Dynamic Development of Marketing Management Strategies and Organizational Performance - Article Example

Introduction The article deals with different strategies, their analysis and the choice within these strategies. The very first section of the article deals with the general view of the strategies according to micro and macro environment of the firm. The second half of the article deals with strategic hierarchy, showing the different use of these strategies by the firms and the goals that are achieved by these strategies. Strategic Analysis and Choice Organization prosperity mainly depends on their strategies that show their plans and visions. Some times the organization fails to follow their norms; the reason is that these norms sometime come against the firm goals and objectives. Usually the strategy you follow differ to firm norms. The strategy is simply a choice. Prosperity is linked not only with profitability but also the long term growth. It’s like steering a ship in the ocean with the danger that pirates may take over, or it might become the victim of the deadly waves. The ship here refers to the company itself and the challenged here include the competitors, the environment etc. Thus, there is a strong need for the managers to make a strategy that works as an action plan to achieve the aimed objectives. The objectives may be both financial such as higher revenues, lower costs, high profits and non-financial just to be the top in the industry, largest market share, or to be place the product in the top minds of the customers. Thus, the need arises to have a blue print that tells how to go about it? Companies need to diverse, differentiate, integrate backward or forwards, and manage business portfolio balanced. The managers need to do planning, develop a vision, has to set their mission, develop long term plans and these all are further divided into different objectives and goals. But it is important that the strategy is to be consistent with the organizational goals and policies, it should be flexible enough to respond to the faster changing environment in which it is operating, and it should add value to the organization and become a source of advantage over its competitors, and lastly, it should be feasible and practical enough to get through. Strategic management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives (David F.R., Strategic Management). The process of strategic management involves three stages, viz. formulation of a strategy, implementing a strategy and lastly, evaluating the strategy. Since, organizations have limited resources thus they need to choose from amongst the alternatives available. Setting a strategy starts with developing a strategic vision so as to provide long term direction, and provide a purpose to the organization. The strategic vision is then converted into specific performance objectives for the company to achieve. And then forming strategies to achieve the desired outcomes that have been developed in the form of objectives. This all was the planning portion of the process; no strategy is useful until it is implemented and executed effectively and efficiently. In the end, evaluation stage begins which requires comparing actual i.e. the reality with the planned. But as companies prosper and grow they need to diversify into new areas. Companies have to balance their portfolios well enough with cash cows, stars, dogs and question marks so that cash needs growth needs all are being fulfilled by the company. Strategy analysis requires companies to understand their markets, their cost structure, and also the capabilities underlying the firm i.e. any of the core competencies or the distinctive competencies that the company possesses. Companies need creativity and new ideas to identify any potential gaps in the strategy, the markets etc. which will lead them to make and implement a solid strategic plan to serve the new and existing markets. 1 Huge businesses are normally divided into the strategic business units. These strategic business units are the individual planning units contained within one large and diversified business serving either the external or the internal market. They make independent decisions for themselves and have a control over their own destiny. They have competitors and are profit centers for the company but still independent. Companies already have so many products and services have many other growth initiatives because of the factors such as globalization, services, quality and the emerging e-businesses. Globalization is not only letting companies to enhance their revenue side by entering the untapped markets but has also opened doors for companies by globalizing all the activities such as production, buying of raw material and especially has facilitated in obtaining the best human capital form the around the world. 