The Essence of Marketing Strategy and the Organizations Business Advantage - Essay Example

Marketing is unlikely to be the source of "blue ocean" strategies so it has limited value in the strategic debate in companies. Introduction In the competitive world of business, any organization has to evolve different strategies to strive hard to achieve its goal and be there in the competition. Organizations identify, plan and manufacture products and provide services, so that it doesn't face stiff competition from its rivals but makes its rivals compete with it. In order to make this possible, company need to market its products and services through the best mediums available and make the consumer conscious about the product. Marketing is an essential and important tool of any successful business. Scott (2006)1 states that companies without marketing mindset are at a disadvantage in today's business world that are product centric rather than customer centered. The overall concept of Blue Ocean Strategy is innovation. It is understood from the book that companies should identify, plan a strategy and create a business of which no competition exists. Kim and Renee (2005)2 divide the competitive business world into two segments of Red Ocean and Blue Ocean. It is further explained that 'Red Ocean' is the business world full of competition where the existing organizations compete with each other to acquire its share in the market whereas 'Blue Ocean' is the unidentified market area. The Blue Ocean is the space wherein the business is new in the market and has no threat of competition instead it has to create competition. The giants of particular commodity or product or services, who are termed as leader, find it difficult to survive in the competitive world of business without marketing. American Marketing Association has defined marketing as the performance of the business activities that direct the flow of goods and services from producer to consumer or user. Marketing assists in identifying specific markets for products and services, guiding the development of products, packages, and services, etc. (Kumar)3 In blue ocean strategy this concept has a new meaning and a new method to implement in the firms. Blue ocean marketing concept proposes a method based on the segmented target group and the product development and marketing is based on the conduct of this group. The concept is good but cannot be fitted with all firms and their marketing procedures as it lack competition, which is vital in the marketing concept. (Kim and Renee, 2005)4 Marketing Strategy David (2007)5 states that creating a marketing strategy is only the first step towards the attainment of goal and after the strategy has been built; its solidarity has to be maintained to attract external stakeholders. He criticizes the marketing directors who are using B2B model while the others in the market have adopted real and valuable marketing strategies. The first principle of blue ocean strategy is to reconstruct market boundaries to create blue oceans so that it doesn't face any level of competitions and existence of competitors is zero. In order to create Blue Ocean, it becomes necessary to identify the threats and difficulties that make Red Ocean such a difficult world to live in. The red ocean companies are trapped in this area due to following reasons, 1) they define their industry similar to which exists in the market and try to provide the best other than others, 2) they try to and follow the strategic accepted methods, models, principles of developed and successful companies and strive to stand out in their strategic group, 3) as they produce similar products and provide service similar to that of the other industry, they focus the same consumer, which further makes the competition stiff and harder, 4) they define the scope of products and services similarly, 5) they accept the rules and regulations of the specific industry as they are governed by the governing body and functions accordingly and 6) some seasonal products produced by the companies will face stiff competition from its rivals as all the companies will enter the market at same time. (Kim and Renee, 2005)6 Market for some product is such wide that no single provider or manufacturer can cater the demand of the entire volume of consumer in this broad global market place. In that specific scenario, blue ocean strategy cannot be fit with the regular marketing strategies. Marketing can produce blue ocean strategy but cannot fit it with all products. Hence, blue ocean strategy can be implemented in the marketing of some products. Marketing cannot easily generate blue ocean strategy as the chance for it is so less and there may be a good chance of finding a competitor with 'me too' product. Innovation The key element of blue ocean strategy is value innovation, a combination of differentiation and low cost that sets a product line or service apart from its competitors. Innovation is the buzz word in each and every industry and organization. The business world and political world has realized the importance of word 'innovation' which brings the new products or services in line by the enterprises or government agencies. Blue Ocean can be created in two ways, one be launching entirely new business different from others, market for which does not exist and eventually no market means no competitors and second, by creating it within the red ocean by expanding the boundaries