Strategic Marketing Planning

Richard M.S. Wilson, Colin Gilligan

• Publisher: Routledge
• Year: 2010
• Print ISBN: 9781138133952
• eBook ISBN: 9781136435249
• Topic: Business
• Subtopic: Business General
• Index: Business

Strategic Marketing Planning concentrates on the critical planning aspects that are of vital importance to practitioners and students alike. It has a clear structure that offers a digest of the five principal dimensions of the strategic marketing planning process.

Leading authors in this sector, Gilligan and Wilson offer current thinking in marketing and consider the changes it has undergone over the past few years. Updated information in this new edition includes:
* Changing corporate perspectives on the role of strategic marketing activity
* Changing social structures and the rise of social tribes
* The significance of the new consumer and how the new consumer needs to be managed
* New thinking on market segmentation
* Changing routes to market
* Developments in e-marketing
* Changing environmental structures and pressures

Introduction

DOI: 10.4324/9780080912127-1

1.1 Learning Objectives

When you have read this chapter you should be able to:

• (a) define marketing in strategic terms;
• (b) understand the basic structure of the book and how this chapter establishes the context for what follows;
• (c) specify the characteristics of strategy and strategic decisions;
• (d) understand the nature of the debate about the future role of marketing and its contribution to management, enhancing organizational effectiveness;
• (e) appreciate the changing emphases within marketing and the implications for the ways in which marketing strategies are developed.

1.2 The Nature of Marketing (or, ‘Delivering Value And Winning Customer Preference')

The question of what marketing is and what it entails has been the focus of a considerable amount of work over the past 60 years. From this, numerous definitions have emerged, with differing emphases on the process of marketing, the functional activities that constitute marketing, and the orientation (or philosophy) of marketing. The Chartered Institute of Marketing, for example, for a long time defined it as:

the management process for identifying, anticipating and satisfying customer requirements profitably.

A slightly longer but conceptually similar definition of marketing was proposed by the American Marketing Association (AMA) in 1985:

Marketing is the process of planning and executing the conception, pricing, promotion distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.

Although this definition, or variations of it, was used by a variety of writers for a number of years (see, for example, McCarthy and Perreault, 1990; Kotler, 1991), Dibb et al., 2005; Littler and Wilson (1995, p.1) pointed to the way in which its adequacy was increasingly being questioned in European textbooks (e.g. Foxall, 1984; Baker, 1987).

They went on to suggest that too many definitions of marketing have presented marketing as a functional process conducted by the organization’s marketing department, whereas the role of marketing today is increasingly being conceptualized as an organizational philosophy or ‘an approach to doing business’. This strategic as opposed to a functional approach to marketing was initially captured both by Drucker (1973) who, almost forty years ago, put forward a definition of marketing orientation: McDonald (1989, p.8):

Marketing is a management process whereby the resources of the whole organization are utilized to satisfy the needs of selected customer groups in order to achieve the objectives of both parties. Marketing, then, is first and foremost an attitude of mind rather than a series of functional activities.

and subsequently by

Marketing is so basic that it cannot be considered a separate function on a par with others such as manufacturing or personnel. It is first a central dimension of the entire business. It is the whole business seen from the point of view of its final result, that is, from the customers’ point of view.

Although Drucker’s definition had a significant effect upon patterns of marketing thinking, it has increasingly been recognized that it too has a number of limitations. Perhaps the most significant shift in emphasis since Drucker wrote this is to be found in the importance that is now attached to competitive position in a changing world and that the marketing concept is the managerial orientation which recognizes that success primarily depends upon identifying changing customer wants and developing products and services that match these better than those of competitors (Doyle, 1987; Wilson and Fook, 1990).

More recently, writers such as Vargo and Lusch (2004), Jobber (2006) and Kotler and Keller (2008) have all pointed to the way in which a new perspective on marketing, characterized by a focus on intangible resources, the co-creation of value, and the management of relationships, has emerged that demands a very different type of definition of marketing. Recognition of this highlights some of the inadequacies of the AMA definition within what is now a very different business environment. It could therefore be said that the AMA definition is more of a list than a definition and is therefore clumsy and inconvenient to use; that it cannot ever be comprehensive; and that it fails to provide a demarcation as to what necessarily is or is not marketing.

It was in an attempt to reflect the very different role that marketing now plays that the Chartered Institute of Marketing (CIM) revised its definition in 2008, seeing it as:

The strategic business function that creates value by stimulating, facilitating and fulfilling customer demand.

Underpinning the definition is the CIM’s belief that marketing creates value

by bundling brands, nurturing innovation, developing relationships, creating good customer service and communicating benefits.

The contrasting emphases on customers and competitors that are highlighted by these more recent definitions of marketing can be highlighted, as in Figure 1.1. If an enterprise is managed a little better than customers expect, and if this is done in a slightly better way than competitors can manage, then the enterprise should be successful.

