West, Ford & Ibrahim: Strategic Marketing 2e, Chapter 2

ChapterSummaries
Chapter2Marketingstrategy:AnalysisandPerspectives

Introduction
Originally, the word Strategy comes from the Greek word strategos, strictly meaning a general in
commandofanarmy;itisformedfromstratos,meaningarmyandag,meaningtolead.Therefore,
theconceptofstrategywasfirstlyintroducedintheancientmilitaryfield.Strategyisdefinedinmilitary
dictionariesasaplanofattackforwinningthebattleoraplanforbeatingtheopposition.Theword
strategyappearedforfirsttimeinthebusinessliteraturein1952inabookbyWilliamNewman.Atthe
timestrategywasimplicitlylookedatasaplanforachievingorganisationalgoals.Whilstthisdefinition
describes strategy as a means for achieving a companys objectives, it has not established a distinct
boundary between strategy and tactics and ignored the environmental dimension of strategy. Taking
two dimensions together, strategy can be defined as the overall plan for deploying resources to
establishafavourableposition,whileatacticisaschemeforaspecificaction.Itappearsthatthetask
ofstrategyistoidentifyhowafirmshoulddeployitsresourceswithinitsenvironmenttosatisfyitslong
term goals and how it will organise its activities to implement that strategy. Adding a competitive
dimension,strategyhasbeendefinedasthebroadstatementofthewayinwhichtheorganisationsets
out to achieve its longterm objectives. From a multiangular view Mintzberg and Quinn (1996)
proposedfivedefinitionsofstrategy(5Ps)asplan,ploy,pattern,positionandperspectiveandlooked
atsomeoftheinterrelationshipsbetweenthesefivedefinitions.

Varadarajan and Jayachandran (2000) note that strategy exists at multiple levels in an organisation:
corporate, business unit, and functional levels. Corporate Strategy describes a companys overall
directionintermsofitsgeneralattitudetowardgrowthandthemanagementofitsvariousbusinesses
andproductlinestoachieveabalancedportfolioofproductsandservices.BusinessStrategysometimes
calledcompetitivestrategyisusuallydevelopedatdivisionallevelandemphasisesimprovementofthe
competitive position of a corporations products or services in a specific industry or market segment
servedbythatdivision.FunctionalStrategyisconcernedwithmaximisingresourcesproductivity.Within
theconstraintsofthecorporateandbusinessstrategiesaroundthem,functionaldepartments,suchas
marketing,finance,R&Dandproduction,developstrategiestopulltogethertheirvariousactivitiesand
competencies to improve performance. The three levels of strategy form a hierarchy of strategy
development within any large corporation. They interact closely and must be well integrated for
corporatesuccess.
MarketingStrategy:DefinitionsandPerspectives
In the early 1970s, marketing strategy was seen as being an indication of how each element of the
marketing mix will be used to achieve the marketing objectives. According to this view, marketing
strategywasdefinedasthebroadconceptionofhowproduct,price,promotionanddistributiontobe
implementedinacoordinatedwaytoovercomeresistancetomeetingmarketinggoals.Thisviewgave
a complete reliance on the marketing mix and, therefore, the utilisation of the mix elements is the
marketingstrategy.

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West, Ford & Ibrahim: Strategic Marketing 2e, Chapter 2

Later,thisviewwasbroadenedtoutiliseothermarketingconcepts(e.g.,segmentationandpositioning,
product life cycle, market share, and competition) when defining marketing strategy. Utilising the
conceptofsegmentationandpositioning,marketingstrategyhasbeendefinedasameansthataimsto
select and target groups of consumers (or organisations) the company wishes to serve in the product
market, while positioning strategy provides the unifying concept for deciding the role of each
componentofthemarketingmix.Specifically,themarketingpositioningstrategyistheemploymentof
the organisations product, distribution, price, and promotion activities to position the companys
offerings against the competitors offerings in meeting the needs and wants of the target market.
Adding a competitive dimension, marketing strategy has been defined as a means that defines the
specific market/s toward which activities are to be targeted and the types of competitive advantages
thataretobedevelopedandexploited.

These definitions seem to belong to the school of thought that sees marketing as an organisational
function, and believes that marketing strategy is one of the firms functional strategies, which is
developedwithinthemarketingdepartmentandaimstoachievemarketinggoalsonly.