of existing industry as in mobile industry. When cell phones first arrived, it was only the medium of voice based service, but SMS came into foray, them MMS, GPRS, EDGE, Bluetooth, and many more services are being added to this little piece to increase its sales via comprehensive marketing. (www.12manage.com)7 Lauren Mathys states that Blue Ocean Strategy is about creating new direction for a company that may already be one of the very good ones but wishes to be the best. (Dag, Swimming the Blue Ocean)8 The essence of marketing concept is that customer and not the product shall be the centre or the heart of the entire business system. In Blue Ocean strategy this is true - customer is targeted first and the product or service is introduced for this segmented group of customer It emphasizes customer-oriented marketing process. But in the expansion process of the targeted group, there will be so many unexpected barriers due to lack of existing marketing data and experience. This may sometimes poses as a big treat for the development and this can be eliminated with traditional marketing strategies along with modern strategies. All business operations revolve around customer satisfaction and service. Marketing plans, policies and programmes are formulated to serve efficiently customer demand. Marketing research and marketing information service is expected to provide adequate, accurate and latest information regarding target markets and current consumer wants as well as dealer wants to the marketing managers and on the basis of such realistic information, they will take sound decision on any marketing problem. The entire marketing mix will be formulated on the basis of marketing research. Thus, marketing strategy is a plan of action for obtaining the marketing objectives. The marketing objectives gave a picture where it wants to go and the marketing strategy provides the path to reach there. In other words, marketing strategy is a specific plan for allocating marketing resources to reach marketing objectives. Hence, which strategy is adopted depends on the objectives of the firm and marketing recourses, which it has. Sometimes it is easy to conquer the competition with the advantage but sometime, it is easy to find a new market place. Hence, there is no readymade strategies are available and it can be not be created from vacuum. Find a product or service and adopt the apt method to market it is the real strategy behind the success of a firm. From the business point of view, strategy may be defined as the schemes whereby a firm's resources and advantages are managed in order to surprise and surpass competitors or to exploit opportunities. In this very concept the very concepts in the Blue ocean strategy has a very little meaning in the overall marketing strategy formulation process.9 (Kim and Renee, 2005) Benefits of Marketing Concepts Benefits of new market-oriented business approach are: (1) Consumer needs, wants and desires receive top consideration in all business activities. (2) Greater attention is given to the product planning and development so that the merchandising can become more effective. (3) Demand side of the equation of exchange is honored more and supply is adjusted to changing demand. Hence, more emphasis is given to research and innovation. (4) Marketing system based on the marketing concept assures integrated view of business operations and indicates interdependence of different departments of a business organization. (5) Interests of the enterprise and society can be harmonized as profit through service is emphasized (6) Marketing research is now an integral part of marketing process and it is a managerial tool in decision-making in the field of marketing. Marketing Strategies The traditional marketing strategies in the Red Ocean include studying the products and its competition in relation to price and consumer demand. This category follows three generic strategies i.e. focus or differentiation or low cost. In this demarked area, the companies use well developed tool to refine their existing marketing strategy by spending considerable amounts of money trying to understand their customers' needs and wants through formal and informal market research. In contrast, blue ocean strategy concentrates on relatively new concept which was originated by two professors at INSEAD, Paris in 2004. The strategy challenges but does not replace existing thinking, creating own market by defining it first and later dominating it like eBay, doesn't require advanced technology and focuses on non-customers. (Andy Young)10 The establishment of a firm presupposes that a market exists for its products or services. As profit motive is the prime mover of all business actions, firms tend to relate markets and marketing conditions to products in terms of profitability. Competition characterizes marketing conditions and different product brands emerged to attract customers. Hence to maximize profits, a firm develops several marketing alternatives. These alternatives, came to be called marketing strategies. According to Philip Kotler (2005)11 "marketing strategy is the essential approach that the firm will use to attain its objectives and it consists of wide decisions on target markets, marketing positioning and mix and marketing expenditures levels." In practice, a company's marketing strategy is the posture, which it takes in a competitive market. For its success, management has to