Australasian Marketing Journal xxx (2014) xxx–xxx

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Australasian Marketing Journal

journal homepage: www.elsevier.com/locate/amj

The role of perceived market orientation in the higher education sector

Riza Casidy ⇑
School of Management and Marketing, Deakin University, Australia

a r t i c l e i n f o a b s t r a c t

Article history: The purpose of this paper is to examine the relationship between perceived market orientation, satisfac-
Received 29 June 2013 tion, loyalty, and post-enrolment communication behaviour in the higher education context. 258 ques-
Revised 27 January 2014 tionnaires were completed by undergraduate students of a particular university in Australia. Perceived
Accepted 11 February 2014
market orientation (PMO) was found to be significantly related to satisfaction, loyalty, and post-
Available online xxxx
enrolment communication behavior. Satisfaction was also found to perform significant mediating roles
on the relationship between PMO, loyalty, and post-enrolment communication behaviour. The findings
Keywords:
have generated relevant managerial implications as to how universities can enhance student satisfaction,
Perceived market orientation
Educational services
loyalty, and positive word-of-mouth (WOM) through strong engagement in each dimension of market
Higher education marketing orientation.
Satisfaction Ó 2014 Australian and New Zealand Marketing Academy. Published by Elsevier Ltd. All rights reserved.
Loyalty
WOM

1. Introduction Due to the intensified competition within the sector, higher

The increasingly competitive environment being experienced
by both the commercial and non-profit sector has led to the adop-
tion of market orientation by various organisations, including high-
er education institutions. This has led to an extensive research of
how higher education institutions can effectively implement mar-
ket oriented activities and behaviour to remain competitive in the
international education market (Flavián and Lozano, 2006; Ma and
Todorovic, 2010).
Since its conception, the notion of market orientation has been
largely regarded as an employee-perceived phenomenon as most
studies have utilised employees as study participants (Gounaris
et al., 2003). In contrast, the notion of market orientation from a
customer perspective—so-called perceived market orientation
(PMO)—has received relatively little attention in the marketing lit-
erature on the non-profit sector, despite the fact that PMO has
been shown to have a significant influence on organisational per-
formance through such constructs as customer satisfaction and
customer commitment (Baker et al., 1999; Krepapa et al., 2003).
Indeed, within the higher education sector, only two empirical
studies have examined the impact of PMO on organisational per-
formance (Voon, 2006, 2008). It is thus apparent that there is a sig-
nificant gap in the research literature in this area.
⇑ Tel.: +61 3 9244 3817.
E-mail address: riza.casidy@deakin.edu.au
education institutions are becoming more customer-oriented and
resorted to the implementation of integrated marketing
approaches to attract enrolments (Wasmer et al., 1997; Wright,
2000). Higher education institutions must focus on developing a
strong market orientation as part of their integrated marketing
approaches (Judson et al., 2009). While the notion of market orien-
tation has been linked with organisational performance in com-
mercial context (Jaworski and Kohli, 1993; Narver and Slater,
1990; Ruekert, 1992; Slater and Narver, 2000), little attention has
been devoted to the examination of market orientation within
the higher education sector.
The examination of market orientation from the perspective of
the students is an important topic of research. Previous studies
have examined market orientation from customer perspective
because ‘‘. . . the adoption of [an] employee-defined view of market
orientation is one-sided and myopic in that it ignores the vital role
of customers in terms of value recognition’’ (Webb et al., 2000, p.
102). With this research gap in mind, this study focuses on the
examination of market orientation from student perspective (per-
ceived market orientation). More specifically, this study examines
the impact of perceived brand orientation on satisfaction, loyalty,
and post-enrolment communication behaviour. With perceived
market orientation as the focal construct, this study seeks to
accomplish two objectives:
(i) To examine the relationship between PMO, satisfaction, loy-
alty, and post-enrolment communication behaviour and,
(ii) To examine the mediating effects of satisfaction on loyalty
and post-enrolment communication behaviour.

http://dx.doi.org/10.1016/j.ausmj.2014.02.001
1441-3582/Ó 2014 Australian and New Zealand Marketing Academy. Published by Elsevier Ltd. All rights reserved.

Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
2 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx
2. Literature review and theoretical framework
2.1. Perceived market orientation in the higher education sector
Since the early 1990’s, universities have embraced the notion of
market orientation and customer orientation in designing its pro-
gram to appeal to the international student market (Wilkinson,
1993). The recent economic downturns and government funding
cuts experienced throughout the world have further intensified
the competitions within the education sector. This, coupled with
the increasing student mobility, the growing attractiveness of
vocational alternatives, and the increasing geographical vicinity
between universities have necessitated the need for universities
to adopt a market orientation philosophy (Flavian and Lozano,
2007). Trang Phuc (2011) argued that the adoption of market ori-
entation is a logical response by universities to cope with the
increasingly competitive environment.
In light of the absence of student-perceived market orientation
studies in the literature, Voon (2006) developed and validated a
measure of measurement of university market orientation which
is examined from student perspective. Voon (2006, p. 219) labelled
the construct as service-driven market orientation (SERVMO),
which is defined as ‘‘the set of beliefs, behaviours, and cross-func-
tional processes that seriously focuses on continuous and compre-
hensive understanding, disseminating as well as satisfying the
current and future needs of the target customers for service excel-
lence.’’ SERVMO consists of the following six dimensions:
 Customer orientation: Organisational activities that aim to
acquire information about consumers to facilitate an under-
standing of the target market’s present and future needs
(Narver and Slater, 1990).
 Competitor orientation: Organisational activities that are
designed to provide an understanding of the short-term
strengths and weaknesses, together with the long-term capabil-
ities and strategies, of key competitors (existing and prospec-
tive) and their environments (Slater and Narver, 1994).
 Inter-functional coordination: ‘‘The coordinated utilization of
company resources in creating superior value for target custom-
ers’’ (Narver and Slater, 1990, p. 22).
 Long-term orientation: ‘‘Forward looking and futuristic orienta-
tion of serving the target market’’ (Voon, 2008, p. 220).
 Performance orientation: An emphasis on quality and excellence
to create superior customer value (Narver and Slater, 1990).
 Employee orientation: An employee-centred organisational cli-
mate which provides a warm and supportive environment to
support staff with the goal to deliver superior customer service
(Zhang, 2010).
2.2. Loyalty
Customer loyalty is defined as a ‘deeply held commitment to
rebuy or repatrionise a preferred product or service consistently
in the future, despite situational influences and marketing efforts
having the potential to cause switching behaviour’ (Oliver 1997,
p. 392). In the context of higher education, student loyalty consists
of attitudinal and behavioural components. The attitudinal compo-
nent relates to cognitive, affective, and conative elements whereas
the behavioural component relates to decisions that students make
regarding their options to move to another university for their cur-
rent or future studies (Henning-Thurau et al., 2001). Helgesen and
Nesset (2007) suggested that student loyalty can relate to the per-
iod when a student is enrolled at the university as well as after the
student finishes his or her studies. This is important because the
goal of universities is not only to encourage students to maintain
Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
their current enrolment, but also to encourage them to do further
studies at the same university.
The relationship between market orientation and loyalty has
been examined mainly in business to business relationships. A
market-oriented firm endorses the growth of long-term relation-
ships with its customers (Gereffi and Memedovic, 2003). Past stud-
ies have found that market orientation is positively related to
loyalty through communication, satisfaction, and trust (Maria Josa
et al., 2007). A study by Dean (2007) has also found a positive link
between perceived customer orientation and customer loyalty in
the form of affective commitment.
A recent study by Raciti (2012) has confirmed that the relation-
ship between students and university staff positively affects
student loyalty. Market-oriented universities tend to prefer long-
term relationships with students, perhaps because they under-
stand the needs of the students and the potential of the students
continuing their studies at the same university. Moreover, mar-
ket-oriented universities focus on the creation of greater value
for students and being able to react to students’ demands quickly
through offering relevant courses or improving student services.
This could have significant implications on students’ intentions
to continue with the same university for their future studies, which
leads us to the first hypothesis:
H1. Student perception of the university’s market orientation has a
positive impact on student loyalty.
Post-enrolment communication behaviour: Post-enrolment com-
munication behaviour concerns with the extent to which students
talk to their friends about their university subsequent to their