Acknowledgingtherolemarketingcanplaytocontributetotheorganisationsstrategicdirectionsina
market, Baker (1992) defined three marketing strategies: undifferentiated, differentiated and
concentratedstrategy.Thedefinitionsofthesethreemarketingstrategiesseemtobesimilartothoseof
Porters generic strategies (i.e., lowcost, differentiation and focus) which normally occur outside the
marketing department. Another approach to defining marketing strategy, which recognises the
contributions of marketing to the organisations strategic directions, is the use of Ansoffs classical
matrixthatcombinesthetwodimensionsofproductstoofferandmarkettotarget.Accordingtothis
approach, four strategies are defined: marketpenetration strategy, marketdevelopment strategy,
productdevelopment strategy, and diversification strategy. When market and product are combined
thiswillproduceamarketpenetration/developmentstrategybywhichacompanycancapturealarge
share of an existing market for its current products or develop markets for its current products. By
meansofaproductdevelopmentstrategyacompanycandevelopnewproductsforexistingmarketsor
developnewproductsfornewmarkets.

MarketingStrategyDevelopment
The development of marketing strategy can occur at three main levels of a firm. At the top level, the
core strategy of the company is selected, and marketing objectives and the broad focus for achieving
them are identified. At the next level, market segments and targets are selected and the companys
differentialadvantageinservingthecustomertargetsbetterthanthecompetitionisidentified.Taken
togethertheidentificationoftargetsanddefinitionofdifferentialadvantageconstitutethecreationof
the competitive positioning of the company and its offerings. At the functional level, a marketing
departmentcapableofputtingthestrategyintopracticemustbecreated.Themarketingdepartment,at
this stage, is responsible for designing the marketing mix programmes that can convey both the
positioningandtheproducts/servicestothetargetmarket(Hooleyetal.,2004).Applyingthisstructural
conceptofmarketingstrategydevelopmentontheBritishAirways(BA),itispossibletoseethatatthe
firstlevelthatthecompanyscorestrategyandmarketingobjectiveshavebeensettoensurethatBAis
thecustomersfirstchoicethroughthedeliveryofanunbeatabletravelexperience.Atthenextlevel,BA
has elected to provide overall superior service and good value for money in every market segment in
whichitcompetes.Atthethirdlevel,BAsmarketingmixprogrammeshavebeendesignedtosupportits
product/servicepositioningintheforefrontoftheglobalisationoftheairlineindustry.

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West, Ford & Ibrahim: Strategic Marketing 2e, Chapter 2

BAs marketing strategy is geared to sustaining a significant presence in the world market by
emphasisingonconsistentqualityofcustomerserviceandthedeliveryofvalueformoney.

MarketingStrategyOrientation
Shouldthedevelopmentofmarketingstrategybeorientedbyconsiderationofcustomers,competitors
or both? During the 1960s and 1970s, academics and practitioners gave much consideration to
customersandemphasisedtheimportanceofunderstandingandsatisfyingcustomersneedsandwants.
In the late 1970s, a competitive orientation was seen as preferable to a customer orientation. In the
early 1990s, it was argued that organisations need to pay equal attention to both customers and
competitors, that is, to adopt a market orientation. This latter orientation raises a question of what
competitivemarketingstrategyis.

Whatcompetitivemarketingstrategyis?

Withinthehierarchyofstrategydevelopmentthebusinessunitstrategysitsbetweenthehighlevelof
corporatestrategyandthedetailedstrategiesforindividualfunctions.DoyleandStern(2006)pointed
out that while corporate strategy sets the broad direction for the company, the business competitive
strategy details how a sustainable competitive advantage can be achieved, allowing the strategic
businessunit(SBU)tocontributetotheoverallcorporateobjectives.WheelenandHunger(2004)note
thatbusinessstrategywhichisoftencalledcompetitivestrategyfocusesonimprovingthecompetitive
position of a companys products or services within the specific industry or market segment that the
company or business unit serves. ElMorsy (1986) also defined competitive strategy as a business
strategy that discerns the basic forces affecting competitive conditions and their underlying structural
causes, identifying the particular strengths and weaknesses of the firm visvis each underlying
structural cause and determining offensive and defensive tactics for creating and maintaining a
competitivepositionovertime.

From the above definition of competitive strategy, it can be concluded that competitive strategy is a
business strategy that exists at the SBU level and deals primarily with the question of competitive
position, while marketing strategy is arguably seen as a functional strategy which is limited to the
actionsofspecificfunctionswithinanorganisation.Basedonthisconclusion,onemightarguethatthe
inclusionofthetwotermscompetitiveandmarketingwithstrategyinonedefinitioncouldbeseenas
onereferringtothetype(level)ofstrategy,whilsttheotherreferstotheorientationofthestrategy.
Acceptingthisview,competitivemarketingstrategycanbedefinedeitheras(1)abusinessstrategythat
isorientedbythemarket,or(2)amarketing(functional)strategywithcompetitiveorientation?

