Critical Analysis: The Concept of Strategic marketing
Introduction
Every business is subject to factors that affect the firm’s function as a whole may it be profit or non-profit oriented. These factors are the ones attributed for the success or even the failure of a business. In a profit making business the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit. In this manner, the management of a certain organisation should be guided by strategic marketing principle to be able to attain its business goal. As mentioned, “Strategic marketing can contribute significantly to organisational performance; however, its practice can have limitations.”
Primarily, the main goal of this paper is to critically evaluate the statement above regarding the concept of strategic marketing. Herein, potential benefits and limitations of the implementation of strategic marketing will be discussed. In addition, this paper will also try to give some insightful details about the key elements of strategic marketing such as strategic analysis, choice and implement and will give some interrelated nature of such elements.
The Concept of Strategic marketing
In the marketing concept, there are many approaches that can be used in order to make a company more competitive and successful. One of these approaches includes the notion of strategic marketing. Strategic marketing can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enables any organisation to attain its objectives. As this definition entails, strategic marketing gives emphasis on integrating management, marketing, finance, production/operations, research and development and computer information systems to achieve organisational success (See Appendix 1). The term strategic marketing is also used synonymously with strategic planning ( 2001).
Strategic marketing is guiding an organisation relative to challenges and opportunities appearing in the contingent environment. This environment is composed of those external elements that most directly affect organisational goal achievement and new goal development. Thus, organisation system design and management should complement strategic actions taken for productive subsystems, as well as those providing output delivery and other support functions for the organisation. To the extent possible, the organisation bases its actions on strategic planning that, rather than a one-time effort, is an ongoing process of adaptation of original conceptions of mission, goals, structure, roles, and so forth relative to environmental dynamics (1992).
Furthermore, due to the existence of competitions within and outside the marketing arena, it is therefore very significant for a company to establish strategic marketing and set a strategic plan for its development and improvement. It is for the reason that the twenty-first-century realities of globalisation, rapid changes in technology, increasing competition, a changing workforce, changing market and economic conditions, and developing resource shortages all increase the complexity of modern management. Whereas strategic planning was a competitive advantage in the past decade, it is a necessity of global thinking in this century. Planning strategically is certainly a new requirement in the global business world. In order to survive the new business challenge, global thinking and practice must permeate all corporate activities. Successful companies are, of course, the first to consider the global marketplace as their arena for competition. According to David (1999), strategic marketing has become a vital part of most, if not all, organisations. “Almost all organisations of any reasonable size have some kind of strategic planning.” More importantly, strategy implementation has been heralded as the key to corporate strategic success.
Approaches to Strategic marketing
The concept of strategic marketing was developed to enable managers to align their organisations with the changing environment in order to achieve organisational goals and objectives (2000). Today, strategic marketing has been associated with a variety of models and styles. The development of this concept is essential because it corrects the anxiety with strategy analysis in the early stage and gives special attention to strategic choice and strategic implementation in the later stage.
Strategic marketing may be viewed from three general perspectives: product-market strategy, competence-based strategy and the integration of the first two by means of the mission and the vision of the organisation. The product-market strategy perspective views the firm as a collection of product/market combinations (i.e., a portfolio). This view sees strategy as a matter of positioning the firm in its environment, either by selecting the optimal mix of product/market combinations or by positioning in relation to stakeholders.
Instead of viewing the firm as a collection of product/markets, it is also possible/feasible to view an organisation as a collection of resources or competencies. This view starts in opposite perspective from that of the traditional product-market. It assumes that a firm cannot be defined by the changing nature of its products and/or markets, but rather by its core competencies, which may be less likely to change in the long run. The rationale, then, is to generate competitive advantage by means of internal factors (i.e., technologies or core competencies). The next approach is core competencies which are considered to be a more appropriate term for describing what generates competitive advantage for a firm. These two views appear to be a duality. A core competence is a well-performed internal capability that is central, not peripheral, to a company's strategy, competitiveness, and profitability. The best-known explanation of core competence is provided by and (1990): " core competencies are the collective learning of the organization, especially how to co-ordinate diverse production skills and integrate multiple streams of technologies".
