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Market research
The impact of Porter’s strategy and CRM
types on the role of market
research and customer
147
relationship management
Received December 2005
Michael J. Valos and David H.B. Bednall Revised November 2006,
Deakin University, Melbourne, Australia, and December 2006
Accepted January 2007
Bill Callaghan
Strategic Mapping, Melbourne, Australia
Abstract
Purpose – This paper seeks to investigate the influence of Porter’s strategy types on the use of
customer relationship management (CRM) techniques and traditional market research, against
theoretical and empirical evidence that differences in strategy types may result in variation in
favoured marketing information sources and procedures.
Design/methodology/approach – Depth interviews generated a series of scale items, which were
combined with others derived from the literature in a questionnaire measuring strategy types, the roles
of market research, and the characteristics of CRM systems. Responses were obtained from 240 senior
marketing managers in Australia, and applied to the testing of five research propositions.
Findings – ANOVA found no differences in CRM usage among the strategy types. Variation was
widespread, however, in four roles of traditional market research: enhancing strategic decision
making, increasing usability of existing data, presenting plans to senior management, and achieving
productivity and political outcomes.
Research limitations/implications – Future researchers using the Porter strategic types should
separate “marketing differentiators” from “product differentiators” because they function and compete
differently.
Practical implications – All organisations can benefit from CRM systems, but “marketing
differentiators” exhibit a relatively higher usage of traditional market research. This is likely to be
because they compete by creating softer product differences, while others do so on harder
characteristics such as price or product functionality.
Originality/value – This is the first study to use the Porter types to explain differences between the
roles and uses of market research and CRM within organisations.
Keywords Marketing strategy, Market research, Market information systems, Customer relations,
Marketing management, Decision support systems
Paper type Research paper
Introduction
Marketing managers face new choices when seeking information to facilitate their
business strategy. According to Malhotra and Peterson (2001) the information
provided by customer relationship management (CRM) systems may complement or Marketing Intelligence & Planning
Vol. 25 No. 2, 2007
corroborate that from traditional market research. CRM has been defined in a number pp. 147-156
of ways, but here we are treating it as the collection and analysis of customer data (its q Emerald Group Publishing Limited
0263-4503
internal use) rather than as a builder of relationships with customers (its external role). DOI 10.1108/02634500710737933
MIP Recent research has highlighted the various alternative roles that market research
25,2 plays in strategic decision-making. Toften (2005) found “instrumental” use (applying
findings to an immediate problem) and the “conceptual” role (general enlightenment on
future issues) to be correlated with marketing performance. In contrast, the “symbolic”
and “political” modes of use did not improve performance. Ganeshasundaram and
Henley (2006) found a paradox in the roles for market research in practice: while much
148 more “background” research was being conducted, it was considered of less value than
“decision” research.
This paper reviews the literature dealing with the roles of marketing research, CRM
and business strategy. Hypotheses are presented regarding the impact of strategy in
explaining differences in how organisations use both marketing research and CRM.
The findings are reported of a quantitative survey carried out to examine differences
between the types and uses of traditional and CRM methods of data collection,
conclusions drawn and implications discussed. The paper concludes with guidelines
for the use of both types by marketing managers in practice.
Methodology
151
In the first phase of the study, 16 preliminary discussions about market research and its
value to the organisations were held with senior marketers and research managers in
Australia and the USA. The objective was to generate additional scale items for the
eventual survey instrument, to supplement those available for modification from the
literature review. The discussion agenda focused on the roles of market research and
the characteristics of CRM systems in general, and in particular on recent trends and
issues, including the role and usage of marketing metrics and single-source databases,
outsourcing and the impact of new organisational structures on the research function.
Academic colleagues reviewed the questionnaire before administration to the eventual
respondents, as a check on completeness and clarity.
In the second phase, a survey sample was selected from the Dun & Bradstreet list of
the top 1,000 senior marketing managers in for-profit Australian companies. After
preliminary contact to establish contacted to confirm the name of the person with
major responsibility for marketing, a self-completion questionnaire was distributed by
mail. Follow-up, as necessary was by letter, telephone or e-mail. A return of 24 per cent
was achieved.
To measure the role of market research, the seven-item scale of Maltz and Kohli
(1996) was used, plus 11 items generated from the depth interviews.