enrolment. Athiyaman (1997) found that student attitude to the
university is positively related to their post-enrolment communi-
cation behaviour. Previous studies have also provided empirical
evidence on the link between customer orientation and positive
word-of-mouth communication behaviour within the service con-
text (Macintosh, 2007). The present study suggests that students’
perception of the extent to which their university engages in mar-
ket-oriented behaviour could have a significant impact on post-
enrolment communication behaviour. Students may feel more
confident talking about their university to their friends if they be-
lieve that the university constantly monitor and address their
needs effectively.
H2. Student perception of the university’s market orientation has a
positive impact on student post-enrolment communication
behaviour.
2.3. Satisfaction
Consumer satisfaction has been defined as an evaluative, affec-
tive, or emotional response that develops along with the experi-
ence a consumer has with goods or services over a period of time
(Oliver and Swan, 1989). Similarly, within the context of higher
education, student satisfaction is perceived as ‘a short-term atti-
tude resulting from an evaluation of a student’s educational expe-
rience’ (Elliott and Healy, 2001, p. 2). While satisfied students can
be a source of positive endorsements for universities, dissatisfied
students may engage in direct or indirect complaining behaviour
which could have adverse effects on university reputation (FitzPa-
trick et al., 2012).
Two components of market orientation, namely intelligence
dissemination and responsiveness were found to be significantly
related to student satisfaction (Trang Phuc, 2011), and the SERVMO
construct was found to be significantly related with perceived
service quality, student satisfaction, and loyalty (Voon, 2008). A
recent study by Bianchi and Drennan (2012) found that service
 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx
provider performance is a key determinant of international student
satisfaction with Australian universities. The service provider per-
formance identified in Bianchi and Drennan’s (2012) studies com-
prises of elements such as knowledgeable academic staff, support
from administrative staff, well-organised courses, and high quality
facilities, all of which are reflected in the PMO dimensions of em-
ployee orientation and long-term orientation in the present study.
The present study suggests that that students’ perception of the
extent to which the university engages in market-oriented behav-
iour could have a significant impact on satisfaction. A university
with a strong emphasis on delivering superior value to students
will be perceived favourably by students which in turns lead to sat-
isfaction. Studies in the past have found strong links between sat-
isfaction and student loyalty (Helgesen and Nesset, 2007; Paswan
and Ganesh, 2009; Rojas-Mendez et al., 2009). Consistent with
the findings of the previous studies, the following hypotheses are
proposed:
H3. Student perception of the university’s market orientation has a
positive impact on student satisfaction.
H4. Student satisfaction has a positive impact on loyalty.
2.4. Post-enrolment communication behaviour
Post-enrolment communication behaviour in this study refers
to the extent a student engages in positive word-of-mouth
(WOM) after their enrolment at the university. Studies in the past
have suggested that WOM is more important than advertising in
increasing awareness, securing product trial (Sheth, 1971),
Fig. 1. Conceptual framework.
Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
3
converting perceptions into positive attitude (Day, 1971), and
affecting purchase decision (Mangold, 1987). Studies involving
Master of Business Administration (MBA) students have confirmed
the importance of WOM in both their course-selection and univer-
sity-selection decision making (Schoenfeld and Bruce, 2005).
Athiyaman (1997) found that satisfaction is significantly related
to post-enrolment communication behaviour. The following
hypothesis is thus proposed:
H5. Student satisfaction has a positive impact on post-enrolment
communication behaviour.
The conceptual model (Fig. 1) proposes satisfaction as the medi-
ating variable between PMO, loyalty, and post-enrolment commu-
nication behaviour. According to Baron and Kenny (1986), a
variable performs a mediating role if it accounts for the relationship
between the antecedents and the results. Accordingly, we contend
that although students may have positive perception of the univer-
sity’s market orientation, their loyalty and post-enrolment com-
munication behaviour are eventually driven by their satisfaction
with the university. Universities with strong market orientation
are perceived as being able to offer study experience that are rele-
vant to the needs and expectation of the students. Consequently,
those who perceive the university as highly market-oriented are
likely to be satisfied with their study experience. In turns, students
who are satisfied are likely to be actively involved in talking about
the university with their friends and attend the same university for
further education. On the basis of this rationale, the following
hypotheses are proposed:
H6a. Student satisfaction mediates the relationship between PMO
and loyalty.
4 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx

