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International Journal of Strategic Property

ManagementPublication details, including instructions for authors and subscription information:http://www.tandfonline.com/loi/tspm20

Market orientation and the property development

business in SingaporeJasmine Y.W. Tay

a& Linda Tay

b

aMarketing Executive, CB Richard Ellis (Pte) Ltd., 6 Battery Road, #3201, 049909,

Singapore E-mail:b

Mirvac School of Sustainable Development, Faculty of Business, Technology &

Sustainable Development, Bond University, Gold Coast, QLD, 4229, Australia E-mail:

Version of record first published: 18 Oct 2010.

To cite this article: Jasmine Y.W. Tay & Linda Tay (2007): Market orientation and the property development business inSingapore, International Journal of Strategic Property Management, 11:1, 1-16

To link to this article: http://dx.doi.org/10.1080/1648715X.2007.9637557

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International Journal of Strategic Property ManagementISSN 1648-715X print / ISSN 1648-9179 online 2007 Vilnius Gediminas Technical University

http://www.ijspm.vgtu.lt

MARKET ORIENTATION AND THE PROPERTY

DEVELOPMENT BUSINESS IN SINGAPORE

Jasmine Y. W. TAY1 and Linda TAY2

1 Marketing Executive, CB Richard Ellis (Pte) Ltd., 6 Battery Road, #32-01,049909, SingaporeE-mail: [email protected]

2 Mirvac School of Sustainable Development, Faculty of Business, Technology & Sustain-able Development, Bond University, Gold Coast, QLD, 4229, AustraliaE-mail: [email protected]

Received 21 September 2006; accepted 29 January 2007

ABSTRACT. The property development business is often regarded as one of high risk and

return. As such, developing a competitive advantage is critical. Extant literature suggeststhat market orientation is a form of sustainable competitive advantage for businesses. This

paper is an attempt to test this relationship with specific reference to a high risk business

such as property development. A market orientation scale is developed to measure the degree

of market orientation in property development firms. The results show that there exists a

significant positive relationship for two specific dimensions of market orientation, i.e., profit

orientation and responsiveness with business performance and marketing performance.

Furthermore, empirical findings showed that the relationship between market orientationand marketing performance was stronger than with business performance.

KEYWORDS: Market Orientation; Property Development; Business Performance; Marketing

Performance; Singapore

1. INTRODUCTION

Market orientation refers to a business phi-

losophy of focusing on the coordinated activi-

ties of the organisation toward satisfying the

needs of a particular market segment(s)

(McCarthy and Perreault, 1984; Deng and

Dart, 1994; Jaworski and Kohli, 1990 and

Narver and Slater, 1990). A business is mar-

ket oriented when its culture is systematically

and entirely committed to the continuous crea-

tion of superior customer value.

The continuous evolvement of customer

needs and wants for superior quality services

and products implies the critical need to de-

velop a sustainable competitive advantage. In

order to maintain competitiveness, it is neces-

sary that firms constantly benchmark their

activities to identify industry-wide trends that

may help improve the business and market-

ing performance. Research has shown that

market orientation relates to better perform-

ance through intuitively and dynamically re-

sponding to market changes and therefore is

a form of sustainable competitive advantage

(Day, 1994).

The property development business is typi-

cally considered to be one of high risk and re-

turn. Nieboer (2005) found that all property

investors interviewed in their study considered

market orientation to be an important aspect

in managing their property portfolio. Compe-

International Journal of Strategic Property Management (2007) 11, 116


3/17

J. Y. W. Tay and L. Tay

titionwithinthepropertyindustryisalsokeen

involving both big and small players. Hence,

developers whowant to maintainor improve

theirbusinesswillneedtoconstantlyproduce

innovativeandhighstandardsofrealproper-

tiesandservices.

Thepurposeofthisstudyistotestthere-

lationship between market orientation and

performanceinthepropertydevelopmentbusi-

ness. It aims to serve as a guide to attain

higherefficiencyandeffectivenessindecision-

making and action to be made by the senior

executiveswithintheproperty industry.This

will enable the developer firm to create en-

hancedcustomervaluethroughtheimplemen-

tation of th e marketing concept an d

operationalise an organisational philosophy,

which is primarily concerned with establish-

inglongtermcustomerrelations.

2.LITERATUREREVIEW

2.1.Definingmarket orientation

Therehasbeenextensiveresearchonmar-

ket orientation (Golann, 2006; Brown et al.,

2002;Jaworski andKohli,1993).Essentially,

extant literaturesuggeststhatmarketorien-

tationencompassesfivedimensions customer

orientation,competitororientation,inter-func-

tionalcoordination,profitorientationandre-

sponsiveness.

Customer orientation requires sufficient

understanding of the target buyer s entire

valuechain,gearinguptooffersuperiorvalue

continuallytothechosencustomers interms

of their needs and wants (Saxe and Weitz,

1982; Michaels and Day, 1985). It includesmaintainingagoodrelationshipwithcustom-

ers by improving customer satisfaction and

paying close attention to both before and af-

ter-sales service. Studies by Lusch an d

Laczniak(1987)andNarverandSlater(1990)

furtherprovidesupportthatorganisationsthat

trackandrespondtocustomerneedsandpref-

erencesareabletobettersatisfycustomersand

hence,performathigherlevels.

