Effects of Strategic Marketing on Business Performance - Literature review Example

?The Effects of Strategic Marketing on Business Performance Table of Contents The Effects of Strategic Marketing on Business Performance Table of Contents 2 Introduction 3 Literature Review 4 Aim and Objective 9 Research Methods 9 Difficulties and Mitigation Methods 10 Conclusion 11 References 12 Bibliography 15 Introduction Marketing is one of the most significant factors of the business. For outperforming competition and taking accurate marketing decision, every company requires good marketing knowledge. The organisation’s product positioning and services depend on the performance and implementation of intellectual and good strategic plans (Chicagoexec, 2011). In the present era, market has become highly competitive. In this competitive market, a strategy is needed to offer product or service which will do better than the competition. The marketing strategy must be executed by a proper methodology. To create a marketing strategy for business a company should think about the following factors. When the market is attractive and the company is holding a strong position in that particular industry, then it must invest the best resources for supporting the offering. But if the company is not in a good position then it must focus on strengthening the company first. When the market is not that attractive and the company is holding a strong position in any industry, then the company should offer effective sales and marketing effort for creating good profit. Furthermore, in either case where company is not too strong then it should promote those offerings which will prove most profitable for business. Literature Review According to the study conducted by Jaakkola (2006), there is a strong connection between market and financial performance. Sales volume has direct effect on profit. Individual coefficient differs from country to country. Four measuring sets, i.e., market and innovation orientation, inside out, and outside in marketing were used for assessing marketing performance in few companies. The ‘inside out capabilities’ have high influence on performance in most of the sample country he used except Hong Kong because the market structure and strength of competition are favourable with high market orientation. The connection among market orientation and market performance is extremely low in Finland. This indicates that market orientation in Finland is bad and high market orientation of the business context does not pay off. Where Finnish companies are good in making profit from ‘inside out capabilities’, Austrian companies are good in converting ‘outside in capabilities’ into good business performance. German companies are good into innovation orientation and generate profit with it. Finnish companies have a more positive outlook than others and they act in market oriented way. They continuously take customers and competition into account and hence the financial performance suffers from it. The effectiveness of strategic marketing process in Finnish companies is extremely low. This refers to strong focus on technological product improvement as emphasis should be put more on irrelevant development of processes and capabilities of company. It shows that how ‘inside out capabilities’ is the individual construct and have large influence on competitive advantage development and sustaining business performance. The innovation process positively relates to market performance and competitive advantages, but its total effect on financial performance is negative. The ‘outside in capabilities’ and marketing orientation include slight harmful outcome on business performance of a company (Jaakkola, 2006). According to the researches done by Garland and Brooksbank (2008), the marketing strategy is quite prevalent in company in case of more comprehensive situation. The higher performing firms place more importance to an inclusive situation analysis than the lower performing companies. There are five kinds of situation study namely buyer, internal, marketplace, business environment and competitor. The summations of these are comprehensive situation analysis (Garland & Et. Al., 2008). Asikhia (2010) observed that for determining the connection among SMO (Strategic Managerial orientation) and performance of banks, it has been revealed that SMO relates positively and significantly with bank performance variables. The marketing competence has reasonable influence on business performance. Marketing proficiency play a vital role in affecting the formation of marketing strategy of bank organisations. Extensive and technical skills guide managers to design strategic directive that helps to deliver better customer value and maintain competitive advantage. The bank uses classification scale for developing model which studies the merger between other banks. The study contributes knowledge development by creating new scales for strategic marketing and bank classification which researchers can use in further research. The manager should be attentive in providing good performance, which needs consideration of most important strategic variables and activities. The ‘long term marketing’ strategy of bank can play a vital role in supporting competitive advantage. Long term goals devote long term decision process and provide long-term results. It allows other operational units of the bank in decision making and thus becomes more effective. Marketing strategies bring a better value of banking. The merger always doesn’t provide the expected result and desired performance. The management must