shape its own policies regarding the various controllable aspects of marketing such as product distribution, promotion and pricing. A combination of such policies on the controllable aspects of marketing is the overall marketing strategy. But in blue ocean strategy this competition is nil and all the marketing strategies formulated must be addressed the needs of customer rather than criticizing the competitor product or service. While implementing the marketing strategy, the management must try to serve selected markets effectively so as to minimize competition. This type of defensive technique may not always succeed. The aggressive competitors by developing new products may break the established customer preferences. In Blue ocean strategy, there is no competitor as the segmentation is already done and there exists a group of segmented customers who need to be addressed with a new or re-shaped product or service and thus a new group of people who are satisfied with the product or service presented with the no competitor market place. Value of Marketing Marketing is as old as human civilization. History of mankind is full of developments resulting from a gradual process of evolution, and modern marketing is no exception to this rule. Now marketing has developed into a full-fledged discipline. Many managers consider marketing as the most important of all management functions in business, industry or service undertakings. Managers have now realized that the success of any enterprise depends on how efficiently they handle marketing.12 (Yang, 2007) Marketing is a dynamic, exciting and challenging activity. It affords ample employment opportunities in the modern business world. The success of business enterprises depends upon the efficiency of marketing management. The marketing manager must be aware of the changing needs and desires of consumers. He must concentrate on demand stimulating and demand fulfilling efforts of the enterprise. Demand creation and demand fulfilling activities are inter-related. These activities include designing of a new product, its production, distribution, promotion and pricing. This is true in blue ocean strategy. Blue ocean strategy also supports this idea of creation of demand by adopting new methods and finding new group of customer for the product. But it devices plan for finding no competition in the marketing which is not a sustainable principle of marketing the marketing of all products as the demand depends of the necessities and catering this necessity is the very essence of winning competition and success. In common parlance, 'marketing" means the process of distribution of goods and services. The term 'marketing' embraces all resources and activities necessary to direct and facilities the flow of goods and services from the producer to the consumer. For such an activity demand creation and catering such created demand is vital. In blue ocean strategy, this is done by finding the exact pulse of the product in the market and caters such created demand with the product line. Hence finding new market place is necessary to implement such a non-competitive idea in the market. According to Theodore Levitt (1983)13, "firms should look at the world as a market of similarities, which it should exploit to standardize, rather than a market of differences where it should always customize and localize." Every business unit operates within a particular environment; an essential feature of marketing management is that the environment exerts much influence on marketing operations. The environmental forces may be internal or external. The internal forces are inherent in any organization and are within the control of the management. But external forces are generally uncontrollable by the management. The various environmental forces that have a bearing on the decisions of the marketing management may be divided into two groups: Controllable Variables, and Uncontrollable Variables. Controllable variables are the decision areas within the control of the management. But uncontrollable variables are forces that impose restrictions or limitations on the decisions of the management. The success of a marketing manager depends on how he uses the means of adaptation to counteract, the influence of environment, with a view to guiding the company towards the most profitable opportunities. As the environment is subject to continuous change, the company should make corresponding modifications in the marketing practices if it has to survive. Hence adopting suitable strategy is just what is needed in the success of a product. Competition cannot be avoided but can be limited with value added qualities to the goods or service. Thus finding a winning marketing strategy rather than creating a space of uncompetitive atmosphere is more beneficial to the overall success of the firm. In addition, every attempt on the part of the marketer in furtherance of sale would tantamount to marketing strategy. In this sense, even a marketing mix emphasizing on product, pricing, physical distribution and promotion strategies would become part of the broad horizon of marketing strategies. According to Michael E Porter (1985)14 marketing strategy has only one goal - to cope with the competition and find the market space for the product and win the competition. Marketing plans devised for the marketing must be suited to products. Marketing strategies are those battle plans used to fight the competition