H6b. Student satisfaction mediates the relationship between PMO agreement with the statements related to their satisfaction with
and post-enrolment communication behaviour. the university.

3.3. Common method bias

3. Methodology
In the present study, common method bias analysis was imple-
3.1. Sample selection and data collection mented using two approaches (Malhotra et al., 2006). First, routine
control was established by mixing unrelated variables in the ques-
The respondents in this study were 258 undergraduate students tionnaire to make it difficult for respondents to conjecture cause
enrolled in the Faculty of Business at one of the leading universities and effect among variables (Jap and Anderson, 2003). Second, fol-
in Australia. An anonymous self-administered questionnaire was lowing Lindell and Whitney (2001), a single item measure of ser-
used for data collection. The questionnaires were distributed to vice quality, theoretically unrelated to the study constructs, was
participants in four different lecture sessions of one particular chosen as a marker variable. Next, the original correlation matrix
business subject. The demographic characteristics of the respon- was re-estimated by regressing out the effect of this marker vari-
dents are described in Table 1. able. None of the previously significant correlations become non-
significant after the marker variable was regressed out. Given the
3.2. Measures post hoc significant correlations, common method bias is not an is-
sue in this study.
Perceived market orientation: The perceived market orientation
(PMO) scale is adapted from Voon’s (2006) service-driven market 3.4. Exploratory factor analysis
orientation (SERVMO) scale, which is the only scale available in
the literature for the measurement of student perception of univer- The 36-item PMO in the present study was subjected to princi-
sity’s market orientation. The present study expands the original pal component analysis with varimax rotation. The analysis pro-
32-items SERVMO to 36 items by separating the employee orienta- duces a six-factor solution and eight items load on multiple
tion construct into academic and administrative staff. Some of the factors. These items were subsequently removed from further
wording of the items was also modified, particularly changing the analysis. The final six-factor solution consisting of 28 items was
term ‘competitors’ to ‘other universities’. then subjected to confirmatory factor analysis. Contrary to Voon’s
Loyalty: This study adopts Helgesen and Nesset’s (2007) scale (2008) SERVMO items, the customer orientation and performance
items to measure student loyalty. Respondents were asked about orientations scale items in the present study load together into
behavioural intentions relating to their university: ‘‘the probability one factor. For the purpose of this study, the construct is labelled
of recommending the university college to friends/acquaintances, as ‘‘customer-performance orientation.’’
the probability of attending the same university college if starting
anew, and the probability of attending new courses/further educa- 3.5. Confirmatory factor analysis
tion at the university college’’ (Helgesen and Nesset, 2007, p. 45).
Post-enrolment communication behaviour: This study adopts Structural equation modeling (SEM) was employed to perform a
Athiyaman’s (1997) 3-item post-purchase communication behav- confirmatory factor analysis on the proposed model. To test the
iour scale with the anchors strongly disagree to strongly agree to validity of the measurement model, the data was split into half
measure respondents’ behavioural intention. randomly using SPSS. The first half of the model was used for mod-
Satisfaction: This study adopts a seven-point student satisfac- el building and the second half for model testing. The measure-
tion scale of Athiyaman (1997) where respondents indicated their ment model was tested using the incremental modification
Table 1 approach of Segars and Grover (1993), and Cheng (2001). The
Respondent characteristics. model was revised by deleting some indicators with low factor
loadings, squared multiple correlations, and those that attempted
Respondent characteristics (n = 258) (%)
to load on more than one dimension as reflected by high modifica-
Age tion indexes (Cheng, 2001). The deletion of the variables was also
Under 20 29
20–25 years old 64
done one by one as the elimination of one variable in the model
26 years old and above 7 may concurrently affect other parts of the model (Kline, 2005).
Gender
Table 3 provides descriptions of the final PMO scale items.
Male 37 Table 2 shows means, standard deviations, and inter-correla-
Female 63 tions of all of the measurement variables. As depicted in the table,
Status the AVE for each construct is greater than all related correlations,
Local students 85 thus indicating discriminant validity (Fornell and Larcker, 1981).
International students 15 The final measurement model demonstrates good fit with the data
Length of study at the university as reflected in the fit indices including v2 (84) = 196.450 (p = .001),
Less than 12 months 28 NC (2.339), RMSEA (.072), TLI (.945), CFI (.956), and NFI (.926).
12–24 months 42
25–36 months 18
More than 36 months 12
Table 2
Marital status Correlation matrix.
Single 94
Married 1 PMO Loyalty Satisfaction Post-Enrolment
De Facto 4 PMO 0.76 .563** .564** .630**
Widowed 1 Loyalty .563** 0.73 .779** .658**
Personal annual income Satisfaction .564** .779** 0.78 .611**
Under $30,000 88 Post Enrolment .630** .658** .611** 0.70
Between $30,001 and $60,000 8
Average variance extracted.
More than $60,000 4 **
Significant at .001 level (two-tailed).

