Marketing and Business Strategy

Increasingly competitive market conditions require strategic responses. Strategic decisions define core competencies and integrate activities. Strategic management recognises the importance of implementation and managing change. Essentially, strategic marketing management and subsequent marketing strategies contribute to overall business goals through a three-stage process: analysis, formulation and implementation.

What is Strategy?

Over the years, many definitions of ‘strategy’ have been developed and close examination of such definitions tends to converge on the following – strategy is concerned with making major decisions affecting the long-term direction of the business.

Strategic problems can be viewed as having three distinct components. Firstly, analysis - we need to understand the business environment and the resource capabilities of the organisation. This needs to be considered in the context of the organisation’s culture and the aspirations and expectations of the stakeholders. Note: ‘stakeholders’ are taken to be anyone with a stake in the organisation (e.g. customers, employees, suppliers, etc.).

Secondly, managers need to make strategic choices. This is achieved via a process of identifying, evaluating and selecting options. The organisation needs to define:

• what is the basis of our strategy – so-called ‘generic’ strategy,
• what product/market areas will we operate in, and
• developing specific strategies to achieve corporate goals.

Finally, the issue of implementation must be considered. There is the need to plan actions, allocate resources, and, where appropriate, restructure to achieve strategic change.

The Role of Marketing Within Strategy

Strategy must address issues such as customers, competitors and market trends. It needs to be proactive as opposed to simply reacting to events. In this way, strategy can detect and influence changes in the business environment. By nature, marketing defines how the organisation interacts with its market place. Consequently, all strategic planning, to a greater or lesser degree, requires an element of marketing. Only in this way can organisations become strategically responsive to customer need and commercial pressures. Indeed, it is possible to view marketing as more than a functional activity. It can be adopted as a business philosophy. Here the organisation adopts a marketing orientation – success by a process of understanding and meeting customer need.

Fundamental Philosophy In Your Business

The company’s orientation defines its fundamental business philosophy, highlighting what is perceived as the primary route to success. Market orientations are now widely established within the business world (and often seen as the ‘holy grail’ of marketers) but other business orientations are equally common.

Strategic Vision: Develop a long-term, market-orientated strategic vision by viewing marketing as more than a series of promotional tools and techniques. It must be on the agenda of senior management, who should develop and implement market-led strategy and define the future in terms of creating long-term value for stakeholders.

Production orientation: Here business success is attributed to efficient production. The emphasis is on mass production, economy of scale and cost control. Management’s key concern is with achieving volume and meeting production schedules. This philosophy has its place, but risks limiting operations to low added-value assembly work.

Product orientation: The belief is that product innovation and design will have buyers beating a path to our door. Management’s perception is that our products are so good they will, in effect, sell themselves. Little, or no effect, is put into establishing what the customer actually wants – a dangerous route! Naturally, product innovation is important, but it needs to appeal to the market place, otherwise it risks being innovation for the sake of innovation.

Sales orientation: This views sales volume as the key determinant of success. The focus is on aggressive selling that persuades the customer to buy. Given that the process is driven by sales targets, a short-term perspective dominates, with little regard to building longer-term relationships. Often, this follows on from a production orientation, as management tries to create a demand for unwanted products.

Market orientation: As previously stated, success is derived from understanding and meeting customer needs. This process starts with the customer and uses actual customer demand as a means to focus resources. In simple terms, we provide what the market wants. Additionally, the importance of building long-term relationships with customers is recognised. We seek to build loyalty and consistently offer superior value. An awareness of competitors’ proficiency and strategy is required in order to optimise this process.

How do we go about achieving a market orientation? The answer to this question can be summarised as follows:

We cannot be all things to all people. Expectations have to be realistic and matched to capabilities, resources and external conditions. We may well need to make ‘trade-offs’ to ensure we focus on activities that add value.