Market Orientation vs Product Orientation: Who is Winning, Tesla or Apple?

Market Orientation vs Product Orientation: Why Tesla's Losing and Apple Usually Wins

If you jump onto one of those time machines that take you back to the past, in this case, back to 2022, you would land in a world where Tesla was absolutely the master in the electric vehicle market with a 75% market share in the US EV market. Three years later? That's dropped to 41%. Meanwhile, Apple - who famously missed the boat on large-screen phones (remember when they insisted nobody wanted a "phablet"?) - still manages to hold around 17-18% of the global smartphone market, neck and neck with Samsung.

So what's going on here? Why is one tech giant slipping whilst another's holding steady despite past mistakes? The answer lies in understanding two completely different approaches to business: market orientation versus product orientation.

Making What You Want vs Making What They Want

In the world of IB Business Management, companies can take two radically different approaches to marketing, and honestly, you should all watch companies play out as it is often better than most Netflix series (and yes, Netflix has over 301 million subscribers now, making them the streaming king- but we'll get to that later).

Product Orientation: "We Know Best"

Product orientation is basically when a business goes, "Right, we're brilliant at making this, and we reckon people will love it." It's an inward-looking approach that focuses on what the company knows how to make or has been making for ages, rather than obsessing over what customers are actually asking for.

Remember when Apple refused to release a big phone? Everyone, even your grandma, was buying Samsung phablets, but Apple was like, "Nah, we're good with our smaller screens, thanks." That's product orientation in action - they focused on what they wanted to create rather than what the market was screaming for. And yes, in case you are wondering what happened, Samsung totally dominated that market whilst Apple gave it a miss.

Product orientation isn't always a bad shout. Companies like Apple, Google, Lego, Nike, and Rolex have built empires on this approach. Why? Because when you've got a strong brand reputation and loyal customers who trust you to innovate, you can afford to say, "Just wait - you'll love what we've cooked up."

Product-orientated businesses typically:

• Focus on creativity and innovation (think Tesla with their Cybertruck or Apple with AirPods)

• Develop a unique selling proposition that competitors can't easily copy

• Work best in markets where change happens slowly (like luxury watches - a Rolex today looks pretty similar to one from decades ago)

• Can lose their market if they ignore what customers actually want (Apple learned this the hard way with phablets)

Market Orientation: "Tell Us What You Want"

Market orientation is an outward-looking approach where businesses are constantly asking, "What do our customers want?" These companies focus on making products they can sell, not just products they can make well.

A company that's proper market-orientated - they're constantly running surveys, analysing social media trends, hosting focus groups, basically doing everything possible to figure out what you want before you even know you want it. Then they make exactly that.

IB Business Management Real-life Example: Take Netflix, for instance. Back in 2013, they launched House of Cards because their data showed subscribers loved political dramas. They didn't just guess - they knew what would work. Fast forward to 2025, and they've got 301.6 million subscribers globally, holding a 21% market share in the competitive US streaming market. That's market orientation paying off big numbers.

Market-orientated businesses typically:

• Conduct loads of market research to understand customer needs

• Stay flexible and adapt quickly to changing demands

• Use customer feedback to improve products constantly

• Have a higher likelihood of success because they're aligned with what people actually want

• Keep customers informed through targeted advertising and promotions

So Which One Of The Two Is Better?

Whether you go market or product orientation depends on a lot of factors:

Nature of the product: If you're making mass-produced stuff like supermarket goods, market orientation makes sense - just give people what they want. But if you're creating cutting-edge tech or luxury items? Product orientation might be your best ally.

Company culture: Some companies are just built different. Apple and 3M are pioneering types who trust their vision. Meanwhile, retailers like Walmart and Zara are all about meeting customer needs as quickly as possible.

Number of competitors: In a market with plenty of competition, you'd better be listening to what customers want. But if you're one of only a few players? You can afford to do your own thing a bit more.

Research and development budget: Got millions to spend on R&D like pharmaceutical companies? Product orientation could work brilliantly. Running on a tight budget? Better stick with market orientation and make what you know will sell.

Market Share: Who Is More Popular In the Market?

Right, now let's talk about market share - basically, how much of the pie you've got compared to everyone else in your industry.

Market share is calculated like this:

Market share (%) = (Your sales revenue / Total industry sales revenue) × 100

Simple example: Let's say the energy drink market in the UK is worth £500 million per year, and BuzzUp Energy has captured 8% of that market. Quick maths: 8% of £500 million = £40 million in annual sales revenue. Sorted.

But why is market share relevant? Well, market share tells you almost everything you need to know about how competitive an industry is. If the top three supermarket chains control 75% of the market, you know it's not exactly a free-for-all - those big players dominate.

IB Business Management Real-life Examples:

Let's look at some current examples:

Tesla's Tumble: In 2022, Tesla had a ridiculous 75% share of the US electric vehicle market. By Q3 2025? That's crashed down to just 41%. What happened? Competition happened. GM, Ford, Hyundai - everyone piled into the EV market. Globally, Tesla's down to about 10.3% market share, with Chinese manufacturer BYD now leading the pack at 19.9%. That's a massive shift in just three years.