2 Thus, the strategies available to the firm include market penetration, market development, product development, and product diversification. To decide how to take advantage of growth and grow further organizations should analyze its customers, competencies and the competition. They need to clearly know who their existing customers are, which segments are and can be their potential customers, what are they interested in, what kind of product needs do they have, and also who are the profitable customers. To serve these customers better organizations should have an insight of their own skills, knowledge and relationships. And need to know what they are good, how do they manage their costs, how and where to generate revenue and make money etc. The competition in the market and the basis of competition should be evaluated which includes the regulated and also the real competition, threats from the competition. As mentioned at the onset of strategic analysis is the know how of the customer and the target market. This begins with knowing what they do and what they value; knowing this can make the organizations serve them better. Thus after the analysis, the process of choosing includes what existing customer does the company have and what customers can be attracted in the future to enter the untapped markets. Evaluating the existing customer requires going through company records and database where the company maintains the list of accounts of all the customers and their financial support data. This provides information about the most valuable customers i.e. according to the 80-20 rule the 20% of the customers that account for larger amounts of sales. Furthermore, other opportunities can be identified and the possible ways of grouping the customers into segments based on their similar needs and requirements or the reason why they value a certain product. Analyzing new markets requires searching for who can be your customers. For this secondary as well as the primary data is needed, the process requires market testing techniques etc. Some times manager are faced with a sales-view bias where they tend to ask and survey to gather information from the people who are already interested in your product, hence it leads to a too overly optimistic future rather than a real true future that is likely to come ahead. Competencies require looking at what the company currently offers with respect to the competition, its strengths and weaknesses also. It should be know what the company is best at and how it can be used to capitalize on the opportunities by utilizing their strengths. For analysis firms can use Mc Kinsey’s 7s model which reflects the skills, structure, style, shared values, strategy, systems and staff. Besides it also simply involves evaluating the tangible resources such as availability of finance, physical assets and also intangible such as human resources. Another way of evaluating also involves using a variation of Porter’s value chain analysis; this means looking at the product and service the customer receives in terms of what and who provides development/technical skills, procurement/production skills, sales/communication skills, distribution/logistics skills, service/support skills. Using marketing intelligence the five forces of the Michael Porter’s Diamond Model should be evaluated that includes the bargaining power of buyers, bargaining power of suppliers, threat of substitute products, threat of new entrants, and the level of the existing competition. After the above mentioned analysis for a multi business company the managers need to evaluate the company and decide on the strategy to be selected. 3 After strategy analysis the companies should select on the strategy; the process of selection is as under: 4 For a multi business the options includes moving into new businesses or markets adopting one of the strategies such as internal development, acquisition, contractual arrangements, strategic alliances and partnerships etc. Internal development involves itself development of the necessary skills, and resources required for a new business venturing; but it requires a longer time period and resources from scratch to be useful or fully facilitative for the company. Acquisition is a more feasible option since acquiring already established business can help capitalize on areas such as already existing customer or supplier relationships, an existing name in the market. Takeovers and mergers is a viable option because they also result in a synergistic effect. Acquisitions bind the companies for a total future period but this can be limited by having contractual arrangements rather than the acquisitions. Contractual arrangements can be a result of forming of consortium, licensing, franchising, having agents etc. These are especially beneficial when a company has decided to move into foreign markets. Strategic alliances and partnerships are more beneficial than contracts when moving into other markets. It is a kind of contractual arrangement but requires companies to be involved at a more strategic level, it requires sharing of almost all information, and work together in a way that goes beyond contractual arrangement. Operating in a multi business also leads to some cross business synergies; some of these involve benefits from economies of scope, market power, internal business governance advantages, and recombinative processes. An example of a successful multi business company is that of General Electric. GE’s businesses includes Aircraft Engines, Appliances, Aviation Services, Capital Services, Commercial Equipment, Financing, Commercial Finance, Employers Reinsurance Corporation, GE Equity, Industrial Systems, Lighting, Medical Systems, Mortgage Insurance, NBC, Plastics, Power Systems, Real Estate, GE Supply, Structured Finance Group, Transportation Systems, and Vendor Financial Services. The Strategic Hierarchy As the size of the organization increases the level of strategic hierarchy also increases. As the companies expands vertically the vertical hierarchy of the strategy increases. The choice paradox mainly depends on the strategies they choose. the choice of strategy mainly depends on the environment in which the company is dealing. Below we discuss the hierarchy of strategy that normally found ial type of firms. Different strategies come under