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http://dx.doi.org/10.1016/j.ausmj.2014.02.001
 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx 5

Table 3
Measurement properties.

Items Mean CR VE
PMO – Customer & Performance Orientation
VAR4: The University regularly measures our satisfaction 4.65 0.89 0.52
VAR19: The University systematically and regularly measures its service performance 4.68
VAR20: The University seriously monitors its service performance
VAR1: The University constantly checks its level of commitment to serving students’ needs 4.32
VAR2: The University serves us based on good understanding of our needs 4.57
VAR3: The University believes in delivering quality service to us 4.92
VAR18: The top management is committed to delivering quality service 4.61
VAR17: The University strives for service excellence 4.86
PMO – Long-Term Orientation
VAR23: The University implements changes (e.g. new facilities) to satisfy us in the long-term 4.23 0.88 0.59
VAR26: The University emphasises continuous improvement in managing its services and course offerings 4.52
VAR24: The University emphasises its long-term survival 4.39
VAR25: The University has long-term plans/goals in service and course offerings 4.59
VAR27: The University considers serving students well as a worthwhile long-term investment 4.63
PMO – Competitor Orientation
VAR8: The University seems to know its competitors well 4.66 0.85 0.76
VAR11: The University always tries to be different from other universities to stay competitive 4.66
VAR9: The University targets for students that it can serve better than the other universities 4.61
VAR10: The University always tries to be better than other universities in serving the students 4.44
PMO – Employee Orientation (Academic)
VAR35: The University recruits and hires sufficient academic staff for delivering quality service 5.06 0.92 0.74
VAR36: The University chooses suitable academic staff to interact or deal with us 4.94
VAR34: The academic staff of the University that interact with us are always motivated or joyful 4.75
VAR33: The academic staff of the University that serve us are well trained 5.06
PMO – Employee Orientation (Administrative)
VAR32: The University chooses suitable administrative staff to interact or deal with us 4.78 0.92 0.74
VAR30: The administrative staff of the University that interact with us are always motivated or joyful 4.65
VAR31: The University recruits and hires sufficient administrative staff for delivering quality service 4.69
VAR29: The administrative staff of the University that serve us are well trained 4.89
PMO – Interfunctional Coordination
VAR16: There is good communication between the different departments/units in the University 4.22 0.84 0.64
VAR15: When there are activities involving different divisions in the University, we can see good coordination 4.30
VAR14: The employees of different divisions in the University seem to have good relationships 4.65
Loyalty
VAR85: Recommend the university to friends/acquaintances 4.99 0.83 0.57
VAR86: Attend the same University if starting anew 4.96
VAR87: Attend new courses/further education at the same University 4.80
Satisfaction
VAR79: I am satisfied with my decision to attend this University 5.18 0.87 0.63
VAR80: If I had to do it all over again, I would NOT enrol in this university (R) 5.35
VAR81: My choice to enrol in this University was a wise one 5.17
VAR83: I think I did the right thing when I decided to enrol in this University 5.26
Post-Enrolment Communication
VAR76: I like talking about my University to my friends 4.43 0.75 0.51
VAR77: I like helping potential students by providing them with information about my University and its courses 4.52

CR = composite reliability.
VE = variance extracted.

