Setting and Developing Marketing Capability - Essay Example

? Setting and Developing Marketing Capability Contents Critical Review of Key Literature 3 Illustrative Examples 7 Implications for Practice 8 Introduction Marketing capabilities define organizational success and its ability to retain customers over a longer period of time. Consumers drive business strategies and successful enterprises. A well-researched marketing approach can help businesses in launching new products and expanding into new market regions successfully through a deeper and improved understanding of the existing operating environment. A primary understanding of operating markets and consumer behavior needs to be well integrated with marketing objectives and strategic plan for effective results. Favorable market environment conditions are perceived when the markets present expanded opportunities in the form of increased consumerism, high demand for specific goods and services and enabling technology systems that contribute towards enhanced customer service and improved ability to meet market demands. The paper provides a deeper insight into the key aspects involved in the setting and developing of marketing capabilities within an organization. Critical Review of Key Literature Organizations operate within the scope and opportunities presented by the market environment. Much of the organizational activities and processes are influenced and impacted by the environment within which they function and operate (Thomas, 1995). Favorable market environment conditions are perceived when the markets present expanded opportunities in the form of increased consumerism, high demand for specific goods and services and enabling technology systems that contribute towards enhanced customer service and improved ability to meet market demands. The market environment comprises of external forces that drive organizational competencies, market positioning and consumer attitudes (Lamb et al., 2012). “Marketing seeks to develop competitive advantage in the marketplace by developing, implementing, and monitoring effective strategic and tactical programs guided by high quality information.” (Deans & Karwan, 1994) There is an increased focus among managers to improvise new strategies and apply innovative techniques to increase market shares and expand into global markets. However, the scope and success of such efforts remain wasted in the absence of adequate market research activities. Market research is highly effective in gaining competitive advantage in any business and expanding operations to new market regions. “The lack of familiarity with the local environment may lead to false assumptions and wrongly defined research problems and further on, to false conclusions about the foreign market” (Contabilizat, 2008). Hence the emphasis on gaining an overall perspective on the market trends and consumer habits is essential for framing suitable business strategies. Managerial strategies play a vital in running a successful business venture within the global perspective since rapidly changing market trends and fluctuating business environment pose many challenges to organizations (Calkins, 2009). Global markets today offer a great potential for businesses across all industries and organizations are investing in extensive research programs to develop innovative products and services that can reap huge profits under these favourable economic conditions (Nijssen and Frambach, 2001). Managers are continuously in the process of re-engineering business strategies to increase their market shares and exploit the business opportunities provided by the opening of new markets. The focus of the organizations in the increasing competitive markets is primarily on providing its customers with increased quality of goods and services, increased value for their money, and strengthened customer relationship approach to increase consumer satisfaction (Loudon et al., 2005). This provides the business with the required competitive edge and has a direct impact on the product positioning and market shares within new market environment. However, one of the critical challenges facing the businesses remain in understanding the existing culture, taste and preference of consumers within this geographic region (Slotegraaf and Dickson, 2004). A critical factor in formulating effective business strategies and strengthening market hold in new geographic areas is intensive market research and a deeper insight of the various economic forces impacting the market demand and trends. A deeper understanding of the external and internal environment of the business helps in identifying the key areas of perceived customer value and how it can be enhanced for increased market shares and revenues (Zavrsnik and Jerman, 2013). Marketing audit is a vital tool used by businesses to support marketing goals and providing the organization with a deeper insight into the existing market conditions, emerging trends and evolving requirements that shape consumer demands (CIMA, 2013). Marketing audit provides an assessment of the organization’s current position, the nature of opportunities and risks presented by the existing business environment, and the organization’s capability to meet these demands (Gilligan and Wilson, 2009). This evaluation is used to support sound marketing strategies and support marketing goals. A sound marketing strategy helps the organizations