Marketing and Strategy Theory Application - Essay Example

This paper examines the marketing and strategy theory and its application. It identifies and justifies alternative perspectives on approaches to marketing and strategy theory. It strives to distinguish and appraise critically the theoretical and practical rationales underpinning strategic marketing perspectives. The paper illustrates and justifies an appreciation of the distinctions between various strategic marketing perspectives and positions within different contexts. It further recognises and discriminates between various management, strategy and marketing philosophies and orientations. The introduction section examines the fact that the rate of failure for the introduction of new products in retail grocery industry falls within the 70 to 80 per cent range. It then develops a theoretical model explaining why this happens. The theoretical model then culminates in a set of hypotheses that are further investigated by the paper. The conclusion part of the paper summarises the main issues brought out by the paper and gives inferences where appropriate. It then confirms that indeed the rate of failure for the introduction of new products in retail grocery industry falls is very high. Introduction The rate of failure for the introduction of new products in retail grocery industry is very high; it falls within the 70 to 80 per cent range. Linton Matysiak and Wilkes is a product development and market research firm specializing in perishable foods. The firm carried out a review of 1935 new products introductions by top food companies in the United States (Linton, Matysiak and Wilkes, 1997). This review was aimed at determining national introductions, regional breakdowns, line extension mortality, new item mortality and the overall product mortality. It also ventured into determining the ratio of line extensions to new items. The firm examined a number of issues such as the number of product line extensions, the number of innovative and new items and the locations where new products were introduced. On the other hand, the review found that the Top 20 grocery retailers in the United States enjoy a 76 per cent rate of success in the introduction of new products. However, the bottom 20,000 food companies in the US found to have slightly less than 12 per cent rate of success for new products introduced (Linton, Matysiak and Wilkes, 1997). The review found a number of differences between the top 20 companies and the bottom 20,000 companies in new product introductions. A notable one is the lack of strategic marketing on the part of the bottom 20,000 new product introductions. The research also observed lack of research among the bottom 20,000 food companies in the US. On the other hand, the top twenty companies were observed to greatly embrace strategic marketing and research. Before any new product introductions, these companies had gathered all the vital information through research. Strategic marketing elevated them even higher (Quinn, 1998). These two aspects are what are believed to be the magic behind the success of the top 20 companies. New product introductions were found to cost an average of $270 per product for each store (Linton, Matysiak and Wilkes, 1997). This is quite a sum of money considering that every year a supermarket may introduce about 5000 new products. It therefore becomes very difficult for the small players to compete effectively with the larger and already established players in the retail grocery industry (Porter, 1980). Groceries spend about $956,800 for every store, most of which eventually fail. Strategic marketing and market research can therefore go a long way in increasing the success rate for new product introductions. This can greatly save money for both retail stores and manufacturers, since any successful new product introduction pays off in the long run. The survey further observed that big corporations practice strategic marketing as an essential part of their day-to-day business management. The firm made use of statistics from the US Commerce Department, New Product News Reports, Supermarket news reports, the Deloitte and Touche costs study and the Fortune 100 Top US listing of companies in order to come up with these findings. Why this is the case New product introductions are an important driver of growth in any given business. The launching of a new product can be very exciting. This however has to be done in the right way, or the chances of success will be sharply diminished. Even though it is not easy to find exact statistics regarding new product introductions in general, it has been found that the rate of failure is very high. This can be attributed to a number of mistakes made in the planning and execution of new product launches. The smaller companies are more affected than the large and established ones. Lack of early planning has been identified as a factor contributing to the failure of new product introductions. Many companies dedicate most of their resources and time to the planning and development of their new product. Unfortunately, they do not dedicate as much time or resources in the planning of the launch. A few weeks to the date of the launch, the companies come to the realization that they do not have any plan in place. Moreover, these companies realize that they do not have the resources or the expertise needed in carrying out the launch. This is because most of the resources and expertise has been used in the planning and development of the product itself. Most of the bottom 20,000 companies either do not have a marketing strategy or have a very poor one. Sometimes these companies concentrate all their efforts on the planning of their launch