On the one hand, they appear to be rather incompatible, but on the other hand, they are still two sides to the same coin: the organisation that must survive and prosper. This corresponds to the third view, which is a holistic view in the sense that it sees both product-markets and core competencies and attempts to integrate them for the benefit of the firm. The considerations so far make it possible to propose a division of strategic marketing into three sub decision areas: product-market strategy, competence-based strategy, and integration of the other two decision areas.
Key Elements of Strategic marketing
Strategic marketing is the process of specifying an organisation’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It provides overall direction to the whole enterprise (1999). It can be "viewed as a set of theories, frameworks designed to explain the factors underlying the performance of organisations and to assist managers in thinking, planning and acting strategically" (2002).
Strategic marketing can be thought of as having three main elements-strategic analysis, strategic choice and strategic implementation (See Appendix 2). First, strategic analysis is concerned with understanding the strategic position of the organisation. Secondary, strategic choice is the result of strategic analysis, which is to do with the formulation of possible course of action, their evaluation and the choice between them. Last, strategic implementation is concentrated on how the choice of strategy can be put into effect (1997).
Strategic analysis includes developing a vision and mission to be achieved by the organisation, analysing and identifying an organisation’s external opportunities and threats, determining the internal position of the company including its strengths and weaknesses and establishing long-term objectives. Strategic analysis means to know the overall position of the organisation within and outside the marketing environment. There are many ways in which a company can be able to analyse the overall position of the organisation internally and externally.
For the external analysis, an organisation can be analysed through the used of Porter’s Five Forces Model or Political, Economical, Sociological and Technological (PEST) Analysis. The major concern of this analysis is to determine and present the level of the company to be geographically positioned in accordance with the degree of its external environment. And to be able to strategically analyse the internal position of an organisation, the management can use SWOT Analysis or Value Chain Analysis. Value chain is the framework for examining the strengths and weaknesses of an organisation, and for using the results of this analysis to improve performance.
On the other hand, strategic choice refers to the activity of organisations which involves creating other strategies and prefers special strategies to practise The degree of discretion or strategic choice an organisation has will be determined to a large extent by leadership style, national culture, commitment to past and continuing strategies, the success of certain symbolic actions, and the nature of its systems and processes ( 1999). The perspective of strategic choice reverses the emphasis by concentrating on the responsibilities of the management teams in shaping the conditions and processes of the strategic marketing from both internal and external environment of an organisation. In addition, strategic action draws upon the social activities and strategic marketing concept to improve the view that any managerial actions can influence or affect performance. The range of strategic actions is very broad. In environmental context, strategic choice comprises the selection of the product/market realm in which a certain organisation will engage (2003).
On the other hand, in organisational context, strategic choice involves the selection of the structures and allocation of the resources to be adopted within the chosen real. Further, strategic choice also involves activities for selecting the most appropriate strategy to be used by the organisation to stay competitive and survive in the stiff competition of the marketplace. Hence, it can be said that strategic choice is one of the crucial element of strategic marketing because the success of the implementation of the strategic marketing depends on how well and efficient the choice made by the management team.
It is said that each of the three key elements of strategic marketing is essential and that the used of these elements must be integrated with each other. If such elements will be treated as a discrete element or if one is separated from the other, it can be concluded that the organisation may not be able to achieve the main objective of using the concept of strategic marketing. It is said that strategic analysis, strategic choice and strategic implementation. By using these three as interdependent with each other will make any business organisation have the competitive edge in the business arena (1996).
Ansoff Matrix
Ansoff Matrix is a process used in an organisation so as to develop essential goals and resources. It is a combination of impure, mixed and interactive process loaded with difficulty, both politically and intellectually. Strategic marketing and human resource are very much related to each other. Through the combined efforts of these two practices, several improvements can be attained, however, without an effective human resources, implementation of strategic marketing will not be possible (2003). In addition, Ansoff Matrix is a three way process (choice, analysis and implement), hence, if one of the three processes does not meet the company’s expectations, then it will affect other process which can make the use of strategic marketing a failure for the organisation. It is important note, that in order to gain success through strategic marketing, the company must be strategic from the very beginning up to the last. When, one does not become successful, all other functions and operations within the organisation will be affected; hence can make the business to face its major downturn (Pearce & Robinson, 2000). Ansoff's Matrix highlights four possible growth strategies for a business.
- Market penetration occurs when a firm tries to sell more of its existing products in its existing markets, perhaps through greater promotional efforts.
- Market development occurs when a firm tries to sell its existing products in a new market e.g. a new segment or country.