Competitororientationcollectsinformation

andinvestigatescompetitors,bothcurrentand

future, in the target market and shares the

informationwithintheorganisation.Itrefers

to a seller grasping the short-term strengths

andweaknessesaswellaslongtermcapabili-

ties and strategies of the present and poten-

tial competitors (Aaker, 1988; Da y an d

Wensley, 1988). The organisation then devel-

opsasharedperspectiveonprobablesources

of competitive threats and thus develops an

advantagebyrespondingrapidlyoranticipat-

ingtheiractions.AsquotedbyDengandDart

(1994), managementcanseldomdependsolely

on patent or other types of monopolies or on

ever-buoyantmarketconditionsforprofitabil-

ity, however, they can rely on the fact that

competitorswilldoallintheirpowertomini-

mise such profits to the greatest possible ex-

tent.

Inter-functional coordination refers to the

degree of co-operation between the different

functions/departmentswithintheorganisation.

It involves the coordination of company re-

sourcestocreatesuperiorvalueforitscustom-

ersthroughexaminingcustomerandcompeti-tor information. Extant literature suggests

threewaystoachieveeffectiveinter-functional

coordination.Firstisthealignmentofthefunc-

tionalareas performanceobjectivesbyfocus-

ingthemonmarkets(e.g.,customersatisfac-

tion). Such market-based incentive systems

motivategroup-interest,leadingeachfunction/

department to participate whole-heartedly in

creating superior value for its customers

(Ruekert an d Walker, 1987; Win d an d

Robertson, 1983). Second, the creation of in-

ter-functionaldependencysuchthateachareafinds it advantages to cooperate closely with

theotherincreasesthedegreeofcoordination.

Third, effective inter-functional coordination

requiresextremesensitivenessandresponsive-

nesstotheperceptionsandneedsofallother

departments.

The ultimate objective of a business in

adopting market orientation is profitability

(McNamara,1972). Havingaprofitorientation


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!Market Orientation and the Property Development Business in Singapore

isthusrequiredforasuccessfulbusinessop-

erationsinceitenablesthefirmtoeffectively

identifyaspecificmarkettargetgroupanddeal

with competitor firms offerings.Sucha posi-

tioncanbeenabledthroughtheactiveappli-

cation of management information systems

(Melville et al., 2004). This dimension have

beenstudiedbyresearcherslikeKeith(1960),

Hise (1965), Narver and Slater (1990) and

NaiduandNarayana(1991).

Responsiveness is the action taken in re-

sponse to assembled information regarding

customersandcompetitors.Itinvolvestheac-

tualproduction,distributionandpromotionof

productsinsuchawaythatelicitsfavourable

end-customer response.An organisation can

generateintelligenceanddisseminateitinter-

nally; however, unless it responds to market

needs,verylittlemaybeaccomplished(Kohli

and Jaworski, 1990). In th e field study

JaworskiandKohli(1993),responsivenessto

marketdevelopmentswasfoundtobeencour-

agedwhenthere isawillingnesstotakecal-

culatedrisksonthepartofseniormanagers.

2.2.Market orientationand performance

Super-normal market performance is de-

finedasattainingahighlevelofprofitability,

customer retention, sales growth and new

productsuccess.An organisationthatyearns

to attain super-normal business performance

isrequiredtocreateasustainablecompetitive

advantage (SCA) (Aaker, 1988). To do so, it

must createsuperiorvalue for itscustomers.

A market-oriented seller thus acknowledges

that additional benefits should be passed on

to buyers through reduction in buyers total

acquisition and use cost results in many po-

tential sources of SCA (Aaker, 1988; Hall,

1980). Long-runperformanceismaximisedby

anorganisationthatcontinuouslyreviewsal-

ternativesourcesofSCAthatwillmosteffec-

tivelycreatesuperiorvalueforitscurrentand

future target buyers.As such, a market-ori-

ented firm is associated with a firm that in-

curslowoperatingandbusinessexpensesdue

tolesserproductfailuresbecausetheyareable

toconsistentlycorrectqualitycontrolproblems.

Thissubsequentlyleadstobetterbusinessand

marketingperformanceintermsofhigherre-

turn on investment. Market orientation is

thereforeadynamiccapabilitythatfirmscan

develop to achieve a sustainable competitive

advantage(Chingand Hsu,2006).

Atuahene-Gima (1995) defines a satisfied

customer as an individual that is greatly in-

fluencedbythequalityofproductandtheserv-

icesprovidedtothem.Drucker(1954)asserted

thatthecreationofasatisfiedcustomeristhe

solejustification for a business purpose. Day

(1994)suggestedthatsatisfiedcustomerswill

spread the good word to other potential cus-

tomersandkeepcomingbacktotheorganisa-

tion,providingitwithmorebusinessandthus

improvethebusinessandmarketingperform-

ance. Reichheld and Sasser (1990) also ob-

served that a 5 percent growth in customer

retentionmightenhancethefirmsprofitlev-

elsfrom25percentto85percent.

Furthermore, Han et al. (1998) proposed

thatamarket-orientedfirmislikelytoleadto

more innovation, which, in turn, is likely toleadtoachievementofsuperiorbusinessand

marketingperformance.Besides,asignificant

amount of management literature also sup-

ports the idea of innovation leading to supe-

rior business performance (Agarwal et al.,

2003, Khan and Manopichetwattana, 1989;

Zahraetal.,1988).

3.HYPOTHESES

Positive relationship between market ori-

entationandbusinessperformancehavebeenfoundinseveralcountries,e.g.,UnitedStates

(Green,etal.,2005),UnitedKingdom(Tayand

Morgan,2002),Japan(Deshpandeetal.,1993),

Taiwan (Chang and Chen, 1994),Australia

(Athuane-Gima, 1995), among others. The

premise for the positive relationship is that

firmsthattakeeffortstounderstandcustom-

ers needsinordertofulfilthoseneedsdevelop

betterproducts/serviceswithlessdefectswhich


5/17

" J. Y. W. Tay and L. Tay

resultsinreducedoperationalcost,andthere-

foreanenhancedperformance(Singh,2003).