in the industry that a company currently participates in. In blue ocean strategy there is no competition or competition is eliminated with new unique quality of the product or service where by customer are attracted to the product which is marketed in the present market place. This is not a winning marketing strategy in its full meaning as the market depends on many factors and competitions is one of the essential element in it and this must be considered seriously for the marketing of any product as the globalization has changed the very way of marketing and the present generations are leaving in the very scenario of global village. Marketing Plans & Products The difference between Red Ocean and Blue Ocean Strategy is that in Red Ocean, companies compete in existing market space, tries to beat the competition, exploit existing demand, makes the value-cost-trade-off and aligns the whole system of firms activities with its strategic choice of differentiation or low cost. Whereas Blue Ocean creates its own market space with no competition, create and captures new demand, break the value-cost-trade-off and aligns the whole system of firms activities in pursuit of differentiation and low cost.15 (Andy Young) Blue Ocean Strategy can be constructed on six point framework which is stated as follows: 1. Look across alternative industries 2. Look across strategic groups within industries 3. Look across the chain of buyers 4. Look across complementary product and service offerings 5. Look across functional or emotional appeal to buyers 6. Look across time. (Kim and Renee, 2005)16 Marketing plans vary from industry to industry. While formulating a plan the marketer must think of the product. The product maybe a consumer product or an industrial product. Marketer must also take into account the system of distribution, promotion and pricing. The product, distribution, promotion and price are the various elements of a comprehensive marketing plan. They are sometimes called the marketing inputs. Blue ocean strategy requires that marketing plan to be shaped not with the product but with the customer demands. But in true sense, it is essential to cater the requirements and demands of the customer at the time of product development and the marketing of that developed product to the customer segmented for this. Thus target customer may be developed after the product development but avoiding competition for this product is not simple task as pictured by the blue ocean strategies. Product strategy is a part of marketing strategy. It defines the place in the market, where the product is supposed to fit and specifies the appeal that is to be used for getting the product accepted by the consumers. The aim of product strategy is to maintain an existing market share / to increase the share or to capture a new market. Accordingly, the existing products will be revised; a new product line maybe added or an entirely new product line may be introduced. Product has an identity or personality as its own. Utility is the one of the important component of product identity and this is the demand-generating factor for the product. Competition will be attracted towards the demand and going ahead above the competition is just what needed to win the customer. Hence gaining competitive advantage is essential for the product success over other products or existing players in the market. Promotional activities help to gain a competitive edge. Both the amount invested in promotion and the effectiveness with which it is used is important. (Yang, 2007)17 The marketer will have to develop a strategy for introducing a new product in the market. The strategies at the introductory stage cover product, size, packaging price, positioning, distribution, advertising and sales promotion, share of target market etc. They will undergo changes in the subsequent stages of the product. For overcome the barriers in the market process of the product during the time of marketing, the marketer has to estimate the initial sales and repeat sales to estimate whether the product would give a reasonable returns to the firm at the time of product development. Blue Ocean Strategy is not an apt choice for the marketing of all products, as it cannot compete with the competitor with the same standard product.18 (Kim and Renee, 2005) But in practice, there are significant differences in the marketing of services and products. In the case of a product, the buyer can often test the various products before he makes the purchasing decision; but this is not possible in services. And the only thing a company can show to the potential buyer is the work it has done for others. The buyer thus finds it difficult to differentiate between the claims of various service organizations. A product is offered with special features. But in service it is the 'personal touch' that counts much. There is the interaction of people. The behavior of individuals have much impact on consumers, e.g. a friendly receptionist, an impolite bank clerk etc. In other words, it is the quality of this interaction that brings success or failure for the marketing effort of a service organization. Service organizations have to adopt marketing concept in marketing services. Thus, adopting marketing concept for the betterment of a service is essential to win over the competition and in this regard, blue ocean strategy is not a fit one in finding the ideal condition for the growth of the