Discriminant validity was established through an examination
of the square root of the average variance extracted (AVE) and cor-
relation between constructs. The reliability of the constructs was
measured using composite reliability (CR) (Fornell and Larcker,
1981). As shown in Table 3, the CR value of all constructs is above
.84, indicating good construct reliability.
(.935), CFI (.948), and NFI (.917) are all above the recommended
fit level. The bootstrapping method was used in AMOS to estimate
the standard error and calculate indirect effects. The effects were
calculated at a confidence level of 95% and the bootstrap was set
to equal to 500.

4.1. Test of the mediating effects

4. Analysis of the structural model
A full structural model (Fig. 2) was employed to examine the
relevant hypotheses under examination. In this structural model,
satisfaction was incorporated as the mediating variable. An obser-
vation of the GOF indices suggests that the structural model is sta-
tistically significant and possesses construct validity. Although the
Chi-Square is statistically significant (v2 = 217.947, df = 85,
p = .001), the Normed Chi-Square (2.564) is within the recom-
mended range. Other indicators including RMSEA (.078), TLI
Our conceptual model specifies that perceived benefits mediate
the effects of perceived market orientation on loyalty and post-
enrolment communication behaviour. In order to examine the
two mediation hypotheses, we followed Baron and Kenny’s
(1986) criteria to establish whether the conditions for mediation
exist. First, we ran a structural model to determine that there is
a relationship between PMO (as the antecedent) and loyalty and
post-enrolment communication behaviour (as the outcome vari-
ables). As can be seen in Table 4 under: ‘Mediation test stage I:

Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
6 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx

⁄⁄
Fig. 2. Full structural model. ns = not significant, significant at .001 level.

Table 4
Results of hypotheses testing.

Hypothesised relationships Standardised coefficients

Beta t-Value
Mediation test stage I: Independent to dependent variable
H1 PMO ? Loyalty .682** 9.767
H2 PMO ? Post-Enrolment Communication Behaviour .791** 1.416
Mediation test stage II: Independent to mediator variables
H3 PMO ? Satisfaction .692** 9.633
Mediation test stage III: Mediator variable to dependent variable
H4 Satisfaction ? Loyalty .806** 1.491
H5 Satisfaction ? Post-Enrolment Communication Behaviour .458** 5.676
Mediation test stage IV: Direct, indirect, and total effects
H6a PMO ? Loyalty
Direct effects .093 .637
Indirect effects .558** 4.027
Total effects .651** 9.697
H6b PMO ? Post Enrolment Communication Behaviour
Direct effects .433** 3.780
Indirect effects .317* 2.954
Total effects .750** 11.269
**
Significant at .001 level.
*
Significant at .05 level.

independent to dependent variable’, PMO has a statistically signif-
icant relationship with loyalty and post-enrolment communication
behaviour prior to the inclusion of satisfaction as the mediator var-
iable. Thus, the first condition of mediation is fulfilled and support
was found for H1 and H2.
Next, we ran a structural model to establish that there is a rela-
tionship between PMO (as the independent variable) and satisfac-
tion (as the mediator variable). Again, PMO has a significant
relationship with satisfaction (b = .692, p < .001). Thus, Baron and
Kenny’s (1986) second condition of mediation is met and support
was found for H3.
The third condition of mediation specifies that the mediator
must have significant relationship with the dependent variable.
The full structural model was run to examine the relationship
between satisfaction and loyalty as well as post-enrolment
communication behaviour. The results suggest that there is a