Conversely, Diamantopoulos and Hart

(1993)intheUKfoundanunfavourablerela-

tionshipbetweenmarketorientationandbusi-

ness performance. Bhuian (1997) inArabia,

Greenley(1995)inUKandAppiah-Adu(1998)

in Ghana gathered no significant association

betweenmarketorientationandbusinessper-

formance. Singh (2003) expressed that such

contrastinfindingsmightbeduetooneofthe

followingfactors:marketorientationmightbe

uneconomicalinvariousmarketconditions;the

possibility of a lagged relationship between

marketorientationandperformancethatwas

notidentifiedinthecross-sectionalstudy;and,

thecosttoimplementthemarketorientation

overridethebenefitsthatcouldbeachieved.

Specifically in the property industry, Tse

(1998) found no significant relationship be-

tween market orientation and business per-

formanceoflargepropertycompaniesin Hong

Kong.Consequently,suchdiverseresultsfound

intheabovevariousresearchespromptsare-

searchtostudytherelationshipbetweenmar-

ket orientation and performance of propertydevelopmentfirmsinSingapore.Inthisstudy,

theimpactofmarketorientationonbothbusi-

ness and marketing performance are exam-

ined.

From the five dimensions discussed, we

developthehypotheses:

H1:Thegreaterthe levelofcustomerori-

entationofadeveloperfirm,thehigher

the business and marketing perform-

ance.

H2:Thegreaterthelevelofcompetitorori-

entationofadeveloperfirm,thehigherthe business and marketing perform-

ance.

H3:Thegreaterthelevelofinter-functional

coordination of a developer firm, the

higherthebusinessandmarketingper-

formance.

H4:Thegreaterthelevelofprofitorienta-

tionofadeveloperfirm,thehigherthe

businessandmarketingperformance.

H5:Thegreaterthelevelofresponsiveness

ofadeveloperfirm,thehigherthebusi-

nessandmarketingperformance.

4.RESEARCHMETHODOLOGY

4.1.Original market orientationscales

In the extant literature, research pertain-

ingtomarketorientationhasdivergedtotwo

maincategories of marketorientation scales,

i.e., those of Narver and Slater (1990) and

Jaworski and Kohli (1993). These generic

measuring instruments are briefly discussed

belowtoprovidebackdroptothefollowingsec-

tion 4.2 in which a separate market orienta-

tion scale will be developed specifically for

propertydevelopmentorganisations.

a) NarverandSlater(1990)

The instrument was tested on 113 strate-

gic business units (SBU) of a major western

corporationdealingwithforestproductsdivi-

sion.Marketorientationwashypothesisedto

comprisecustomerorientation,competitorori-

entation,inter-functionalcoordination,along-

termfocusandaprofitobjective.Respondents

were required to go through a 33-item scale

and then record their answers on a 7-point

Likert scale with 1 indicating that the SBU

doesnotengageinthepracticeatallwhile7

represents that SBU engages in it to a very

greatextent.Thereliabilityanalysisfromthe

testisfoundinTable1.

Table1.CronbachalphafromNarverandSlater

(1990)

Dimension Cronbach

alphaSample 1

Cronbach

alphaSample 2

Customer orientation 0.85 0.87

Competitor orientation 0.72 0.73

Interfunctional

coordination

0.71 0.73

Long-term horizon 0.48 0.41

Profit emphasis 0.14 0.00


6/17

#Market Orientation and the Property Development Business in Singapore

b)JaworskiandKohli(1993)

Marketorientationwasmeasuredthrough

a 32-itemscale.Itemsweregroupedinto 3 core

criteria;tenitemspertainingtomarketintel-

ligence generation, eight to intelligence dis-

semination and fourteen to responsiveness.

Eachindividualitemwasscoredupona5-point

Likert scale ranging from strongly disagree

to strongly agree. Business and marketing

performanceweremeasuredusingbothjudg-

mentalandobjective measures.Judgemental

measureswereassessedbyinformantsbyrat-

ingtheirbusinessandmarketingperformance

using a 7-point scale ranging from poorer to

excellencecomparedtothenearestcompetitor

while the objective measures were rated by

informants on their organisations market

sharecomparedtotheservedmarket.There-

liabilityanalysisfromthetestisfoundinTab-

le2.

Table2.Cronbachalpha fromJaworskiand

Kohli(1993)

Dimension Conbach alpha

Intelligence generation 0.71

Intelligence dissemination 0.82

Responsiveness 0.78

4.2.Developmentofmarketorientation

scaleforproperty developmentfirms

To maximise the insights from the above

twopioneeringstudies,thisstudyseekstosyn-

thesisetheresultstoproduceamarketorien-

tation instrument to be used in the property

developmentbusiness.Areviewoftheinstru-

mentsbythetwodifferentsetsofresearchers

showedsomeoverlappingquestions(placedin

differentdimensionalheading).Assuch,ques-

tions that were eithersimilar in the two dif-

ferent instrumentsorquestionsthathad low

CronbachAlpha scores were eliminated.As

suggestedbyNunally(1978),reliabilityexceed-

ing0.7arerecommendedforresearch. Hence,

CronbachAlpha scores above 0.7 from the

original studies were selected. Five market

orientationdimensionsitemsthatcollectively

definethescopeofthemarketorientationcon-

struct were selected. Thereafter, some items

were revised in specific relation to practices

withinthelocalpropertydevelopmentbusiness

(pleaserefertothe * items intheAppendix).