different main head. Its firm choice that which strategy it used to deal its firm to gain the competitive advantage. The very first level of strategy5 is the functional strategy, applied at the functional or to low level management hierarchy. This strategy actually holds the game plan and holds all the information to carry the business main activities. The functional strategy itself divided into many parts but basically these strategies is applied on two broad areas. The functional strategy to cover the primary activities and the strategy applied to the support activities. For primary activities the specific term of operational strategies is used that will be discussed later but for support activities the functional strategy term is more in use. This strategy include marketing strategies, human resource strategies, new product development strategies, financial strategies, legal strategies, supply chain strategies and information technological strategies. These all are the support activities in order support the prime activities. The marketing strategies hold different strategies in order to market and sale the product in better form. It include advertisement strategies, channel marketing, promotion, public relations and internet marketing. These all are the ways in order to promote the sales of the product. The marketing strategies are organized according to the market in which they are dealing and according to product that is produced by the company. The strategies are feasible and practically applicable. For instance, the service companies such as insurance company usually depend on the public relations in order to enhance their marketing of product and to promote their product. Usually the strategies are based on the market dominance. This include that either the firm has to approach the leadership strategy6, challenger strategy or follower strategy. These three strategies mainly depend on the market in which the firm is serving. The marketing strategies may include Porter Generic strategy that includes cost leadership, product differentiation or market segmentation. The cost leadership strategy includes the use of minimum cost in order to enhance their profit. The product differentiation strategy is that producing the product that is new to the market holding different variables. Where as, the marketing strategy may be the market segmentation in which the product is marketed depending on the different market segment. The positioning strategies in the marketing deals that how the company will choose their market. The company may choose the benefit positioning means the choosing the market that provide maximum benefits. Quality-price positioning is the strategy in which you took two variables as quality and price to choose their market. They will position the product at a market in which they provide maximum quality with less price to get maximum market share. Similarly competitor positioning is that choosing the market in which your main competitor is serving. Actually the reason for choosing such market position is to compete with your competitor providing better product then your competitor. The other main category of marketing strategy is the innovation strategy holding three main variables as pioneers, close followers and late followers. Above all the marketing mix strategies are also in sued holding four main variables as Price. Product, Promotion and Placement. Promotional and placement strategies are already discussed above. The product strategy7 involves new product development, product line to be served to the market, brand to be served, packaging and labeling of the product and product life cycle decision. These all strategies will define that what product, its quality, its packaging and brand name should be introduced in the market. The price within the marketing mix strategy8 involves different pricing strategies that are: Markup pricing: hold information that how much extra price is charged to a single product, above then its cost. It is usually expressed in fix amount or in percentage. Target-return pricing: the price of the product that can give the target revenue to the firm in return. The target is mentioned in the business strategy. Perceived-value pricing: the price of the product is charges according to the perceived value of the product by the consumer. Usually the perceived-value pricing is taken by a complete research in the market. Value-pricing: the price of the product showing the value of the product. It means high price due to high quality or value of the product. Going-rate pricing: the price of the product similar to the price of the same product introduced by the competitor in the market. Usually this strategy is used in perfect competition. For instance, the price of beverages. Geographical-pricing: the pricing strategies mostly used by the companies serving in different regions. They used the pricing strategies that suit best with the geography of the country. Price-discount allowances9: these are the pricing strategies that are usually adopted to promote products. Buy two get one free tag is the example of this price strategy. Promotional strategies: in promotional strategies the price is the key of marketing mix. In this strategy the price is the basic thing used by the firms to promote their product. Usually high quality product with low price is used to get the maximum market share. Discriminatory pricing: the price strategies that discriminate the firm from its competitor. These strategies usually involve the pricing of product that differ a lot with the competitor pricing