take decision as to merge with other companies or buy over (Asikhia, 2010). The study conducted by Garland and Brooksbank (2009) about Strategic Marketing and Business Performance of Sport says that marketing strategy planning in Australian sport organisation is imperative today. Club performance does not vary with size of the club but by ‘professionalism’ of management. Clubs with higher performance employ permanent worker and on the other side clubs’ performing low depend heavily on part time worker. Those clubs whose performance is moderate shows combined characteristics of both. The higher performing club put more importance on a broad situation analysis. Strategic analysis can be done in five ways namely competitor analysis, community trend analysis, member analysis, industry analysis and internal analysis. The comprehensive analysis is an important aspect of strategic marketing planning for commercial organisation. The higher performing club prefers these strategic initiatives. It always forecasts future and lower performance clubs follow a more reactive path. The implementation of strategic marketing is still not popular among Australian Golf Club. Only one among five, provides importance on formulating strategy and carries out market research. The strategic planning and development of VSOs (Voluntary Sport Organisations) lead to good and effective management. The real profit of VSO is derived from executing strategic marketing (Garland & Brooksbank, 2009). According to Nwokah’s study (2008) about ‘Strategic market orientation and business performance’ of ‘food and beverages organisations in Nigeria’, there is no strong relation between market strategy and business performance in foodstuff and beverage companies of Nigeria. The major reason of this weak relation is that a food and beverage industry includes policies of government, devaluation of Nigerian currency and product diversification. Market strategy leads to a better business performance through moderating variables. The government of Nigeria must make sure of a steady economy and implement economic policies that enhance business development. Organisations must include performance measurement method for identifying the effect of investment on market strategy (Nwokah, 2008). A study conducted by Akinyele (2010) about Strategic Management of Oil and Gas Industry of Nigeria reveals that Oil and Gas companies have competitive advantage for adopting marketing strategies via different technologies. They use traditional methods of marketing rather than specialised marketing strategy. The difference between traditional and specialised strategy is that traditional strategy uses soft information and specialised strategy uses hard and quantitative information. The company faces a lesser amount of market mobility, fewer competitions and high opportunity. The Nigerian Oil and Gas Company put more importance on various marketing strategies. Changes in business environment produce opportunity and threat for strategic development. Organisations must monitor environment frequently in order to build strategy and move the business forward. It should create and develop product or services in new or existing market for offering better customer service. The success for any marketing strategy is to anticipate competitors’ action on behalf of the organisational moves. The company should put more emphasis on relationship marketing to ensure the effectiveness of organisation (Akinyele, 2010). The Nigerian company should introduce the idea of TQM (Total Quality Management) amongst product marketers because the clients for gas or oil products demand more quality from petroleum companies. The company must make their own learning organisation where their employees will always make inquiries of systematic impact of the firm. Effective downstream marketing strategies hinge on an intelligent understanding of favourable marketing strategies. This study shows that strategic marketing have significant effect on performance of organisation. For enhancing the performance of business every company should think about: TQM, relationship marketing, re-engineering, co-marketing, re-marketing, bench marketing, value analysis and permission marketing. The marketer must understand the relevant factors that affect the clients’ behaviour and a proper strategic step to cope up with such behaviour. Firms which are not operating in dynamic business atmosphere are not required to adopt strategy marketing. This will make the firm inconsistent in front of customers and decrease effective performance (Akinyele, 2010). According to study conducted by Matsuno & Et. Al. (2002) about the consequence of entrepreneurial productivity and ‘market orientation on business performance’, there is an important relation between market orientation and ‘entrepreneurial productivity’ in achieving business performance. Market orientation is detrimental to a firm which is also trying to be successful. Entrepreneurial productivity has not only a positive and direct relationship on market orientation but also has a positive and indirect effect on market orientation through the diminution of departmentalisation. The entrepreneurial performance influence is positive when medicated by market orientation, but it has negative effect when not medicated by market orientation (Matsuno & Et. Al., 2002). According to the study by Tang & Et. Al. (2005) about Marketing Strategy and Business Performance of Small Firms in China, the ‘long term differentiation marketing strategy’ has positive effect on small firm’s business performance. The key factors for successful