Transcript Aligning Marketing to Corporate Strategy

(the academic perspective)
Strategic Marketing: the traditional view
 …is all about:
 getting and keeping competitive advantage?
 matching distinctive abilities to specialised customer
needs?
 the interplay of environment, goals and strategies?
 analysis and hard work?
 inspiration, creativity and luck?
SMP process (Wilson and Gilligan)
 Where are we now?
 Where do we want to be?
 How might we get there?
 Which way is best?
 How can we ensure arrival?
 And what happens if things change?
Strategic marketing planning
Business
purpose
Industry
analysis
Core strategy
Company
analysis
Market target
Competitive
positioning
Competitive
advantage
Control
Implementation
Organisation
Marketing mix
(HPN, p35)
Limitations of traditional view
 Helps to generate discussion and new ideas
 Ensures proper breadth of analysis
 But fails to provide an unambiguous method of
judging between possible strategies
 And so may fail to convince sceptical audiences
Key challenges
 Doyle (2008): most firms face same key challenges:
 rapid market change
 marketing, rather than production skills underpin
sustainable competitive advantage
 marketing performance is the main driver of shareholder
value creation
 But marketing has been losing influence in major
firms….
“…because mainstream marketing is
occupied with doing things and spending a
budget on marketing mix variables,
marketing has become a cost issue only,
instead of a balance sheet issue as well”
Grønroos (2003)
“…marketers are perceived to be
“unaccountable” by the rest of the
organisation; they are seen as unable to
demonstrate a return on investment in
the activities they have control over.”
Baker and Holt (2004)
“Because the link between marketing strategy and
shareholder value has not been made, boards have
tended to look at two other more transparent
strategies. One has been cost reduction – sometimes
disguised by more appealing names such as
reengineering, downsizing or right sizing. …The
other common remedy has been acquisition”
Doyle 2008, p19
Value-Based Marketing
 Main sources:
 Doyle, P (2008), Value-Based Marketing, 2e John Wiley
 McDonald et al (2005), Marketing Due Diligence, Butterworth
Heinemann
 Reinterprets strategic marketing ideas in terms of
maximising shareholder value
 Potential alignment of marketing and finance theory
Value in business
 Shareholder value has been created when market value
of a firm exceeds book value
 Market value mainly depends on management’s ability
to seize profitable opportunities
 availability of opportunities in the market
 competence of business
 Key is to maintain sustainable competitive advantage
in a dynamic market
SV and Marketing
 SVA is a tool for analysing performance, or
evaluating options
 SVA itself doesn’t produce winning strategies, but it
does help to reveal them
 SVA can lend greater force to marketing arguments
 stronger theoretical basis
 encourages profitable marketing investments
 penalises arbitrary short-term cuts
Challenges to the SVA approach
 What about other stakeholders?
 What if it doesn’t work?
 OK, but how do you actually manage?
What if it doesn’t work?
"I made a mistake in presuming that the selfinterests of organisations, specifically banks and
others, were such that they were best capable of
protecting their own shareholders and their equity
in the firms… Those of us who have looked to the
self-interest of lending institutions to protect
shareholders' equity (myself especially) are in a
state of shocked disbelief.”
(Alan Greenspan, former Chairman of the US
Federal Reserve, to a Congressional committee in
October 2008)
How do you actually manage?
 Ambler (2003): SV can’t be the exclusive focus
 Good for choosing between possibilities
 But concentrates on things that can be expressed as
money…
 …and can work against radical, breakthrough
innovations…
 …and can lead to a blinkered view of the future and its
possibilities
 So, selection of operational metrics is vital
 (and some degree of fuzziness is advisable)
“The relationship paradigm has an opportunity to
make marketing relevant for shareholders, top
management, customers and the management of
customers again. In the age of customer
relationships, where marketing is a process
encompassing most of the functions, processes
and departments of a firm, the support of the
entire organisation is imperative to success.”
Grønroos (2003)
“Marketing is to invest in customers and customer
portfolios to get wanted long-term cash flows from them.
This is achieved through an exchange and fulfilment of
promises, which facilitates the process of acquiring
customers, and maintaining and enhancing relationships
with these customers, and when necessary terminating
these relationships, so that the financial and non-financial
goals of all parties involved in the network of suppliers,
customers and other stakeholders are met”
Grønroos (2003)
Marketing is the management
process that seeks to maximise
returns to shareholders by
developing relationships with valued
customers and creating a competitive
advantage
Doyle (2008), p30
References
 Ambler, T (2003), Marketing and the Bottom Line, FTPH
 Baker, S and Holt, S (2004), Making marketers accountable: a
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failure of marketing education?, Marketing Intelligence and
Planning, 22/5, 557-567
Doyle, P (2008), Value-Based Marketing, 2e John Wiley
Grønroos. C (2003), Taking customer focus back into the
boardroom: can relationship marketing do it?, Marketing Theory,
3/1, 171-173
Hooley, G, Piercey N and Nicoulaud B (2008), Marketing
Strategy and Competitive Positioning, 4e, FTPH
McDonald, M, Smith, B and Ward, K (2005), Marketing Due
Diligence, Butterworth Heinemann
Wilson, R and Gilligan, P (2005), Strategic Marketing
Management, 3e, CIM/Elsevier