Toensureaparsimoniousscale,academic in-

putswerealsosought.Therobustness ofthe

adapted scale for the property development

industryisfurtherreinforcedbysubjectingit

to reliability and validity tests in the follow-

ingsections.Thefinalcountforthemeasure-

mentitemswas29.

4.3.Operationalisationofvariables

Themarketorientationscalevariablesare

operationalisedbya Likertscaleofseven in-

steadoftheoriginalscaleoffive.Theanchors

ofthestandardscalearelabelledwith strongly

disagree (1) to strongly agree (7). Such ex-

tension ensured greater sensitivity and com-

parabilitywithotherscales.

This study operationalises business per-

formance using six performance indicators.

Theyaremarketshare,salesgrowth,average

profitsperproject,returnoninvestment(ROI),

numberofprofitablenewpropertiesdeveloped/

servicesprovidedandoverallbusinessperform-

ance. Marketing performance was measured

through five indicators consisting of identify-

ing new opportunities, raising awareness of

firms,clientsatisfaction,clientretentionand

cross-sellingofnewpropertiesdevelopedand

servicesprovidedtoexistingclients.Respond-

entswereaskedtoassesstheirfirmsperform-

anceinrelationtotheirmajordirectcompeti-

tor.Bothmeasures were measured according

toa 7-point Likertscale ranging from 3 be-

ing much lower performance, 0 being no dif-

ference in performance and +3 being much

superiorperformance.

4.4.Datacollection

Nunally (1978) opined that subjects used

should be those whom the instrument devel-


7/17

$ J. Y. W. Tay and L. Tay

opedareintendedfor.Thelevelofanalysisin

thisstudyistheoverallorganisationsdegree

ofmarketorientationratherthanofaspecific

department within the organisation. Hence-

forth, the modified questionnaires were di-

rectedtoCEOoftheorganisations.Theyare

the thought leadersoftheorganisation,and,

oftenalsoactasthearchitectoftheorganisa-

tionsbusinessphilosophy.Anotherreasonfor

addressing the questionnaires to the CEO is

thatwheretheCEOisnotavailabletorespond,

he/she would be in the best position to iden-

tifyasubordinatewhoiswellacquaintedwith

theorganisationsbusinessoperationsandcul-

ture.

The data for testing the hypotheses were

collectedviamailsurveyinlate2003.Thetar-

get population was the property developer

firmsinSingaporethatdevelopedretail,com-

mercial, industrial andresidential properties

inSingaporeaswellasdeveloperswhodevelop

and operate hospitality businesses. This tar-

get range varied in size, annual gross turno-

verandgeographiclocationastheobjectiveof

this study was to develop a scale suitable to

beusedfordeveloperfirmsthathadactiverealestatebusinessdealinginSingapore.Inorder

to ensure the firms surveyed have business

operations in Singapore, the firms were se-

lectedfromalistofdevelopersregisteredun-

dertheRealEstateDevelopersAssociationof

Singapore(REDAS)andwhichhadofficeslo-

catedinSingapore.Thisresultedintheiden-

tificationof145firms.

A questionnaire and a personal letter to-

gether with a pre-paid return envelope were

mailedtothedeveloperfirmsaddressedtothe

CEO either by name or title.A three-wavemailingprocedurewasadoptedtoimprovethe

response rate. The questionnaires were first

sentoutwithanaccompanyingcoverletterand

a self addressed reply-paid envelope.A re-

minderpostcardwassentaweeklateranda

thirdmailingwasmadetofirmsthathadnot

replied three weeks after the first mailing.

Throughthisprocedure,41 completeandus-

able surveys werereceived. Thiscorresponds

toaneffectiveresponserateof28.3%.12ques-

tionnaireswerereturnedduetooneofthefol-

lowing reasons: the company has moved, the

companynolongerexistsorthecompanyhas

been inactive in real estate businesses in re-

centyears.

4.5.Reliabilityanalysis

Cronbachsalphaisacoefficientofreliabil-

ity mathematically defined as the proportion

ofthevariability intheresponsestothesur-

veythatistheresultofdifferencesinthere-

spondent. Cronbachs alpha estimate of reli-

abilityiscomputedbasedonthereliabilityof

atestrelativetoothertestswithsamenumber

ofitems,andmeasuringthesameconstructof

interest.Nunally(1978)recommendsacoeffi-

cient of 0.7 as the basis for determining the

reliabilityofeachdimension.Inthisstudy,a

stricterscalepurifiercoefficientof0.75isem-

ployed to develop a more precise instrument

(Churchill,1979).Nunally (1978)alsorecom-

mendedanitem-to-totalcorrelationofatleast

0.45asthethresholdfordeletionofitemfrom

thescale.

Table 3 shows that the reliability coeffi-

cientswerefairlyuniform,rangingfrom0.7991

to0.9028forthefivedimensionswhile0.9278

to0.9656forthebusinessandmarketingper-

formancemeasureswithalltheitemsexceed-

ing the threshold alpha value of 0.75. Five

items out of the original 29 were deleted to

improve the CronbachAlpha and therefore

improving the reliability of the instrument.

Thisleaves24itemsinthescale.

4.6.Va

lidi

tyassessmen

t

Validity refers to the degree in which a

study accurately reflects the specific concept

thattheresearcherisattemptingtomeasure.

While reliability is concerned with the accu-

racy of the actual measuring instrument or

procedure, validity is concerned with the

studys success at measuring what the re-

searchersintendedtomeasure.