Apple's Smartphone Struggle: Apple's currently sitting at about 17.7% of the global smartphone market (Q2 2024), with Samsung at 18.3%. It's proper close. But, Chinese brands like Xiaomi, Oppo, Vivo, and Realme together control over 36% of the global market. Apple might dominate the US (where they've got about 54% of smartphone sales), but globally? They're fighting hard to maintain their position.

Netflix's Streaming Dominance: Despite every major company launching their own streaming service, Netflix still holds strong with over 301.6 million subscribers worldwide. In the US, they're tied with Amazon Prime at 21% market share each. Not bad for a company that started by posting DVDs through letterboxes.

Market Leadership: Being Top Dog (HL only)

When you've got the largest market share in your industry, congratulations - you're a market leader. And honestly, it's brilliant being number one.

Why Market Leadership is Relevant

Being the market leader comes with some serious perks:

• Better brand loyalty: People trust the big names (there's a reason "just Google it" is a thing)

• Economies of scale: Making millions of units is way cheaper per unit than making thousands

• Less price sensitivity: Market leaders can charge more because customers believe they're getting the best

• Better access to customer data: More customers = more insights into what works

• Attracts better talent: Top employees want to work for top companies

• Retailers love you: Shops are more likely to stock products from market leaders

IB Business Management Real-life Example: Apple's a perfect example. Despite not being the global market leader in smartphones by volume, they absolutely dominate in terms of revenue and profit. Why? Because people are willing to pay £1,000+ for the latest iPhone. That's the power of market leadership in the premium segment.

Market Leadership It's Not All Sunshine and Rainbows

Being number one doesn't make you invincible. External factors can knock you off your perch faster than you can say "market disruption."

Look at what's happening in the EV market. Tesla, who basically created the mainstream electric car market, is watching their market share get absolutely munched by competitors. BYD's now shipping 2.6 million EVs between January and August 2025, whilst Tesla's deliveries in the same period have dropped 11% annually to 985,000.

Changes in the external business environment (IB Business Management Toolkit STEEPLE factors - political, economic, social, technological, legal, environmental) can completely reshape markets. A new government regulation? Game-changer. Economic recession? Total shake-up. Technological breakthrough? Industry revolution.

The good news? Larger firms generally have the best chance of surviving these crises because they've got the resources to adapt. But they're not guaranteed to survive - just ask Nokia or Blockbuster.

Market Growth: Getting Bigger and Better

Finally, let's introduce the concept of market growth - basically, how much an industry or company is expanding over time.

New businesses usually just aim to break even and survive (getting through the first year is tough enough). But established businesses? They're looking for greater market share and market growth.

Market growth can be measured by:

• Size of your customer base

• Total sales revenue

• Market share percentage

How to Actually Grow Your Market

Companies can achieve market growth through various strategies:

• Mergers and acquisitions (M&As): Buy your competitors (or partner with them)

• Takeovers: Hostile or friendly, just get bigger

• Joint ventures: Team up with other companies

• Strategic alliances: Work together without fully merging

• Franchising: Let others sell under your brand

Or you can use the Ansoff matrix strategies:

• Market penetration: Sell more of your existing products to existing customers

• Market development: Take your products to new markets or regions

• Product development: Create new products for your existing customers

• Diversification: New products for new markets (riskiest but potentially most rewarding)

Markets That Are Booming Right Now

Want to know where the growth is? Check these out:

Electric Vehicles: Despite Tesla's shrinking market share, the overall EV market is exploding. In the US, EVs hit 8.1% of all vehicle sales in 2024, up from 5.8% in 2022. That's real market growth. Globally, EV sales are projected to keep climbing as governments push for net-zero emissions.

Streaming Services: The streaming market continues to grow despite being crowded. Netflix alone added 41 million subscribers in 2024 - that's a 15.9% year-over-year increase. The global streaming market is now worth hundreds of billions.

Other High-Growth Markets:

• Cloud computing services

• Cybersecurity (with everyone online, this is massive)

• Online education platforms

• Virtual reality and AR tech

The key is doing proper market research to understand where the opportunities are. Markets change constantly - what's hot today might be dead tomorrow. Just ask anyone who invested in cryptocurrency at the peak (oof).

IB Business Management Exam Gold

So here's what you need to remember for your IB exams:

1. Product orientation works when you've got strong brand reputation, innovative capabilities, and customers who trust your vision. But ignore market needs at your peril.

2. Market orientation is about staying flexible and giving customers what they want. It's generally safer but might limit innovation.

3. Market share tells you how you stack up against competitors. Calculate it, track it, and understand what it means for your industry's competitiveness.

4. Market leadership brings massive advantages - economies of scale, brand loyalty, better margins. But it doesn't guarantee survival. Stay sharp or get overtaken (just ask Tesla).

5. Market growth is the ultimate goal for most established businesses. Whether through M&As, innovation, or geographic expansion, growth strategies need to align with your orientation and capabilities.

The business world is really dynamic. Apple can miss out on phablets but still stay relevant. Tesla can dominate and then lose ground to Chinese competitors in just three years. Netflix can go from posting DVDs to having 301 million streaming subscribers.

The companies that survive and thrive? They're the ones that either stick rigidly to their product vision and make it work (Apple) or stay ridiculously flexible and market-focused (Netflix). There's no single "right" answer - just the answer that's right for your business, your market, and your customers.

Stay well,