Figure 1.1 Customer and competitor orientations (adapted from Day, 1990)

Within Figure 1.1, the customer-oriented and competitor-centred categories speak for themselves. The self-centred category is characterized by an introspective orientation that focuses on year-on-year improvements in key operating ratios, or on improvements in sales volume without making direct comparisons with competitors. Such an orientation is potentially disastrous when viewed in strategic terms. At the opposite extreme is a market-driven approach to marketing, which seeks to balance responsiveness to customers’ requirements on the one hand with direct competitor comparisons on the other (see Illustration 1.1).

Illustration 1.1 But is your organization really market-driven?

When Peter Drucker first outlined the marketing concept over 50 years ago, he equated marketing with customer orientation, arguing that for a firm to be market-driven meant always putting the customer first and innovating continuously to improve the delivered value. Subsequently, it has been recognized that Drucker’s perspective lacked strategic content in that it gives emphasis to the organizational culture, but fails to provide guidance on which customers to serve and how to serve them. Equally, Drucker’s initial views failed to take explicit account of competitors and the discipline of profit in the analysis of product and market opportunity. It is because of this that customer orientation has been replaced with the broader concept of market orientation.

Given this, we can see marketing operating at three levels:

1. Marketing as a culture characterized by a set of values and beliefs that highlights the importance of the customer’s interests
2. Marketing as a strategy concerned with the choice of products, markets and competitive stance
3. Marketing as the set of tactics (essentially the seven Ps of the expanded marketing mix) that provides the basis for the implementation of the business and competitive strategy.

Recognition of this has led Webster (1999, pp.239–40) to argue that the extent to which an organization is market-driven can be measured against eleven dimensions:

1. The extent to which a customer focus pervades the entire organization
2. The commitment to delivering value
3. The identification and development of distinctive competencies
4. The formation of strategic partnerships
5. The development of strong relationships with strategically important customers
6. The emphasis upon market segmentation, targeting and positioning
7. The use of customer information as a strategic asset
8. The focus on customer benefits and service
9. Continuous improvement and innovation
10. The definition of quality based on meeting customers’ expectations
11. A commitment to having the best information technology available.

For Day (1990), the characteristics of a market-driven organization can be stated more succinctly:

• An externally oriented culture that emphasizes superior customer value
• Distinctive capabilities in market sensing as a means of anticipating the future
• Structures that are responsive to changing customer and market requirements.

The significance of being market-driven has, in turn, been highlighted by a series of studies, including one amongst 600 managers in France, the USA, Germany, Japan and the UK, which found that ‘the single strongest influence on company performance is innovativeness. Further, a market-oriented company culture was found to have a positive impact in all five countries, while customer orientation, by itself, has virtually no influence on bottom line performance’ (Webster, 1999, p.241). It is the recognition of this that, as Webster suggests, highlights the need for firms to innovate continuously in order to exceed the customer’s evolving definition of value.

Given the nature of these three comments, the essential requirements of marketing can be seen to be (Wilson, 1988, p.259):

1. The identification of consumers’ needs (covering what goods and services are bought; how they are bought; by whom they are bought; and why they are bought);
2. The definition of target market segments (by which customers are grouped according to common characteristics – whether demographic, psychological, geographic, etc.); and
3. The creation of a differential advantage within target segments by which a distinct competitive position relative to other companies can be established, and from which profit flows.

The way in which a differential advantage might be achieved – and sustained – is through the manipulation of the elements of the marketing mix. This mix has traditionally been seen to consist of the ‘four Ps’ of marketing: Product, Price, Promotion and Place. Increasingly, however, but particularly in the services sector, it has been recognized that these four Ps are far too limited in terms of providing a framework both for thinking about marketing and for planning marketing strategy. It is because of this that a far greater emphasis is now given to the idea of an expanded mix that has three additional elements:

• People
• Physical evidence
• Process management.

The detail of both the traditional ‘hard’ elements of the mix and the ‘softer’ elements appears in Figure 1.2.

Figure 1.2 The elements of the marketing mix

1.3 The Management Process

Management can be looked at from a variety of viewpoints. It may be seen from one perspective as being largely an attitude that reflects a willingness to debate issues and resolve them through the use of appropriate techniques and procedures. Alternatively, management may be viewed in terms of its responsibility for achieving desired objectives, which requires the selection of means to accomplish prescribed ends as well as the articulation of those

ends. This view of management can be analysed further by focusing on its task orientation (e.g. in the functional context of marketing) or on its process orientation (i.e. the way in which the responsi...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Preface
• Overview of the Book's Structure
• 1 Introduction
• 2 Strategic Marketing Planning and the Marketing Plan
• Stage One: Where Are We Now? Strategic and Marketing Analysis
• 3 Marketing Auditing and the Analysis of Capability
• 4 Segmental, Productivity and Ratio Analysis
• 5 Market and Environmental Analysis
• 6 Approaches to Customer Analysis
• 7 Approaches to Competitor Analysis
• Stage Two: Where do We Want to Be? Strategic Direction and Strategy Formulation
• 8 Missions and Objectives
• 9 Market Segmentation, Targeting and Positioning
• 10 The Formulation of Strategy 1: Analysing the Product Portfolio
• 11 The Formulation of Strategy 2: Generic Strategies and the Significance of Competitive Advantage
• 12 The Formulation of Strategy 3: Strategies for Leaders, Followers, Challengers and Nichers
• Bibliography
• Index