Abstract

This study assesses how customer value has chain effects on an insurance company’s market orientation, competitive advantage and organizational performance in a command economy. In this study we want to analyze Iran’s Insurance policy in strategy selection to identify its deficiencies compared to the ideal situation that Zhou explained in his essay, “Market orientation, competitive advantage and organizational performance: A demand- based perspective”, done in hotel industry. He showed if a firm knows its customers well, the firm will be able to adopt an adaptable strategy “customer orientation or competitor orientation” in the market. The findings showed if Iran’s insurance company perceives its customers as service sensitive, it tend will to develop customer orientation in order to satisfy its customers . But if it thinks its customers are price sensitive, it tends to develop no purposeful orientation. Moreover, the greater this firm's customer orientation, the more the firm is able to develop a competitive advantage based on innovation and market differentiation. In contrast, a competitor orientation has no special effect on the firm’s differentiation advantages. Finally, innovation and market differentiation advantages in this company are not in the line with market performance (e.g., perceived quality, customer satisfaction) but increase in market performance will lead to higher financial performance (e.g., profit, market share).

Key words: Customer value, market orientation, competitive advantage, organizational performance.