate demand. In other words, a product-oriented business has an “if you build it well, sales will come” type of mentality.
On the opposite side of the coin is a strategy called market orientation. The biggest difference is that product-oriented companies build products that they believe are strong enough to inspire public interest, while market-oriented companies build products designed to cater to public interests that already exist. Learn more about product orientation by reviewing definitions and examples of companies that utilize this strategy.
Up until the mid-20th century, product orientation was fairly standard simply because consumers didn’t have too many choices when it came to certain products. One famous example of this sentiment comes from an early 1900s Henry Ford declaration: “Any customer can have a car painted any color that he wants so long as it is black.”
As the marketplace continued to evolve, however, business strategies were forced to grow along with consumer demands. As lack of competition has become rarer in most industries, many successful businesses now use a combination of market- and product-oriented approaches. While it’s still common for some companies to lean more heavily towards one side or the other, few tend to use either exclusively.
Regardless, product orientation still plays an important role in most companies’ market strategies. During the product orientation stage of developing goods, there’s a large focus on product research, product development and product focus.
If you’re looking to open a business or launch a new product, product research plays an important role and gauges your odds of success. Product research can include a variety of activities, such as evaluating and testing product concepts, evaluating how much competition you’ll have, figuring out potential costs to make the product and pricing the product in a way that you’ll be able to generate a profit.
If a business is heavily focused on product orientation, then this is a large part of the process. Though many different activities are involved in this stage, the focus is on making the strongest possible process to ensure demand. Development typically involves creating and designing a new product or figuring out updates to an existing one. It can also include building and testing said product and subsequently producing, marketing and distributing it, too.
Product focus involves mapping out things like selling strategy, manufacturing and metrics. By focusing on the product, companies aim to continually improve their offerings to stay competitive in their industry.
Product Orientation Examples
While we mentioned that many companies use a mixture of market orientation and product orientation, there are some that lean more towards the product orientation angle. These companies tend to be innovators that arrive on the scene with hot new products that consumers had no idea they wanted. Some examples include:
Before Steve Jobs and the Apple team shot to the level of tech stardom the company possesses today, no one had really envisioned the iPod, iPhone, iPad — iAnything. Yet by developing these and other revolutionary new products, Jobs and his team were able to cash in by offering products that they correctly predicted would create a great deal of demand.
Netflix’s product is technically more of a service, but by providing customers with easy access to the latest movies and TV shows, Netflix made large video rental stores like Blockbuster obsolete. Once again, the company’s success was based on identifying a convenient option that the public hadn’t yet realized was even possible.
Robinhood is an investing app that transformed the world of market trading. Less than a decade ago, the stock market was still largely inaccessible to everyday participants, as investing came with a high cost of brokerage commissions. Then, Robinhood developed a trading platform that individual investors could use to get in on the action, commission-free.
The service proved to be so popular that ultimately other brokerages like TD Ameritrade and Etrade were also forced to go commission-free in order to keep up. Robinhood’s product orientation-style approach was the result of identifying a problem in a specific industry and then fixing it in a way that no other company had either considered or tried to attempt.
Advantages and Disadvantages of Product Orientation
Companies that lean towards product orientation tend to operate with a different set of rules than those that revolve around market orientation. Marketing and product orientation-heavy business models come with their own sets of pros and cons.
As mentioned, product-oriented companies often provide innovative new products or services that fill an existing need in the marketplace. At least in their initial phases, their ability to be the first to offer a product or service often means being the only business that does. This was the case for Netflix in the early 2000s when it added a digital streaming option to its existing mail-delivery DVD-rental service.
The downside of innovation is that, when something works, more businesses jump to offer it. By 2008, Netflix’s streaming service already had competition from Hulu. Today, these companies compete with a variety of other streaming options ranging from Amazon Prime to services from individual networks and studios like Disney+ and Peacock — the point being that innovation can only take you so far.
Product-oriented companies don’t have to be as concerned as market-oriented companies do with the idea that “the customer is always right.” This gives them the freedom to take public feedback with a grain of salt and releases them from the pressure to keep up with constantly evolving trends.
The downside, however, is that trends do sell. Market-oriented businesses are often able to make a great deal of money simply by giving customers what they want. Rather than having to guess whether a new product or service will fill a hole in the market, they listen to public feedback and deliver products that are already in demand to meet that demand.
Quality tends to be a primary consideration for product-oriented businesses. Because they count on a product to sell itself to some extent, these companies are well aware that it needs to be a good one. While this approach comes with the benefit of saving money on advertising, it doesn’t always take other factors into account.
While Apple will always have a large customer base due to its premium-quality iPhones, not all consumers are keen on the devices’ notoriously high price tags and frequent upgrades. This has created ample room for competitors like Samsung to offer comparable smartphones at lower prices and with features iPhones lack.