marketing in small construction company are to follow a long term marketing strategy and develop new products that can better serve the changing needs of marketing. ‘Current product focus strategy’ is not radically associated with business performance of small firms, but long term marketing strategy has great effect on business performance. The housing market in China has improved in such a phase where market growth strategy based on product contribution is not sufficient. A successful company tends to follow the long term strategy such as new product and service, brand quality and new advertising and promotion (Tang & Et. Al., 2005). Aim and Objective The aim of this research study is to observe the relationship between marketing strategy and business performance. The main objectives of the research projects are: How business performance is affected by market oriented strategy? How the different marketing resources affect firm’s financial performance? How strategic marketing improves the competitiveness of the firm? Since this paper examines the relationship between business performance and marketing strategy, these objectives will show how the performance of business is affected by multifarious marketing strategies. Research Methods Qualitative research approaches will be used for this study. The major reason for using qualitative approach is that it will provide rich information and detailed data about the subject. It is the flexible approach to carry out collection of information, explanation of collected information and subsequent analysis. It provides a clear view of the subject under research. The researcher can interact with research subjects in his own language and his own terms. This method is used to gain people’s opinions, concerns, aspiration and to notify business decision, communication, policy creation and research. Qualitative research is the study of certain unstructured data and people’s feedback as well (FHI, n.d.). The researcher can use the Contact Methods in order to fulfil the objectives of the research. The Questionnaires can be mailed for collecting the information. The reason for using questionnaire method is that it costs less to gather large amount of information in short time. The respondent can answer when they have the time. It is easy to analyse and it does not require any trained interviewer. This method can reduce the bias and the researcher’s own opinion cannot influence the answer. The sample will be consisting of respondents who are company’s personnel from whom valuable information about the related questions will be obtained. The questionnaire will be mailed to approximately 100 respondents in different companies to get access with them, because among them several will be rejected or will not provide proper response at proper time. Difficulties and Mitigation Methods The major difficulty of this study is that the response rate is too low in this research. The researcher has no control over the answer and it may be incomplete or biased. The time taken is longer than personal interview. Above all, the most important constraint is the limitation of financial resource available to conduct the research. To mitigate the cost disadvantage, the questionnaire method has been used. Due to the forecasting of low response rate, the questionnaire is sent to several organisations. This has been done because among the several organisations, at least half can be expected to respond. Conclusion The literature review reveals that business performance is affected by strategic marketing. The performance of business can be measured by various measuring sets. From the literature review it is observed that different countries use diverse strategies and set of measures such as ‘inside out capabilities’ which have high influence on the performance of Finnish companies. Austrian companies are competent in rendering ‘outside in capabilities’ into superior business performance. In case of banks the ‘strategic managerial orientation’ has direct effect on the performance of banks. In case of china’s small firms the differentiation strategy has positive effect on business performance. A Study of Akinyele (2010) also revealed that Nigerian Oil and Gas companies have gained competitive advantage due to adopting marketing strategies through different technologies. Therefore, it is quite evident that strategic marketing has strong effect on performance of business in many countries. Thus, in this current era of competitive market formulating a correct strategy helps a business to survive and perform well. Thus, a good marketing strategy should be prepared for improvement and growth of business. References Akinyele, S. T., 2010. Strategic Marketing Management of Oil and Gas Industry: A Review of Literature. Journal of Business Management and Economics. [Online] Available at: http://e3journals.org/JBME/PDF/2010/OCT/Akinyele.pdf [Accessed February 19, 2011]. Akinyele, S., 2010. Significance of Strategic Marketing to Enterprise Performance: An Empirical Analysis of Nigerian Oil and Gas Industry. Global Journal of Management and Business Research. [Online] Available at: http://globaljournals.org/GJMBR_Volume10/7-significance-of-strategy-markerting-to-enterprise-performance.pdf [Accessed February 19, 2011]. Asikhia, O., 2010. Strategic Marketing Orientation and Performance: A Case for Synergistic Merger Effects of Nigerian Banks. European Journal of Scientific Research. [Online] Available at: http://www.eurojournals.com/ejsr_42_2_11.pdf [Accessed February 19, 2011]. Chicagoexec, 2011. 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