8/17

%Market Orientation and the Property Development Business in Singapore

Table3.Summarised reliability analysis results

Dimension Items Correcteditem-to-total

correlation

Cronbachalpha if items

is deleted

Cronbachalpha of

dimension

Deleteditems

Cronbach alpha ofdimension of

deletion of items

Cust_01 0.8148 0.8783

Cust_02 0.6681 0.8963

Cust_03 0.8448 0.8766

Cust_04 0.7476 0.8852

Cust_05 0.6394 0.8959

Cust_06 0.4306 0.9126

Cust_07 0.7410 0.8869

Customer

orientation

Cust_08 0.7395 0.8879

0.9028 Cust_06 0.9126

Comp_01 0.4424 0.8151

Comp_02 0.5772 0.7778Comp_03 0.7596 0.7241

Comp_04 0.7244 0.7287

Competitor

orientation

Comp_05 0.4980 0.8007

0.8092 Comp_01 0.8151

Intf_01 0.4717 0.7859

Intf_02 0.5552 0.7740

Intf_03 0.3327 0.8139

Intf_04 0.5921 0.7595

Intf_05 0.6684 0.7408

Interfunctional

co-ordination

Intf_06 0.7542 0.7142

0.7991 Intf_03 0.8139

Prof_01 0.6485 0.8046

Prof_02 0.7562 0.6962

Profit

orientationProf_03 0.6605 0.7869

0.8281 - 0.8281

Resp_01 0.5284 0.8135

Resp_02 0.4319 0.8245

Resp_03 0.3037 0.8577

Resp_04 0.6552 0.7900

Resp_05 0.6475 0.7914

Resp_06 0.7463 0.7774

Responsiveness

Resp_07 0.8125 0.7603

0.8274 Resp_02

Resp_03

0.8653

Bzper_01 0.8008 0.9691

Bzper_02 0.9440 0.9533

Bzper_03 0.8543 0.9630Bzper_04 0.8929 0.9586

Bzper_05 0.9226 0.9554

Business perfor-

mance

Bzper_06 0.9339 0.9542

0.9656 - 0.9656

Mktper_01 0.8375 0.9060

Mktper_02 0.8105 0.9130

Mktper_03 0.7079 0.9299

Mktper_04 0.8808 0.8971

Marketing

performance

Mktper_05 0.8347 0.9078

0.9278 - 0.9278


9/17

& J. Y. W. Tay and L. Tay

Todemonstratevalidity,factoranalysiswas

performedinthisstudytodetermineandcon-

firmwhetherthe24itemscollapseandfitinto

the 5 dimensions. The minimum factor load-

ingof0.45asrecommendedbyChurchilletal.

(1979),wasusedasthebasisforcollatingthe

items that pertain to their respective dimen-

sion.Onlyitemswiththehighestloadingsare

harmonised into the respective dimension.

Also, any items that did not show a discrete

distinctiontofitintoanyofthe5dimensions

wereeliminated.Theresultsarepresentedin

Table4below.

Fromtheresults,itisobservedthat6fac-

torswerederivedthroughfactoranalysis.The

itemswerefitintotheirrespectivedimensions

Table4.SummarisedValidityAnalysisResults

Factors

1 2 3 4 5 6

Cust_01 0.866

Cust_02 0.776

Cust_03 0.917

Cust_04 0.840

Cust_05 0.665Cust_07 0.745

Cust_08 0.757

Comp_02 0.524

Comp_03 0.860

Comp_04 0.874

Comp_05 0.569

Intf_01 0.795

Intf_02 0.568

Intf_04 0.471 0.672

Intf_05 0.707

Intf_06 0.540 0.495

Prof_01 0.814Prof_02 0.893

Prof_03 0.764

Resp_01 0.577

Resp_04 0.815

Resp_05 0.806

Resp_06 0.857

Resp_07 0.858

Itemsinboldaresuccessfullyloadedwhileitemsinitalicaredeleted.

basedonthehighest loadingscore. However,

some items were reallocated to a more suit-

able dimension. For instance, Intf_02 and

Intf_04weretransferredtothecompetitorori-

entation dimension. The transfer of Intf_02

wasjustifiablesincepreparationofagoodbusi-

nessplanstrategy(Intf_02)takesintoaccount

competitorsactivitiesandstrategies. Intf_04

was loaded both onto its original dimension

andcompetitororientation.Anexaminationof

Intf_04showsthat there is in factarelation

between these two dimensions. However the

question was based on whether one depart-

mentisquickenoughtoalertanotherdepart-

ment when there is news of competitors, so

the itemwas lefttoremainwithin the inter-


10/17

'Market Orientation and the Property Development Business in Singapore

functional coordination dimension. Moreover,

basedonthehighestloadingfactor,thefactor

loadingscorewashigherinitsoriginaldimen-

sion(0.672)thanincompetitororientationdi-

mension(0.471).

SimilarlyResp_01andComp_02wereloaded

onto the inter-functional coordination dimen-

sion. However, Comp_02, which measures the

frequencyoftheemployeesthatcollectcompeti-

torsmarketingdatainordertohelpdirectthe

firms marketing plan was not related to the

inter-functional dimension, hence, it was

dropped.SimilarlyResp_01wasdroppedsince

thequestionwasbasedontheresponsiveness

ofthefirmtocompetitorspricechangesaswell

aschangesincustomersneeds.