and fail to develop marketing strategies to ensure long term sale of the product. As a result, the launch does not go very well and they are left in wonder. Many of the companies fail to define their target market for the new product. Failing to clearly define one's target market is a sure way of not reaching them. Unfortunately, most of the bottom 20,000 companies fail to consider this important aspect of new product introductions. Another factor known to contribute to the failure of new product introductions is launching too soon. Many companies are usually very eager to hit the market first. They therefore end up overlooking the vital aspects of this launch, hence it does not succeed. Another factor that has been known to go along with premature launching is poor quality of the product being launched, which happens quite often. Companies are often so anxious to introduce new products that they end up overlooking critical flaws in the product being launched. Many companies usually have an inflexible, rigid launch plan for their new product. The successful launch of a new product is not a science but an art, and therefore needs flexibility (Chalmers, 1982). This lack of flexibility is very costly to the companies in the end since it leads to unsuccessful launches. Numerous companies do not dedicate sufficient funding to the launch of their new products. This mistake occurs often not only in new product introductions, but also generally in small and medium-sized companies. These companies fail to make sure they have sufficient funds to assist them until the development of a regular flow of cash. Overestimation of results is another big hindrance to the success of new product introductions. Most company executives daydream about perfect new product introductions. They often think of spending just a little money on publicity and become the toast of television and radio programs all over the country, where everyone raves about their new products. This has proved to be only a good fantasy that rarely happens in the real world. A number of company executives do not delegate responsibilities to other people, and instead try to do everything by themselves, forgetting that no one can be an expert in everything (Learned et al, 1969). This particularly happens in small and medium-sized companies where the CEO regards himself or herself as a jack of all trades. They also think they have the expertise to do undertake everything without involving the other employees. It is unfortunate that this is not always the case. These companies therefore end up failing in their new product launches. A good number of companies do not have a crisis plan and therefore do not know what to do in case things do not go right. When things go wrong, these people just panic because they have very little they can do. Whereas it is not possible to plan for all possible catastrophes, a crisis plan can be of great help. Companies need to avoid these common errors and plan ahead to avoid them. This can be very important in the planning ands execution of a successful launch of a new product. Theoretical model Fig: theoretical model Key Constructs The C represents the constructs in the model, which are the reasons for a high rate of failure for the introduction of new products in retail grocery industry. C1= lack of early planning C2= poor or lack of a marketing strategy C3=lack of target market definition C4=premature launching C5= Poor quality product C6=rigid launch plan C7= inadequate funding C8=overestimation of results C9=lack of delegation of duties C10=lack of a crisis plan Observables The O's represent what is observed in every construct. O1= lack of adequate expertise or resources to undertake the launch O2=launch does not go well O3=failure to reach the market O4=overlook of important aspects O5=critical flaws in the product O6= unsuccessful launch O7=lack of funds before development of regular cash flow O8=disappointment O9= poor quality product O10= panic in case things go wrong Alternative explanatory model The alternative explanatory model to the above one would be what is referred to as the innovative strategies model. This model is usually concerned with the company's new product development rate as well as business model innovation. It asks whether or not the company is on the company embraces business innovation and cutting edge technology. The model classifies companies into three broad categories namely pioneers, close followers and late followers. Pioneers lead the way in business innovation and new product development. They closely monitor and identify the needs of the customers and respond to them by developing new products or improving on the existing ones before other players in the industry do so. This model is therefore in close touch with the customer at all times, and always tries to improve towards his or her expectations. This gives such companies a competitive advantage over others that do not follow the same model. The close followers respond to the needs of the customer shortly after the pioneers have done it. They may capture some market, especially if they are close enough to the pioneer in the development of new products and business innovation. The late followers have a very little sense of business innovation and new product development. They often imitate other companies long after they have developed new products. This is often very late since the new products may be obsolete by the time they introduce them. Moreover, the customers may have developed a sense of loyalty towards its competitors' brands. Strategic marketing implications for both models A marketing strategy enables organizations to concentrate their limited resources on the best