strategies. Premium pricing: the premium pricing strategy is used to capture the high class sector as they are always conscious about the standard. Thus, serving the market with high quality and high price product. The financial strategies are the ones that are mostly used in the service companies like insurance and banking sector. The financial strategies are used to know that which strategy can better give us more return on investment. The financial strategies are chosen according to the type of firm. The supply chain management strategy defines the distribution channel of the firm. Mainly it holds the components of logistics management. It holds that how the firm has to manage its supply from supplier to end user. It involves that how the company has to source its different resources, their procurement, conversions and logistic management. The legal strategies involve different legal issues that the firm has adopted. The legal issues of different firm differ according to their serving. The human resource strategy support by providing the best human resource to the firm that can increase the operational productivity of the firm, holding high efficiency and effectiveness. The last term, the information technological strategy helps in providing the best technology that suit the firm, providing flexibility and high productivity level The operational strategy10 involves the strategies for the primary activities. It shows that how the each day operations are to be taken in account and daily schedule of working. The operational strategy involves that how the each process and steps should be carried out. The operational strategy is the narrow focus on the daily process of the firm. These strategies are issued by the business strategies. Using the best customer service approach is the example of the operational strategy. Staffing strategy in order to enhance the workforce productivity is another example of the operational activity. In operational strategies different strategies are includes and these are given as Production-operational strategies: this includes further many strategies as JIT (just-in-time) strategies that include mainly the supplier and the manufacturer. In this the supplier provides the manufacturer with the resources at time when needed and this reduces the placement and holding cost of the resources and raw material. Inventory management strategy involves that how the company has to manage its inventory; raw material, goods in process and finished goods. Project management strategies involve that how different projects within the firm should be carried on in order to fulfill the project very successfully. Maintenance management strategy involves that how the firm will manage and maintain its process, steps, operations and different functions. Current production-operational strategies: it involves advance manufacturing technology strategies. It informs that what different technologies in order to manufacture their goods and services that can provide flexibility, high productivity and low cost. Total quality management strategies are used by the companies to improve the quality of each process, operation, steps and their product. These strategies can be benchmarking, quality deployment and ISO. Then come the business level strategies, the responsibility of the business unit strategies is to provide the basic steps and strategies for the operational unit. The business strategies actually inform that how different steps, processes are to be taken at the operational level. The business strategies are in turn given by the corporate strategies. The corporate strategy is the major and overall strategy of the firm showing that what actually the firm wants to serve, to which market it wants to serve, their mission, objectives and main goals. The above all information deals with division of the main corporate strategy into different strategies. The next section of the article will deal with the specific functional strategies, their intent and its actual result. Conclusion The over all article shows the strategies according to the micro-environment and macro-environment of the companies, whereas, the later part deals in the hierarchy of strategies. The strategy is simply a plan that is used to achieve the goals and objectives of the company. The strategy is the choice of the company that inn which way the company will move. The right strategy, taken in account according to the market, environment and many other factors, will lead to the success. The above all discussion deals with different strategies and their goals. The companies can not use all of them, but they have to choose the best amount them that suit better with their firm. The strategy is the only plan that may take you to the peak of success or may took you to the decline of your firm life period. References/ bibliography Carr, A., Durant, R., Downs A, (2004) Emergent strategy development, abduction, and pragmatism: New lessons for corporations. Human Systems Management, [online] 23 (2) Kjellberg R, (2001) Rapid and Dynamic Strategy Development Martin, J, Eisenhardt, K, (2002) “Cross Business Synergy” Power, D, (2001) “Strategic Analysis and Choice in Multi business Companies” Jeff Madura (2003) “Introduction to Business” 1st edition Thompson, A., Strickland. J, (2003) Strategic Management Concepts and Cases. 13th Edition. Philips Kotler (2003) “Marketing Management” Eleventh edition Net MBA, Business Knowledge Center [Internet] Available from Accessed on [Monday 11, February] Planning skills [Internet] Available from Accessed on [Monday 11, February] Read More