Interestingly,anewdimensionevolvedthat

containedbothIntf_01andIntf_06.Thismeant

thatthereweretwoseparatedimensionsmeas-

uring inter-functional coordination; one that

involvesIntf_04,Intf_05andIntf_06whilethe

other includes Intf_01 and Intf_06.After re-

viewingeachofthesequestions,itwasfound

that there was a slight difference in the for-

mulation as Intf_04, Intf_05 and Intf_06 in-

volveddiscussingandalertingdepartmentsonnewinformationgathered.Inaddition,Intf_06

when loaded with Intf_04 and Intf_05 was

higher(0.540)thanwhenloadedwithIntf_01

(0.495). Hence,itwasdroppedfromthedimen-

sionthatinvolvedIntf_01.

AnexaminationofIntf_01wasdoneandit

wasfoundthatIntf_01wasbasedonsharing

ofmarketinginformationorganisational-wide.

Marketinginformation,inthecaseofreales-

tate development are highly sensitive and a

sourceofadvantageovercompetitors.Forex-

ample, sale prices and marketing strategy of

new developments are not revealed to the

sales-force till the launch date itself. Conse-

quently,marketinginformationmaynotbeso

freely shared with the other department to

avoidanyleakageofpriceinformationtocom-

petitors.Further,Intf_01isareversed-phrased

questionanda limitationtosuchphrasing is

thatrespondentstendtoemphasisetheiran-

swersmorestrongly.Assuch,recodedanswers

wouldappeartobeacompoundedproblemre-

sulting in differences from what the original

scale was measuring. For these reasons, the

dimensioncontainingonlyIntf_01waselimi-

natedas itwasambiguoustoaccepta factor

consistingofonly1item.

From the 24 items, three items, namely

Comp_02, Intf_01 and Resp_01 were deleted

as it did not fall into any of the dimensions.

Table5isareorganisationofthe21itemsal-

locatedinto5dimensions.

5.RESULTS

5.1.Profile of respondents

The responses received showed a fair dis-

tribution in terms of firm size with 29.3% of

thedevelopersemployingbetween101and200

employeesand 34.2% employinglessthen100

employees. In addition, majority of the re-

spondentfirmsareestablishedintheproperty

developmentbusinesswith63.4% operatingfor

more than 10 years in the industry. The re-

spondentswerealsomostlyseniorexecutives

inthefirmsandhenceareabletoprovidestra-

tegicresponsessoughtinthequestionnaire.

Table 5.Factorreorganisation

Dimension Items

Customer orientation Cust_01, Cust_02, Cust_03, Cust_04, Cust_05, Cust_07, Cust_08

Competitor orientation Comp_03, Comp_04, Comp_05, Intf_02

Inter-functional coordination Intf_04, Intf_05, Intf_06

Profit orientation Prof_01, Prof_02, Prof_03

Responsiveness Resp_04, Resp_05, Resp_06, Resp_07,


11/17


Table6.Regression results

5.2.Hypothesistesting

To test the five hypotheses, simple linearregression was performed to determine if there

exists a linear relationship between the de-

pendent variable (business and marketing per-

formance) and the independent variable (cus-

tomer orientation, competitor orientation, in-

ter-functional coordination, profit orientation

and profit orientation). Table 6 presents a sum-

mary from the linear regression test.

The results regressed support both hypoth-

eses 4 and 5. That is, responsiveness of a de-

veloper firm is positively and linearly related

to business (b = 0.253, R2 = 0.498) and mar-keting (b = 0.380, R2 = 0.509) performance.

Similarly profit orientation of a developer firm

is positively and linearly related to business

(b = 0.199, R2 = 0.512) and marketing (b =

0.232, R2 = 0.460) performance at a 0.05 level

of significance.

For H1, H2 and H3, the null hypothesis is

not rejected. However, it does not conclude that

b1 = 0. Instead additional data might indicate

that b1 differs from zero, or a more complex

relationship may exist between X and Y, thus

requiring a fitting of a model other than a

straight line model. Therefore it is interpreted

that customer orientation, competitive orien-

Independent variables Dependent variables R2 Beta Significance

Overall business performance 0.019 0.170 0.386Customer orientation

Overall marketing performance 0.075 0.280 0.082

Overall business performance 0.046 -0.253 0.176Competitor orientation


Overall business performance 0.031 0.178 0.267Inter-functional

coordination Overall marketing performance 0.078 0.234 0.077

Overall business performance 0.199 0.512 0.003Profit orientation


Overall business performance 0.253 0.498 0.001Responsiveness


tation and Interfunctional coordination of a

developer firm is not linearly related to busi-

ness and marketing performance.

5.3.Correlationanalysis

To produce further insights from the data

collected, a correlation analysis using the

Pearsons test is conducted between the indi-

vidual dimensions of market orientation and

the two performance indicators, i.e., business

and marketing performance. As suggested in

Alvin and Ronald (2000), associative relation-

ship is best tested using correlation analysis.

Table 7 presents the results.

Since Pearson correlation is in fact a meas-

ure of strength of linear relationship between

two quantitative variables, the resulting cor-

relation results should be consistent with the

usage of simple linear regression. Indeed, the

responsiveness dimension showed statistically

significant results at the 0.01 significance level

for all 11 performance indicators. Profit orien-

tation dimension also showed significant re-

sults at the 0.01 significance level except two

indicators, identifying new business opportu-

nities and cross-selling of new properties de-

veloped/services provided to existing clients

which was significant at the 0.05 level.


