The concept of marketing is inherently simple – business success through a process of understanding and meeting customer needs. Few would argue with this basic principle, and even the most inexperienced of business managers would intuitively see the sense in this.
Given this basic simplicity, why do we need something as complicated, and time-consuming, as a marketing strategy? While basic business principles may be simple common sense, achievement involves many complex, interdependent or even conflicting tasks. Increasingly, such tasks are undertaken against a backdrop of constant change, intense competition, and limited resources. To further enhance the challenge, managers are often at the mercy of incomplete data and unexpected events, often being left to ‘second guess’ customer and competitor reactions.
It is to this end, marketing strategy has become a vital component of success. A well-considered, effectively implemented, marketing strategy should go some way to alleviating the aforementioned problems and reduce the complexity of business tasks. The strategy should restore simplicity to the art of management. In essence, it is a series of tools and techniques that guide (hopefully) the organization to the marketing panacea – success through a process of understanding and meeting customer needs.
Towards strategic management
Over a period of some 30 years, we have seen the concept of strategy evolve. Aaker (1995) provides a historical perspective showing how this evolution has progressed and acknowledges that strategic activity has been described over the years as:
● Budgeting: Early strategic activity was concerned with budgetary and control mechanisms. Structured methods of allocating, monitoring and investigating variances from the budget provided a means of managing complex processes. The process was often based on past trends and assumed incremental development.
● Long-range planning: the Here greater emphasis was placed on forecasting. Planning systems and processes tended to extrapolate current trends (with varying degrees of sophistication) and predict factors such as sales, profits, and cost. Management could use such forecasts as a basis for decision making.
● Strategic planning: The 1970/1980s was the era of strategic planning, with emphasis placed on (i) specifying the overall direction and (ii) centralized control of planning activities. While still based around forecasting and extrapolation of past trends, far greater attention was paid to understanding the business environment. Managers hoped to be able to anticipate events through a detailed analysis of cause-and-effect relationships. Planning systems aimed to provide data and logic as a means of decision support. While promoting more awareness of strategic issues in terms of the external environment, the process still tended to focus on the preparation of corporate-wide plans. This was often achieved in a highly bureaucratic, centralized fashion.
● Strategic management: We are currently in the age of strategic management. Strategic management concerns both the formulation of strategy and how such a strategy is put into practice. While still undertaking analysis and forecasting, far greater prominence is placed on implementation. The concern is with managing change and transforming the organization within an increasingly turbulent business environment.
Change – shaping strategy
Change is an accepted consequence of modern life. Indeed, the phrase – ‘change is the only certainty’ – has become something of a business mantra. All organizations are subject to increasing levels of change. We can view change in terms of cyclical change and evolutionary change. Cyclical change involves variation that is repetitive and often predictable (e.g. seasonal variation in demand or fluctuation in economy circumstances). Evolutionary change involves a more fundamental shift. It may mean sudden innovation or a gradual ‘creeping’ process.
● Drivers of change Consistently, current products and methods of operating rapidly being displaced by a combination of competitors’ actions and shifting customer needs. This discontinuity is being driven by the following factors: Political, Economic, Social (e.g. demographics) and Technological. A so-called ‘PEST’ analysis (see later) provides a useful analytical framework with which to study the business environment.
● Impact of change Quite simply, change means we need to re-define our markets. While fast growth is still possible within certain ‘sun-rise’ industries, many industries have to accept the days of incremental annual growth are over. Variation in consumer habits and demographic patterns mean traditional markets are becoming more challenging. Change is accompanied by intense competition, in which the phenomenon of business globalization can only intensify. Increasingly, we see shorter product life cycles and increasing difficulty in predicting the future.
● Result of change There are two main outcomes. Firstly, change creates opportunity. Organizations that are flexible and in-touch with customer needs are likely not just to survive, but prosper. Secondly, past actions, strategies, and methods offer no guarantee of future success. There is a need to guard against complacency and ensure that the strategic thrust of the organization does not drift from the true needs of the market place (beware strategic drift).
Contemporary Issues in Strategic Marketing
The process of strategic marketing and its associated research is continually evolving. This text highlights two current or contemporary, issues which have and will continue to greatly influence marketing at a strategic level. While the issues of CRM and ethics are corporate-wide in nature, they will impact significantly on marketing-based business strategies. Two key areas are considered. Firstly, Chapter 15 examines the role of CRM. CRM is commonly IT-driven, but such technical associations should not detract from its key function; retaining customers.
Given customer relationships and retention are vital marketing functions; CRM is likely to be increasingly driven from a strategic perspective. Secondly, Chapter 16 considers the ethical dimension associated with marketing. Increasing levels of legislation and consumerism have placed ethics and social responsibility firmly on the corporate agenda.
Teaching Strategic Marketing
Many approaches exist in relation to teaching marketing from a strategic perspective. No one method offers a panacea, all have strengths and weaknesses. Tutors, students, and practitioners all have many and varied ways of addressing issues related to teaching and learning. The author offers a problem-based learning (PBL) approach as one perspective.
Experience suggests that this lends itself to teaching strategic marketing. PBL allows students to develop the correct balance of academic analysis and transferable skills, such as teamwork. Tutors should note that the companion website to this book will provide additional examples and support in relation to PBL as a teaching strategy.