The role and usage of CRM systems and subsystems within the company was
measured by five items derived from the depth interviews, which covered CRM, data
warehousing, and sales, service and billing databases. To classify business strategy
types, a non-hierarchical Ward’s cluster analysis was undertaken on eight items
measuring Porter strategy types from Pelham and Wilson (1996) and three items from
the depth interviews. The focus was initially on the three-cluster solution, given the
Porter typologies expected, but other solutions were also explored.
One-way ANOVA was used to identify differences between market research roles
and CRM usage among the Porter types. ANOVA “determines the degree to which
differences found between the means of different groups or categories can be attributed
to sampling error” (Hair et al., 1995, p. 617). Statistical significance was established at
the 5 per cent level, which is consistent with a sample of this size. Dunnett’s T3 test of
significance was further applied, as the Levene test showed unequal variance within
the variables used in the ANOVA.
Findings
Table I shows the role variables derived from a Varimax factor analysis and
subsequent Cronbach a test, based on data collected by seven-point Likert scales.
Three strategies were identified by the cluster analysis: cost leadership, marketing
differentiator (i.e. brand differentiation) and product differentiator (i.e. differentiation
by innovative feature). Somewhat surprisingly, the focus strategy was not confirmed in
25,2
MIP
152
Table I.
strategy type
ANOVA comparison of
Enhancing decision making (0.90) 4.18 (1.81) 4.71 (1.57) 3.52 (2.4) M.P 6.52 0.00
Increasing usability of existing data (0.76) 3.28 (1.68) 3.99 (1.51) 2.55 (1.99) M . P, M . CL 12.2 0.00
Communicating actions to senior management (0.67) 3.51 (1.77) 3.82 (1.52) 2.88 (2.18) M.P 4.58 0.01
Achieving productivity and political outcomes (0.63) 3.10 (1.52) 3.62 (1.52) 2.75 (2.06) M.P 5.08 0.01
CRM proposition
CRM reliance (0.77) 3.94 (2.26) 4.02 (2.18) 3.62 (2.11) N/S 0.54 0.58
the cluster analysis solution. Previous researchers, for example Miller (1987), have also Market research
found variations from the original Porter typology when using cluster analysis. and CRM
The findings show that marketing differentiators rely more than product
differentiators on market research for enhancing strategic decision-making,
increasing usability of existing data, presenting marketing activities to senior
management and for productivity and political outcomes. The sole difference between
marketing differentiators and cost leaders in terms of any of the four roles of market 153
research under study was that they allocated a stronger role for market research in
“increasing usability of existing data”.
Lastly, and surprisingly, no significant differences were found among marketing
differentiators, product differentiators and cost leaders in the usage of CRM systems to
support marketing decision-making.
Research implications
Future researchers using the Porter types should ensure that differentiators are split
into their marketing and product sub-types. Differences between those were found in
this study, in terms of the respective roles allocated to market research, and treating
them as a single group potentially obscures important variation in strategy
implementation. It would also be beneficial to separate traditional market research into
the two categories identified by Ganeshasundaram and Henley (2006), “decision
research” and “background research” and study each role separately. This would
permit examination of the notion that cost leaders operate in a more certain and
predictable environment and their research is more for insurance or long-term
knowledge than short-term action; they consequently favour background research.
In contrast, it is to be expected that the more innovative and dynamic environment in
which product differentiators operate will require research to lead to immediate action;
decision research may therefore be preferred.
Practical implications
All marketing managers appear to benefit from CRM, given that strategy is not a
determinant of CRM usage. However, different approaches to the implementation of
marketing strategy do suggest guidelines for the usage of traditional market research.
Marketing managers need to consider their organisational structure in choosing the
roles for market research. For example, organisations with centralised structures are
likely to encourage non-rational and political uses of market research.
Market research managers operating in a strategic environment designed by Market research
market differentiators may require enhanced communication skills, because the and CRM
requirements they have to specify in their briefs to research sub-contractors and
the findings they must subsequently convey to marketing managers are typically
subtle and complex aspects of branding and differentiation, given that their products
and services have limited objective competitive advantage. On the other hand, the
market research undertaken for product differentiators and cost leaders will relate to 155
more obvious competitive advantages, such as functionality or price, and thus be easier
to communicate.
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Subramanian, R., Fernandes, N. and Harper, E. (1993), “An empirical examination of the
relationship between strategy and scanning”, Mid-Atlantic Journal of Business, Vol. 29
No. 3, pp. 315-30.
Corresponding author
Michael J. Valos can be contacted at: michael.valos@deakin.edu.au