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 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx
significant relationship between satisfaction – loyalty (b = .806,
p < .001), as well as satisfaction – post-enrolment communication
behaviour (b = .458, p < .001), thereby lending support to H4 and
H5 respectively.
The fourth condition of mediation specifies that the direct ef-
fects between the independent variable and the dependent vari-
able should disappear or weaken with the inclusion of the
mediator. This condition was also fulfilled and discussed in more
details in the following section.
4.2. Indirect effects
Based on the approach suggested by Baron and Kenny (1986),
the mediation effects were assessed through an examination of
the size and significance of the indirect effects. The indirect effects
on the structural model were measured as the product of the struc-
ture coefficients involved (Kline, 2005). PMO has significant indi-
rect effects on loyalty (b = .558, p < .001) and post-enrolment
communication behaviour (b = .317, p < .05) through satisfaction
as the mediating variables, thereby lending support to H6.
4.3. Total effects
An examination of the total effects suggests that PMO has a sig-
nificant relationship with loyalty and post-enrolment communica-
tion behaviour through the mediating effect of satisfaction.
In order to determine the extent of mediation (full or partial),
we examined the relationship between PMO, loyalty, and post-
enrolment communication behaviour before satisfaction was in-
cluded as the mediating variable in the model. For full mediation
to occur, the direct paths from the independent variable to depen-
dent variable should be non-significant when the mediating vari-
ables are included in the model (Baron and Kenny, 1986). Our
results reveal that the direct effects between PMO and post-enrol-
ment communication were reduced but remain significant after
the introduction of satisfaction as the mediating variable. This indi-
cates that satisfaction performs a partial mediating role on the
relationship between PMO and post-enrolment communication
behaviour. On the other hand, the relationship between PMO and
loyalty become non-significant after satisfaction was included as
the mediating variable. This indicates that satisfaction plays a full
mediating role on the relationship between PMO and loyalty.
5. Discussion
This study contributes to a better understanding of the role of
perceived market orientation in the higher education sector. Until
recently, only few studies have been done to examine market ori-
entation from the perspective of consumers (Baker et al., 1999;
Corbitt et al., 2003; Gounaris et al., 2003) in general and university
students in particular (Voon, 2006, 2008). This study attempts to
fill this gap by examining market orientation from the perspective
of the students and investigate its impact on satisfaction, loyalty,
and post-enrolment communication behaviour.
The analysis has addressed the research hypotheses relating to
the role of PMO in the conceptual framework and three important
findings were identified.
First, we find that PMO has a positive impact on student loyalty.
The full structural model reveals that satisfaction performs full
mediation effects on the relationship between PMO and loyalty.
This implies that a positive perception of a university’s market ori-
entation alone does not affect student loyalty to the university.
Rather, it is only through satisfaction that students eventually
‘transform’ their positive perception of a university’s market orien-
tation to stronger commitment to the university. This has provided
Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
7
further empirical support on the link between market orientation
and loyalty as discussed in the literature (Maria Josa et al., 2007;
Shu-Ching and Quester, 2006), and also lend further support to
the central role of satisfaction in affecting student loyalty (Helge-
sen and Nesset, 2007; Paswan and Ganesh, 2009; Rojas-Mendez
et al., 2009).
Second, we find a significant association between PMO and
post-enrolment communication behaviour. This implies that the
more positive perception students have about the university’s mar-
ket orientation, the more likely they will recommend the univer-
sity to their friends. This is consistent with Athiyaman’s (1997)
findings, which suggests that students’ attitude to the university
is related to positive post-enrolment communication behaviour.
We also find that the mediating effects of satisfaction on the rela-
tionship between PMO and post-purchase communication behav-
iour is only ‘partial’, which implies that although satisfaction
plays an important role in enhancing positive post-enrolment com-
munication behaviour, students will still recommend the univer-
sity to their friends if they perceive the university to be
market-oriented, regardless of their level of satisfaction with the
university.
Finally, the evidence of association between PMO, satisfaction,
loyalty, and post-purchase communication behaviour established
in the present study further highlights the importance of student
satisfaction in the higher education sector. A recent study has
found that customers who have pleasing consumption experience
tend to spread positive word-of-mouth to help the company at-
tract more customers (Yap et al., 2013). Similarly, this study finds
that student satisfaction is positively associated with their likeli-
ness in recommending the university to their friends and
colleagues.
6. Conclusion
6.1. Theoretical implications
This study has made at least two important implications to the
body of literature concerning the role of market orientation in
higher education sector.
The first implication relates to the examination of the role of