12/17

Market Orientation and the Property Development Business in Singapore

Table 7.Pearson correlation : market orientation dimension and performance indicators

Indicators / Dimension Customerorientation

Competitororientation

Inter-functionalcoordination

Profitorientation

Respon-siveness

Market share 0.255 -0.337* 0.060 0.254 0.515**

Sales growth 0.143 -0.170 0.177 0.441** 0.535**

Average profits /project 0.246 -0.004 0.255 0.471** 0.485**

ROI 0.099 -0.092 0.107 0.412** 0.446**

Profitable

developments

0.018 -0.249 0.152 0.490** 0.413**

Businessperformance

Overall business

performance

0.032 -0.256 0.150 0.469** 0.417**

Identify new

opportunities

0.400** 0.260 0.362* 0.366* 0.477**

Raising awareness offirm

0.463** 0.221 0.326* 0.448** 0.546**

Client satisfaction 0.501** 0.374* 0.517** 0.444** 0.482**

Client retention 0.242 0.095 0.180 0.198 0.605**

Marketing

performance

Cross-selling 0.258 0.103 0.261 0.315* 0.592**

** Correlation significant at 0.01 level (2-tailed)

* Correlation significant at 0.05 level (2-tailed)

There exists significant relationship be-

tween customer orientation with three market-

ing performance indicators, identify new op-

portunities, raising awareness of firm and cli-ent satisfaction at the 0.01 significance level.

This suggests that developers who are more

customer-oriented are able to create superior

customer satisfaction, the good word spread by

the customers creates greater public awareness

of the firm and helps develop new business

opportunities for the firm. As such, there might

be better chances of sales growth in the long

term.

Similarly, inter-functional co-ordination is

positively associated with three marketing per-

formance indicators. Specifically, identify newopportunities and raising awareness of firm

were significant at the 0.05 level and client

satisfaction was significant at the 0.01 level.

This dimension shows that if a developer de-

sires to improve its marketing performance, it

should be inter-functionally coordinated; the

firm requires inter-departmental dissemination

of any information with regards to clients feed-

back, competitor activities, etc. to be very effi-

cient. The engagement of this dimension helps

the firm to acquire knowledge required by each

individual department efficiently. Effective

communication and well-coordinated businessplan strategies thus helps the firm to satisfy

customers better. An efficient team thus en-

hance the developer s chances of identifying

new opportunities timely as well as create

greater public awareness of the firm.

There was also significant correlation be-

tween two performance indicators, client sat-

isfaction and market share with the competi-

tor orientation dimension. Both the correla-

tions were rather weak at the 0.05 level sig-

nificant levels. Such correlation implies that

the more competitor-oriented the developer, themore it is able to satisfy their clients since they

are constantly reviewing the competitor s ac-

tion and reacting to their moves. In any case

if the developer decides to react to competi-

tors reduction in price, clients will be more

satisfied since they have more to gain in such

circumstances. However, the more competitor-

oriented the developer, the lower its market

share since over-concentrating by always re-


13/17


acting to competitors actions will make the

developer lose its focus of the unique flavour

thatitsdevelopment/servicecanprovidefor.

Eventhoughthealternativehypothesisof

hypothesis 1, 2 and 3 were rejected, the null

hypothesesarealsonotaccepted.Thereason

isthatthereexistsalinearcorrelationbetween

the customer orientation, competitor orienta-

tionandinter-functionalcoordinationwithfour

of the performance indicators. It thus shows

that, the greater the level of customer orien-

tationofadeveloperfirm,thebetteritsmar-

ketingperformanceintermsofidentifyingnew

opportunities, raising awareness of firm and

client satisfaction, albeit a weak correlation.

Similarly, the greaterthe inter-functional co-

ordinationofadeveloper,themoresuperioris

itsmarketingperformanceintermsofidenti-

fyingnewopportunities,raisingawarenessof

firmandclientsatisfaction.Competitororien-

tationshowedstatisticalsignificancewithcli-

entsatisfactioninapositiveassociationwhile

a negative association was registered with

marketshare.

6.CONCLUSIONS

Inessence,thefindingsindicateastronger

relationship between market orientation and

marketing performance rather than business

performance for Singapore property develop-

mentfirms.Thelessthanstrongrelationship

betweenmarketorientationandbusinessper-

formance suggests that there may be moder-

atingfactorsintherelationshipbetweenmar-

ketorientationandbusinessperformance.An

empiricalstudybyTay(2002)onthebusiness

performanceofsurveyingfirmsfoundmarket-ingperformancetohaveastrongandsignifi-

cantdirecteffectonbusinessperformance.In

turn,marketingperformanceislargelydepend-

entonthefirmsdegreeofmarketorientation.

Thisfindingisalsosupportedinthisstudy.

The overall results supported two of the

hypothesis, H4and H5,i.e.thegreaterthelevel

of profit orientation of a developer firm, the

higher the business and marketing perform-

ance(H4)and,thegreaterthelevelofrespon-

siveness of a developer firm, the higher the

businessandmarketingperformance(H5).The

findingsareintuitivebecausethegreaterthe

profit orientation implies a greater emphasis

onthedevelopmentofagoodmanagementin-

formationsystem.Suchanemphasistherefore

has a direct relationship with good perform-

ancesinceknowledgeisthecriticalingredient

ofeffectivebusinessstrategising.Thus,hypoth-

esis4,i.e.,thehigherthelevelofprofitorien-

tationofadeveloperfirm,thebetteritsbusi-

ness and marketing performance was sup-

ported.