- New product development occurs when a firm offers a new product to its existing customers.
- Diversification occurs when a firm develops new products for new markets.
Other Analytical Tools
Porter’s Competitive Advantage
Competitive advantage has always been an issue in business. This was clearly addressed by Michael Porter in the early nineties, which led to several moels such as the Five Forces. His theory of competitive advantage is one of a number of theories that place geographical industrialization and innovation at the centre of the process of development and competition (1999). In this theory, Porter mentioned four attributes namely: factor conditions; demand conditions; related and supporting industries, and; firm strategy structure and rivalry (1996). Each attributes are discussed in a national context. Factor conditions basically refer to a nation’s position on factors of production (i.e. skilled labor or infrastructure), which are necessary to compete in a given industry. Demand condition is the nature of national or local demand for both service and tangible products. Related and supporting industries, on the other hand, pertains to the presence or absence in the nation of supplier industries and other related industries that are internationally competitive. Finally, firm strategy, structure and rivalry determines the conditions in the nation governing how companies are created, organized and managed, as well as the nature of domestic rivalry (1996). The four attributes interact with one another. Modeled as the diamond, its systemic nature is indeed variable. Several factors transform the diamond into a system. This includes domestic rivalry and geographic industry concentration. Domestic rivalry promotes upgrading of the entire national diamond; while geographic concentration transforms the diamond into a system because it elevates and magnifies the interactions within the diamond (1990; 1999). This systemic nature then promotes clustering, which enables both vertical and horizontal linkages between industries (1990; 1999).
Porter’s theory provides an interesting framework on how the conditions of industries are shaped and influenced. However, many factors or competitive advantage determinants are missing in the theory. For instance, (1996) mentioned that Porter did not give importance to the culture or politics, while (1999) criticized that Porter failed to provide a comprehensive explanation on how clusters are developed. Another missing factor is the competitive advantage of alliance or strategic alliance. Porter’s theory offers an incomplete framework, but serves as a reminder that rivalry is not the only means for survival. Furthermore, it suggests that through rivalry partnerships or alliances can arise, leaving more space for competition.
The 4C Model
(2004) stated that the competition is now in the global scale, and hints that explaining competitive advantage in the national context may already be obsolete. To make up for the limitations of competitive advantage models of the past such as Porter’s theory, Ma (2004) integrated different theories and created the 4Cs. Here, views of pro-coordinated marketing proponents such as Levitt, Ohmae and Yip are integrated with competitive advantage theory of Porter. This new 4C model (see Figure 1) features integrated attributes such as: creation and innovation; competition; cooperation; and co-option.
Figure 1: The 4C Model ( 2004)
As can be seen, the 4C model is a combination of international management and competitive strategy that have new theoretical underpinnings and practical applications. This model does not only stress the prowess of competition, but also the impact of collaboration as a competitive advantage for firms (2004). The rationale of Ma (2004) for integrating cooperation in this new competitive advantage model is the prevalence of literatures pertaining to the importance of strategic alliance in the global context. Basically, this should be the main concern of the industries in this era because globalization already decapitated most local competition, and forced global competition in. Thus, competitive advantage is now more applicable in the global context. With choosing the right partners or allies, firms that are on the edge can push themselves back at the epicenter of success. Important factors related to cooperation in the 4C include: setting foothold; pooling resources; sharing complementarity; learning from partners; building alliances; and weighting option. It can be argued that among the factors in cooperation, seeking partners or alliances is are some of the most important as without allies, there is no way that the company can execute the other factors.
Conclusion
The scope of strategic marketing is inherently greater than that of operational management. With long time spans and complex organisational-environmental links, it is often impossible to determine the causes of a particular success or failure. Hence, it is difficult, if not impossible, to learn or foresee whether a certain strategic decision is good or bad for the firm. Furthermore, strategic marketing is concerned with non-routine issues and innovation at the organisational level; thus, strategic marketing is complex and ambiguous. As already mentioned, complex and ambiguous problems requires different approaches than simple and straightforward ones. In other words, managers who are used to managing day-to-day operations and solving the problems there may find it a challenge to be part of strategic marketing.
Appendix
APPENDIX 1
STRATEGIC MARKETING MODEL
APPENDIX 2
OVERVIEW OF STRATEGIC MARKETING CONCEPT
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