meet and satisfy customer needs and expectations by defining the specific needs of the customer, the competitive strengths and capitalize on the existing market opportunities (Kaplan, 2008). Strategic marketing planning (SMP) has been defined as “a systematic process that involves assessing marketing opportunities and resources, determining marketing objectives and developing a thorough plan for implementation and control” (Groucutt, Leadley and Forsyth, 2004, p248). Donnelly, Megicks and Harrison (2009) highlight the role played by SMP in defining market segments and positioning the products for increased market effectiveness. SMP, according to them, is strongly driven by the changing business environment, market dynamics and competitive forces that define the product strategies of competitors. However, this process is time consuming and costly that adds to the complexity of undertaking research in different locations across the globe. “In carrying out marketing research internationally, problems arise by virtue of the very nature of the number and complexities of markets being investigated” (Doole & Lowe, 2007). It is widely accepted that knowledge about customers, their preferences, and their behaviours are key to devising strategies related to marketing of products and services and assisting the companies in adapting new functionality and features within the deliver products to meet customer expectation (Browne et al., 2012). The existence of multiple brands in the markets helps the consumers to distinguish one product or service from another that simplifies the purchasing decision to a great extent. “In a commodity market where features and benefits are virtually indistinguishable, a strong brand will help your customers trust you and create a set of expectations about your products without even knowing the specifics of product features” (Dolak, 2009). There are many consumers who prefer to stick to a single brand for years owing to the value it represents to them. Moreover, the customers recognize the associated values of the brand name that guides his demands and expectations. A customer purchasing an Apple I-pod will expect high quality features and functions since he is willing to pay more for the utilities provided by the product. Success of a product in the market eventually correlates to consumer satisfaction. An understanding of the consumer needs and expectation is primarily important for planning and implementing a successful business strategy. The primary objective of the branding strategy is to promote brand recognition and popularize the products in the market through a combination of effective marketing mix strategies (Vera and Crossan, 2005). “The lack of familiarity with the local environment may lead to false assumptions and wrongly defined research problems and further on, to false conclusions about the foreign market” (Contabilizat, 2008). A primary understanding of the local market environment and consumer behaviour should be integrated with market research objectives and design for effective results. Market research provides the managers with extensive information and supportive evidence that forms the base for strategic decision making process. Effective control and in-depth knowledge of the business environment is vital to enable managers to detect problems within the organization and identify new opportunities. Illustrative Examples A vital requirement for formulating effective marketing strategies is to assess the target market in terms of population, religion, economic, legal and political features. However, one of the critical challenges facing the business remains in understanding the existing culture, taste and preference of consumers within this geographic region. Extensive market research and analysis of economic forces driving the market in these regions are much required in formulating effective business strategies and establishing market presence. This will provide an improved understanding of the market environment dynamics and will have a distinctive impact on the company’s marketing strategies. The country analysis provides an insight into the geographic location, population demographics and existing food culture that have a direct bearing on the strategic positioning and market focus of the business. A sound understanding of the various factors influencing the business environment, identifying new opportunities, and analysing the organizational capacity to explore new opportunities are some of the responsibilities of the management. The management must have the capability to identify new opportunities and technology changes that can have immense impact on their current business models. The effectiveness of managerial capabilities is demonstrated through its ability to devise alternative business strategies that can help the organization meet any eventualities or challenges faced while venturing into new grounds. Implications for Practice Marketing audit provides the firm with a deeper analysis and insight into the marketing capabilities and the key weaknesses faced by the organization. This begins with the identification of its primary resources, firm capabilities and the extent to which the firm can handle market demands. However, this is not an easy task considering the high level of coordination required between the senior managers and the operational teams in combining individual capabilities and