The fifthhypothesis, i.e.themorerespon-

sivethedeveloperfirmthebetteritsbusiness

and marketing performance was also sup-

ported.Activeresponsetocustomerandcom-

petitor information through product design,

production, distribution and promotion pro-

videsanedgeoverthecompetitorsandthere-

forecanleadtoimprovementinsalesandprof-

its. However,simplygeneratingcustomerand

competitorinformationwithoutanalysingand

responding to it will not help to improve the

business/marketingperformance.Moreover,asstatedintheliteraturereview,responsiveness

involves responding to all the other four di-

mensions. Hence, the engagement of respon-

siveness implicitly proves its correlation of

improved business and marketing perform-

ance.

Althoughtherewasnooverallpositivere-

lationshipfoundbetweencustomerorientation,

competitororientationandinter-functionalco-

ordinationandperformance(bothbusinessand

marketing),thereweremoderatelystrongre-

lationshipsbetweenthesethreemarketorien-tationdimensionsandindividualperformance

indicatorssuchasidentifyingnewopportuni-

ties,clientsatisfactionandraisingfirmaware-

ness.

6.1.Implications for managers

The central message arising from the re-

sultsofthisstudyformanagersistheimpor-


14/17

!Market Orientation and the Property Development Business in Singapore

tanceofmarketorientationforimprovingper-

formance.Specifically,theresultsillustratethe

relevanceofthemarketorientationconceptfor

the property development business. It rein-

forcesthefindingsofJaworskiandKohli(1993)

by showing that to improve marketing and

business performance, market orientation

needs to be implemented in all its three di-

mensions,i.e.,intelligencegeneration,intelli-

gence dissemination and responsiveness.

Firstly,theresultsshowedthatthemost im-

portant intelligence required pertainsto cus-

tomer. Secondly, the intelligence needs to be

disseminated effectively through good inter-

functionalco-ordination.Finally,thefirmneeds

to act on the information through targeted

strategies and this is facilitated by having a

goodmanagementinformationsystem.

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#Market Orientation and the Property Development Business in Singapore

SANTRAUKA

RINKOS ORIENTACIJA IR NEKILNOJAMOJO TURTO PLTROS VERSLAS SINGAPREJasmine Y. W. TAY, Linda TAY

Nekilnojamojo turto pltros verslas danai laikomas itin rizikingu ir pelningu. Todl btina gyti konkurencin

pranaum. Dalykinje literatroje raoma, kad rinkos orientacija tai subalansuoto konkurencinio pranaumo

forma versle. Straipsnyje mginama ry patikrinti, nagrinjant btent itin riziking versl, tok kaip nekilnojamojo

turto pltra. Sukurta rinkos orientacijos skal, kuria remiantis matuojamas rinkos orientacijos laipsnis nekilnojamojo

turto pltros firmose. Rezultatai rodo, kad yra nemaas teigiamas ryys tarp dviej konkrei rinkos orientacijos

aspekt, t. y. orientacijos peln ir reagavimo verslo rezultatus bei rinkodaros rezultatus. Be to, empirins

ivados rodo, kad rinkos orientacijos ryys su rinkodaros rezultatais yra stipresnis nei su verslo rezultatais.


17/17

$ J. Y. W. Tay and L. Tay

APPENDIX

Market orientation scale

Dimension label Question

Cust_01 We encourage customer comments and complaints because they help do a better job.

Cust_02 After-sales service is not an important part of our business strategy.

Cust_03 We have a strong commitment to our customers.

Cust_04 We are always looking at ways to create customer value in the properties that we

develop Residential /Commercial /Industrial) and the services that we provide (e.g.

Hotel services and property management services). *

Cust_05 We do not measure customer satisfaction on a regular basis.

Cust_06 Our firm would do a lot better if the sales force worked a bit harder.

Cust_07 In our company, marketings most important job is to identify and help meet needs of

our customers.

Customer

orientation

Cust_08 We define quality as the extent to which our customers are satisfied with the properties

that we develop and the services we provide.

Comp_01 We regularly monitor our competitors marketing efforts.

Comp_02 We infrequently collect marketing data on our competitors to help direct our Marketing

plans.

Comp_03 Our salespeople are instructed to monitor and report on competitor activity.

Comp_04 Our top managers often discuss competitors actions.

Competitor

orientation

Comp_05 We consider opportunities based on competitive advantage.

Intf_01 Marketing information is not shared with all departments.

Intf_02 Only some departments are involved in preparing business plans strategies.

Intf_03 We do a good job integrating the activities of all departments.

Intf_04 When one department discovers something important about competitors, it is slow to

alert other departments.

Intf_05 We regularly have inter-departmental meetings to discuss market trends anddevelopments on a formal basis. *

Inter-

functional

co-ordination

Intf_06 Our marketing people regularly discuss customer needs with other departments.

Prof_01 Our management information system can quickly determine the profitability of our

different target market. *

Prof_02 Our management information system can quickly determine the profitability of

properties that we develop and services that we provide. *

Profit

orientation

Prof_03 Our management information system can quickly determine the profitability of each

property that we develop and each service that we provide. *

Resp_01 It takes us forever to decide how to respond to competitors price changes. Somewhat,

we tend to ignore changes to our customers property/service needs. *

Resp_02 We periodically check our portfolio of investment properties and services we provide to

assess whether they are in line with customer needs. *Resp_03 Our business activities are driven more by cost savings in construction than by marketresearch. *

Resp_04 The properties/services we sell are determined more by internal politics than real market

needs. *

Resp_05 If a competitor launches an intensive campaign targeted at our customers well react

immediately.

Resp_06 The activities of our departments are well-co-ordinated.

Responsive-

ness

Resp_07 When we find that clients would like us to modify our service, facility/quality of our

investment properties or designs for our new properties that is to be developed soon, the

departments involved make concerted efforts to do so. *

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