Inthecompetitiveorientationofmarketingstrategy,themarketerobserveswhatrivalfirmsaredoing,
anticipatestheirmoves,andsetsobjectivesforwaystosurpassthem.Inthemarketingorientationof
competitivestrategy,marketingplaysapivotalroleforstrategydevelopmentbylinkingtheorganisation
withtheenvironment.Becauseofmarketingspositionattheboundarybetweentheorganisationand
its customers, channel members and competition forces, it becomes central to the competitive
(business)strategyplanningprocessandisseenasaresponsibilityoftheentirebusinessratherthana
specialised function. The view adopted in this book has been influenced by the previously discussed
perspectives of marketing strategy, which recognise marketing as a businessphilosophy. It is believed
thatcompetitivemarketingstrategycannotbereducedtoalowerlevelofstrategydevelopment,norbe
seenafunctionalstrategydevelopedtoservethe4Ps.

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West, Ford & Ibrahim: Strategic Marketing 2e, Chapter 2

It should be seen rather as a marketingoriented business strategy. Based on this view, the following
definitionofcompetitivemarketingstrategyissuggested.

Competitivemarketingstrategyisamarketorientedapproachthatestablishesaprofitablecompetitive
positionforthefirmagainstallforcesthatdetermineindustrycompetitionbycontinuouslycreatingand
developing a sustainable competitive advantage (SCA) from the potential sources that exist in a firms
valuechain.

PlanningFrameworksforStrategyMakingProcess
Strategyistheoutcomeoftheorganisationsplanningactivities.Theseactivitiesareundertakenthrough
aprocessinwhichstrategyisdeveloped,approved,implementedandevaluated.Theprocessofstrategy
makinghasbeendescribedovertheyearsinsuchtermsas,budgeting,longrangeplanning,strategic
planning, strategic market planning, strategic management and strategic market management.
These terms are often used interchangeably. However, they can be put in a historical context as four
phases in the evolution of the management planning discipline. For the purpose of this chapter,
discussionhasbeenfocusedonlyonstrategicplanningandstrategicmanagement.

Strategicplanningasamodelofstrategydevelopmenthasbeendefinedastheprocessthatdefinesthe
longterm objectives of a company and the means by which these objectives are to be achieved. The
strategic planning model isprimarilyconcernedwithplanningaspectsonly,andseemedtoignorethe
implementationsideofstrategy. Thewordmarket wasadded tothelexiconofstrategic conceptsto
formwhatiscalledstrategicmarketplanning,andtoemphasisethatstrategydevelopmentneedstobe
drivenbytheforcesinthemarketenvironmentandnotonlybyinternalfactors.Strategicmanagement,
on the other hand, was introduced in the late of 1970s to highlight the importance of strategy
implementation, evaluation, and control. The concept of strategic market management emerged to
emphasise that strategy formulation and implementation should be informed and/or guided by the
marketandtheexternalenvironmentratherthanbeinginternallyoriented.

Conclusion
Thisbooksviewofthedevelopment ofmarketingstrategyisconsistentwiththemarketingliterature
thatrecognisesmarketingnotonlyasasetoffunctionsbutalsoasabusinessphilosophythatguidesthe
organisationsoverallactivities.Atthefunctionallevel,themarketingmanagerisconcernedinparticular
with the development of the organisations marketing mix programmes, and marketing positioning
strategy.Atthecorporatelevel,themarketingdepartmentcanactastheorganisationsprimarylinkto
themarketenvironmentincludingcustomers,suppliers,andcompetitors,andthereforemarketingcan
playasignificantroleinguidingtheorganisationsstrategicdirections.

Summary
This chapter reviewed the nature and various definitions of marketing strategy. Marketing strategy is
seenasbeingdevelopedthroughthreesequentialsteps/phases.First,thecorestrategyofthecompany
willbeselected,andthemarketingobjectivesandthebroadfocusforachievingthemwillbeidentified.
Secondly, market segments and targets are selected, and the companys differential advantage in
servingthecustomertargetsbetterthanthecompetitionisidentified.

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West, Ford & Ibrahim: Strategic Marketing 2e, Chapter 2

Finally,amarketingmanagercapableofputtingthestrategyintopracticemustbeelectedtodesignand
guidetheimplementationofthemarketingmixprogrammesinthetargetmarket.

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