An investigation on the Relationship between New Service Development, Market Orientation and Marketing Performance

Abstract

New service development has been recognized as sources of advantage for service organizations.  Market orientation, also, has long been considered as one of the most productive strategic options in satisfying market needs more efficiently. It has been recognized as the best option to attain and preserve a competitive advantage in the market. Unfortunately, the impact of market orientation on firm performance was influenced by certain environmental and organizational contexts, as well as, mediating variables. While the empirical evidence is not unequivocal, the generalizability of its impact required further research. The purpose of this study is to explore the relationship between new service development, market orientation and marketing performance. More specifically, main objective of this study is to investigate the mediating effect of new service development on the relationship between market orientation and marketing performance. The proposed model was tested on data were obtain through survey conducted on managers of Jordanian hotels. Structural equation modeling using EQS 6.2 for Windows with maximum likelihood estimation was conducted to verify the reliability and validity of the multi-item scales and to test the hypothesized relationships. The measurement properties of the measures were examined using a sequential process of exploratory factor analysis and confirmatory factor analysis. However, all measures were found to be exhibit acceptable reliability and validity. As regards the goodness of fit of the causal model, the results showed a reasonable fit between the model and the data. However, the findings confirm the effect of market orientation on new service development and Marketing performance. Result also provides evidence that new service development had a positive and significant impact on marketing performance. In addition, the indirect effect of market orientation on marketing performance through new service development as mediator was also verified. However, these results indicate the dual role of market orientation as both direct contributor to marketing performance and as indirect contributor through new service development. The study shed light on the usefulness of new services development that will help hotel become more market oriented and achieve superior performance outcomes. In sum the study has made a useful contribution to the hotel industry in emerging markets.

Keywords: New Service Development; Market Orientation; Marketing Performance; Structural equation modeling.