Market Orientation, Competitive Advantage, and Performance: A Demand-Based Perspective

This study assesses how customer value affects a firm\u27s market orientation and consequently, competitive advantage and organizational performance in a service industry — the global hotel industry. The findings show that if a firm perceives its customers as valuing service, the firm is more likely to adopt both a customer and a competitor orientation; if the firm thinks its customers are price sensitive, the firm tends to develop a competitor orientation. Moreover, the greater a firm\u27s customer orientation, the more the firm is able to develop a competitive advantage based on innovation and market differentiation. In contrast, a competitor orientation has a negative effect on a firm\u27s market differentiation advantage. Finally, innovation and market differentiation advantages lead to greater market performance (e.g., perceived quality, customer satisfaction) and in turn, higher financial performance (e.g., profit, market share)