Market Driving (And Being Just Really Good)

Some firms don’t seem to follow the the market but instead chart their own course. The classic example might be Apple. It looks to many that Apple is able to influence tastes in the market rather than just serve the consumers’ tastes. Whether this is true depends a little on your definitions. I’d argue firms are still serving the tastes of consumers by addressing the consumers’ deeper needs. I.e. to feel part of a larger community or signal that they have taste.

Nirmalya Kumarand his colleagues develop the idea of market driving to explain such succcesful firms. It is a potentially interesting approach. It is useful for students to consider whether, and if so which, firms are able to drive the market. When is it good to be: “Guided by Vision Rather than Traditional Market Research” (Kumar, Scheer, and Kotler, 2000, Page 132).

The one caveat I would add is that the market driving firms seem, to use a technical term, just really good. Market driving is explained as improving on 2 dimensions, both “price” and “benefits less costs”. Market driving firms can deliver a product that is simply better than other firms. They can also deliver this product at a cheaper price. Firms that can beat other firms on these two dimensions are just better. If you are simply better business is probably quite easy.

As a professor I feel we should set ourselves the harder task of explaning how firms that aren’t that great can do well. These firms need the help more than market driving firms.

Read: Nirmalya Kumar, Lisa Scheer, and Philip Kotler, (2000), From Market Driven to Market Driving, European Management Journal, 18 (2), pages 129-142.