firm as it segment the market with a small percentage of customer whose demands are catered with more care and future development of such market depends on so many other external and internal factors which are always changing from time to time with the global market scenario. Wal-Mart could be great example to cite for new market creation. Sam Walton in 1962 had an innovative idea of making profits from discount stores, which were in operation at the time. He thought of making profits on bulk sales rather than making profits from customers. Even today, Wal-Mart which is considered as the biggest organization in the world and in the history thrives on creating history and achieve its goal, by the medium of heavy sales and attracting customers through innovative methods of marketing in its discount stores. (Brunn, 2006) 19 Market Segmentation & Blue Ocean Strategy It is important to segment the market and decide a particular group that will serve as the target market. In Blue Ocean strategy, this concept of segmentation is implemented by the way of attracting existing or new customer who has some reason for not being a consumer for some particular product or service. Finding the reason for this attitude and devising a new service or introducing a new product for this group is what blue ocean strategy propose for covering this segmented group. Hence in Blue Ocean strategy, there is no actual segmentation, but covering a segmented group with their needs is done. In designing marketing plans and crafting marketing strategies, there are several concepts that are organised to create a broader picture of the firm's situations. Part of these ideas includes the four Ps, which are shortened for product, pricing, promotion, and placement. These are valuable aspects that need to serve as the foundation of marketing management strategies. Usually, the concept of marketing is generalised and extensively focused on the manner in which goods or service are presented in the market. Gradually, practitioners have made specific changes to accommodate the different components of marketing. But in Blue ocean strategy, it is nor the goods presented in the market, but the existed or created market will position the product or service designed for this segmented group. The product that a company is providing becomes a major issue in the conception of marketing plans (Brown, 1993)20. Indeed, quality is an important aspect that the product needs to acquire. Moreover, the product needs to address the needs of the consumers. These two considerations are vital in gauging the actions to be made in the marketing strategies. In devising marketing strategies pricing methods are fundamental especially in competing with other products. But in Blue ocean strategy there is no competition to other products. For consumers, price serves as a barrier to purchase high quality commodities (Guiltinan et al., 1996)21. On the other hand, there are top-notch products that have been identified as consumer friendly in relation to price. Every product in the market is provided with several sources where competitive advantage can be derived. In particular, some of its marketing attributes can lead a product to unprecedented success. For this, the firm has to start from the basics before making complicated strategies. This entails the analysis of current environments where the marketing strategies will work. Also, the company needs to use marketing tools that will allow the effective use of its resources to make the marketing initiatives easier to manifest. Overall, there has to be a clear direction as to the marketing strategy for the firm. There are characteristics that the company can use to fuel its marketing strategies. Aaker (1984)22 further stated that marketing techniques such as segmentation and targeting would further specify the marketing needs of the firm. Holistically, competitive strategy in relation to marketing comes with a complete understanding of the general concepts and procedurally uses different marketing mechanisms using quality instruments. Thus, marking strategy based on blue ocean concept has little meaning in the overall process of firm activities. Marketing in Blue Ocean In theory, positioning refers to the perceptions developed in the minds of the target market. Basically, it entails the creation of image of the brand and the entire organisation (Trout and Rivkin, 1996)23. Positioning is the act of designing the company's offering and image to occupy a distinctive place in the target market's mind. The end result of positioning is the successful creation of a market-focused value proposition, a cogent reason why the target market should buy the product. Andy Young explains that the business has to cater to the needs of three different noncustomers which include 'soon to be' noncustomers who are on the edge of market, 'refusing' noncustomer, the ones who consciously choose against the market, and third is 'unexplored' noncustomers who are in the markets at the distance. Therefore it is clear from this explanation by Andy that business in Blue Ocean has to rely somewhat on marketing to attract noncustomers in order to build the business based on six point frameworks. Marketing in any ocean whether it be according to rhetoric of Kim and Renee, Red Ocean and Blue Ocean, is an integral part of any business. The six points formula on which the Blue Ocean should be build clearly states to look across the