opportunities in order achieve sustainable competitive advantage and increase sales (Baker, 2008). Any marketing strategy must be centred on key concepts, with customer satisfaction being the main goal (Mintzberg, 1990). An effective marketing strategy must also be an essential component of the firm's strategy (Andrews, 1998). It must also define how the firm successfully engages its competitors, prospects and customers in the marketing environment. It must also be consistent with corporate goals, corporate missions and corporate strategies (Kreps, 1986). Since customers constitute the source of any corporation's revenue, marketing strategy is often linked with sales (Mintzberg et al, 1998). A key marketing strategy component is often keeping marketing consistent with the corporation's mission statement (Baker, 2008). A good marketing strategy must put into consideration the organization's target audience, propositions and its implementation. A marketing strategy more often than not acts as the base of an organization's marketing plan (Mintzberg, 1987). A marketing plan consists of a number of specific actions necessary in the successful implementation of the marketing strategy. For instance, a company can decide to use low costs in attracting customers. Once the company establishes a relationship with its customers through low cost products, it sells extra high-margin goods and services, enhancing the customers' interaction with low-cost goods and services. A marketing strategy comprises well thought out tactics aimed at making the marketing plan more effective. A marketing strategy serves as the foundation of marketing plans and helps in reaching marketing objectives and filling market needs. Objectives and plans usually undergo testing for measurable results. Marketing strategies often integrate a company's tactics, action sequences, policies and marketing goals into a single package. Similarly, numerous strands of the marketing strategy such as public relations, promotion, internet marketing, channel marketing and advertising can be orchestrated. A number of companies usually cascade a strategy all through the organization through making strategy tactics which later become goals of marketing strategy for the next group or level. Every group is expected to take the strategy goal and create various tactics in order to achieve the goal. This makes it important for every strategy goal to be measurable. Marketing strategies are interactive and dynamic, and are partially planned and unplanned. Testing of the model The first test of the model will be to establish whether or not its findings are refutable. If they are found to be refutable, model will be considered as inappropriate. On the other hand, it will be deemed effective and appropriate if the results are not found to be refutable. Another testing attribute will be investigating if the model's findings are consistent with empirical data available. If it is not, it will either be rejected or modified to make it consistent. If it is consistent, more tests will carried out to further investigate other attributes of the model (Lave and March, 1993). These attributes include whether or not it is aesthetically appealing and simple and whether or not it is capable of predicting future events. Moreover, the test will strive to establish whether or not it is consistent with previous observations. The model must satisfy all the needs of the stakeholders, who must all be happy with it. If it does not do this, it will either be modified or totally rejected. The model will also have to be fairly comprehensive for it to be acceptable. This is because a shallow model will not address all the requirements of the stakeholders. A good model will have to include all the necessary constructs. A model with omitted constructs will not be accepted. Similarly, a model with redundant constructs will not be accepted. This is because redundant constructs only crowd the model without contributing much towards its success. Another test for a good or bad model will be whether or not it is possible to derive the model's implications. Any model that does not make it possible to derive clear implications from it will not be an appropriate one and will therefore be rejected. Finally, a good model must be capable of making accurate predictions. Conclusion The rate of failure for the introduction of new products in retail grocery industry falls within the 70 to 80 per cent range. However, the Top 20 grocery players in the US enjoy a 76 per cent rate of success in the introduction of new products. On the other hand, the bottom 20,000 food companies in the US were found to have slightly less than 12 per cent rate of success for new products introduced. One notable difference between the two categories of companies is the lack of strategic marketing on the part of the bottom 20,000 new product introductions. On the other hand, the top twenty companies were observed to greatly embrace strategic marketing and research. Before any new product introductions, these companies had had gathered all the vital information through research. Strategic marketing elevated them even higher. These two aspects are what are believed to be the magic behind their success. Strategic marketing and market research can go a long way in increasing the success rate for new product introductions a success. This can greatly save money for both retail stores and manufacturers, since any successful new product introduction pays off in the end. There are a number of mistakes made by the bottom 20,000 companies in launching of new products. These must be sealed in order to make new product introductions a success. . 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