marketing strengths to achieve the desired goals and objectives. Various marketing functions such as marketing communication, branding, training and development of personnel and strategy building processes add to provide a successful orientation to the firm’s efforts (Morgan et al., 2009). In essence, “few managers have a clear idea of what marketing capabilities actually are or how to begin developing them” (Lilien and Grewal, 2012, p101). Branding is important for companies to create significant impact on the business environment as well as to gain a good market share. In an increasingly competitive market, brands serve to simplify the buying decision for the consumers. The trust placed on specific brands by the consumers is a strong driving force in the market. The World Organization for Industrial Property defines a brand, as cited in the book The New Strategic Brand Management by Jean-Noel Kapferer (2004) as “a symbol serving to distinguish the products or services of one company from those of another”. Thus, brands not only distinguish one product from the other but also indicate the product’s origin. The brand or product positioning of an organization is a significant factor in the implementation of a successful marketing strategy. This involves strategies like product differentiation that offers distinctive product benefits in comparison to other products or substitutes available in the market. The essential feature of product positioning lies in emphasising the product benefits and functionalities to the end consumer that helps in building a product image. It is useful in defining the product qualities, its value for money and other distinctive aspects that make it different from other competitive brands. Brands promote repeat purchase and help the businesses to increase revenues and market shares. John Phillip Jones (1999) in his book How to use advertising to build strong brands observes “A successful brand will build a preference – a psychological predilection – in the minds of its users that encourages them to buy the brand repeatedly.” Brand positioning plays a vital role in creating a successful customer retention strategy. Effective retention strategies include client segmentation, market acquisition, and customer service. The management must have an in-depth knowledge and understanding of the various alternative and substitutes available in the market that satisfy the customer needs. This makes it easier to define product positioning strategies and launch the product with a new look and feel that appeal to consumer senses. Advertising is a widely used and much effective strategy in creating consumer awareness and create a market niche for new products in the market. An effective advertising and promotional strategy is the result of consolidated efforts from sales and marketing teams since it requires extensive planning and designing of campaign layout and presentation to drive home the product benefits and create brand loyalty. Brand loyalty involves the identification of target customers, market positioning, increasing market shares, an in-depth understanding of client needs and detailed analysis of alternatives and choices available to the consumers. Market research hence forms a vital tool in understanding the customer needs and alternatives present in the market. Reference list Browne, S., Lawlor, K., Scott, P.S. and, Cuddiby, L. (2012), Implementation challenges: Triggers for interactions in marketing strategy making, European Group for Organization Studies (EGOS) conference 2012, Hanken School of Economics, Helsinki, Finland. Calkins, T. (2009), A marketing plan for turbulent times, Ivey Business Journal, [online] available at: http://www.iveybusinessjournal.com/topics/marketing/a-marketing-plan-for-turbulent-times#.UOPDI6wkpKM CIM (2013), The marketing audit, [online] available at: http://www.cim.co.uk/marketingplanningtool/tech/tech5.asp (accessed June 26 2013). Contabilizat. (2008) Chapter 8 – International Marketing Research, [online] available at: http://www.contabilizat.ro/file/cursuri_de_perfectionare/management_si_marketing/International%20marketing/cap8.pdf (accessed June 26 2013). Deans, Candace, P., Karwan, Kirk R. (1994) Global Information Systems and Technology: focus on the organization and its functional areas, Idea Group Inc. Donnelly, R., Megicks, P. and Harrison, G. (2009), The marketing planning process, Butterworth-Heinemann Publications. Dolak, D. (2009) Direct Marketing, [online] available at: http://www.davedolak.com/directm.htm (accessed June 27 2013). Doole, I. and Lowe, R. (2007), International Marketing Strategy, Cengage Learning EMEA. Gilligan, C. and Wilson, R. (2009), Strategic Marketing Planning, Elsevier Butterworth-Heinemann. Groucutt, J., Leadley,P., and Forsyth, P. (2004), Marketing: essential principles, new realities, Kogan Page. Jones, John Phillip. (1999), How to use advertising to build strong brands, SAGE. Kapferer, Jean-Noel (2004), The new strategic brand management: creating and sustaining brand equity long term, Kogan Page Publishers. Kaplan, S. (2008), Framing contests: strategy making under uncertainty, Organization Science, 19, pp 729-752. 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(2013), The role of marketing capabilities in the competitive advantage in the Slovenian market, 5th International conference, Economic integration, competition, and cooperation, Croatia. Read More