functional and emotional appeal to buyers. In the Wal-Mart example cited above, it is mentioned that Wal-Mart earned huge revenue on bulk purchases only because it could attract customers in large numbers. Wal-Mart attracted consumers with attractive marketing strategies which forced the customer to shop at Wal-Mart. Recent and presently under progress, Indian Premier League (IPL) is the best example of blue ocean strategy. A totally new concept of cricket is attracting biggest of the entrepreneurs and business magnet to invest in this new venture. Two years back it was never thought of Twenty 20 game but now it is challenging all the big formats in business. However, IPL attributes its success a lot to its marketing. Players of the franchise teams, film stars, bigwigs, etc. were included in the marketing strategy to promote this version of game. Conclusion The essence of marketing strategy is to understand the current forces and to use them to the organizations business advantage. Blue ocean strategy has a little influence to this process as the physical barriers that obstructs the tapping of customer has been disappeared de t the globalization process and one who has the capability to compete can succeed in its segment. Marketing ideas have to be done using creativity with the inclination to use the fundamental tools and concepts. Thus, Blue Ocean strategy cannot be nullified; it must be used with other strategies for the formulation of new strategic policies for he entire firm. These mixed concepts will help the marketer to succeed in this global market scenario. Marketing can be managed perfectly by managing production of product or service. Addressing consumer's needs are vital in marking of a product or concept and caring their demands will expand the number of customer to the product or service as compeered t the next competitor. There is no doubt that consumer's needs are to be satisfied. (Kolter 2005)24 A company adopting the marketing concept has three distinguishing elements around its marketing function: it has consumer-orientation in its business planning and activities; it focuses its attention to corporate objectives, including profit. Corporate objectives are given top preference and departmental goals act as the means to achieve corporate goals. And it adopts the systems approach in planning, organizing, controlling and coordinating its entire business as one system to achieve the overall corporate objectives. Customer-orientation, profitable sales volume and integrated marketing activities are the three pillars of the marketing concept. There is magical readymade tool available but can make with the real time data and experience in the global market. Marketing strategy is all about firm success and profit making. Hence, Marketing is unlikely to be the source of "blue ocean" strategies so it has limited value in the strategic debate in companies. References 1. Aaker, D. (1984). Strategic Market Management. London: Wiley and Sons Publishing 2. Andy Young, Assoc. Professor, Blue Ocean Strategy, University of Warwick, UK. http://web.management.ntu.edu.tw/English/NtuMBA/Upload/Blue%20Ocean%20Strategy-Andrew%20Young.pdf 3. Andy Young, Assoc. Professor, Blue Ocean Strategy, University of Warwick, UK http://web.management.ntu.edu.tw/English/NtuMBA/Upload/Blue%20Ocean%20Strategy-Andrew%20Young.pdf 4. Blue Ocean Strategy (2009) 12 Manage, http://www.12manage.com/methods_kim_blue_ocean_strategy.html 5. Brown, S. (1993). European Journal of Marketing "Post-modern Marketing" 6. Dag Hakon Helevik, Swimming the Blue Ocean, http://www.norskdesign.no/getfile.php/Filer/Artikler/Ukeavisen%20Ledelse_EN.pdf. 7. David Murphy (2007) The Marketer, March 2007 8. Guiltinan et al. (1996). Marketing Management: Strategies and Programs. New York: McGraw-Hill 9. Kai Yang (2007) Voice of the Customer: Capture and Analysis, McGraw-Hill Professional, 10. Kai Yang (2007) Voice of the Customer: Capture and Analysis, McGraw-Hill Professional, 11. Kotler, P. and Armstrong, G. (2005). Principles of Marketing 11th Edition. New Jersey: Prentice-Hall 12. Kotler, P. and Armstrong, G. (2005). Principles of Marketing 11th Edition. New Jersey: Prentice-Hall 13. Kumar, N. Marketing Management, Anmol Publications Pvt. Ltd. 14. Levitt, T. (1983), The globalisation of markets. Harvard Business Review, April/May, 92-107 15. Michael E. Porter "Competitive Advantage: Creating and Sustaining Superior Performance. 1985 16. Scott F. Geld (2006) Importance of Marketing, Marketingblaster, http://tools.devshed.com/c/a/Website-Marketing/Importance-of-Marketing/ 17. Stanley D. Brunn (2006) Wal-Mart world: the world's biggest corporation in the global economy, CRC Press 18. Trout, J. and Rivkin, S. (1996). The New Positioning: The Latest on the World's Number 1 Business Strategy. New York: McGraw Hill 19. W. Chan Kim, Rene Mauborgne (2005) Blue Ocean Strategy, Harvard Business School Press, Boston, Massachusetts. 20. W. Chan Kim, Rene Mauborgne (2005) Blue Ocean Strategy, Harvard Business School Press, Boston, Massachusetts. 21. W. Chan Kim, Rene Mauborgne (2005) Blue Ocean Strategy, Harvard Business School Press, Boston, Massachusetts. 22. W. Chan Kim, Rene Mauborgne (2005) Blue Ocean Strategy, Harvard Business School Press, Boston, Massachusetts 23. W. Chan Kim, Rene Mauborgne (2005) Blue Ocean Strategy, Harvard Business School Press, Boston, Massachusetts 24. W. 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