‘‘perceived market orientation’’ in the higher education context.
To the best of our knowledge, this is the first and only study done
to examine the measurement invariance of the constructs of
perceived market orientation, satisfaction, loyalty, and post-enrol-
ment communication behaviour in the higher education environ-
ment. There was evidence that PMO is positively associated with
all constructs in the present study which could generate further
theoretical insights for researchers on the topic of market
orientation.
The second theoretical implication relates to the central role of
student satisfaction in the relationship between all constructs.
Although many studies have been done in the area of student sat-
isfaction (Athiyaman, 1997; Brown and Mazzarol, 2009; Carter,
2009; Petruzzellis et al., 2006), this study is the first to examine
the mediating role of satisfaction on the relationship between per-
ceived market orientation, loyalty, and post-enrolment communi-
cation behaviour. The present study has provided empirical
evidence to support the links between the three variables which
further highlight the central role of satisfaction in service context
in general, and higher education context in particular.
6.2. Implications for higher education institutions
The competition within the higher education sector has intensi-
fied in recent years due to the growing internationalisation of
8 R. Casidy / Australasian Marketing Journal xxx (2014) xxx–xxx
education providers. This study has provided a further insight to
the role of market orientation within the higher education sector.
Positive student perception in every dimension of university mar-
ket orientation could help the university to improve student satis-
faction, loyalty, and encourage positive word-of-mouth (WOM)
among existing students. Universities should therefore invest sig-
nificant effort in each dimension of market orientation detailed
in the present study and constantly monitor students’ evaluation
of their performance in each dimension.
With the intensified competition in the higher education sector,
many universities resorted to internal marketing to promote fur-
ther courses for their current students (IBISWorld, 2012). Satisfac-
tion performs a strong mediating role in the present study and
therefore it is imperative for universities maintain and improve
students’ satisfaction level and have a system in place for students
to recommend their courses through social media platform. This
will enable satisfied students to disseminate their positive percep-
tion of the university to their social network circle which in turns
will provide greater positive word-of-mouth relating to the
university.
6.3. Limitations and directions for future research
Two main limitations of the study are identified. First, the use of
convenience sampling to recruit the study participants has some
weaknesses. Although the students were informed that the survey
was anonymous in nature, they were notified that a summary of
the study findings would be reported to the university executives
to evaluate the university market. Hence, respondents’ evaluation
of the university’s market orientation might be biased towards giv-
ing socially desirable responses. There is also unequal distribution
in terms of gender, as the majority of respondents are female.
The second limitation relates to the research context of this
study. The Higher Education sector is a unique service organisation
with an ongoing level of engagement between consumers and the
service providers. Therefore, consumer overall satisfaction in this
context is difficult to assess due to the various dimensions of ser-
vices involved in the delivery of course offerings. The concept of
student loyalty within the higher education sector may not be
the same to the concept of customer loyalty in other service organ-
isations due to the fact that students generally do not switch to
other universities due to the complexity involved in transferring
to other universities. Consequently, future studies could examine
the relationship between PMO, satisfaction, loyalty, and post-pur-
chase communication behaviour in other service contexts to exam-
ine whether the dynamic relationship between these constructs is
also significant in other contexts.
Future research can also attempt to examine the relationship
between perceived market orientation and perceived brand orien-
tation (PBO) (Mulyanegara, 2011) in the higher education sector. It
will be interesting to see the link between PMO and PBO and iden-
tify the construct which has the strongest effects on satisfaction,
loyalty, and post-enrolment communication behaviour.
6.4. Concluding statement
With the limited number of studies on perceived market orien-
tation within the higher education sector, this study has provided
significant theoretical and managerial implications for higher edu-
cation institutions to enhance student satisfaction, loyalty, and
post-enrolment communication behaviour. Consistent with the
results of this study, universities and other education providers
alike should strive to engage in market-oriented activities to re-
main competitive in the increasingly competitive education envi-
ronment. It is expected that this study would encourage further
research in this important topic.
Please cite this article in press as: Casidy, R. The role of perceived market orientation in the higher education sector. Australasian Marketing Journal (2014),
http://dx.doi.org/10.1016/j.ausmj.2014.02.001
Acknowledgement
The author would like to thank the anonymous reviewers for
their helpful comments and detailed feedback, which has helped
the author in improving the quality of this paper.
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