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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Dozens of lively international case studies that help readers put core marketing principles in a real-world context
From market research to positioning and brand management to customer relations, marketing is the engine that drives innovation and growth in the modern business organization. This latest addition to the acclaimed Pathfinder series, like its popular predecessor, The Strategy Pathfinder, features a unique blend of core concepts and brief, international case studies. A refreshing contrast to traditional marketing texts and references, which tend to be prescriptive and directive, The Marketing Pathfinder offers professionals and marketing students alike an effective way to contextualize the marketing decisions they'll make in the real world of business.
- Not another one-size-fits-all marketing toolkit, The Marketing Pathfinder functions as a dynamic, interactive resource
- Each chapter presents a set of core concepts, frameworks, and tools, followed by five or more short, lively international case studies illustrating how the concepts and tools can be applied in the real world
- The case studies are specifically designed to encourage readers to pursue additional independent research and to encourage them to articulate and defend their decisions
- Throughout, the emphasis is on the reader as a marketing professional in the thick of it and responsible for the decisions they make
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Seitenzahl: 438
Veröffentlichungsjahr: 2014
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Table of Contents
Further praise for The Marketing Pathfinder
Title Page
Copyright
Pathways to Marketing
Reference
The Marketing Pathfinder Map
1. Mobilizing the Marketing Endeavour
2. Developing Products and Services
3. Analysis and Understanding
4. Understanding Why They Buy
5. How Much Are They Prepared to Pay?
6. Over-Promising, Ethics, and Sustainability
7. Successful Brand Building
8. Finding the Right Marketing Space
9. Communication Heaven
10. Maverick Marketing
About the Authors
Chapter 1: Mobilizing the Marketing Endeavour
Border Patrol
Whatever Way You Look at It
Above and Beyond
Does my Value Look Big in this Proposition?
Conclusion
References and Further Reading
Case Acknowledgements
Chapter 2: Developing Products and Services
What Counts as What?
The Only Constant is Change
Metamorphosis
Spread the Word
First Off the Blocks
References and Further Reading
Case Acknowledgements
Chapter 3: Analysis and Understanding
It's Written in the Stars
What's Going On Out There?
Winners and Losers
We're Listening
References and Further Reading
Case Acknowledgements
Chapter 4: Understanding Why They Buy
I Think Therefore I Shop
Come Together, Right Now
Power to the People
Decisions, Decisions, Decisions
Stairway to Heaven
References and Further Reading
Case Acknowledgements
Chapter 5: How Much Are They Prepared to Pay
Making a Buck
Everything Comes at a Price
Claim to Fame
Money Makes the World Go Around
Optimized or Just Optimistic?
References and Further Reading
Case Acknowledgements
Chapter 6: Over-Promising, Ethics, and Sustainability
Promises, Promises
The Truth is Out There
Honest Guv!
It's Not Easy Being Green
References and Further Reading
Case Acknowledgements
Chapter 7: Successful Brand Building
Whose Needs are Being Met?
Vive la Différence
Read the Signals Jerry
To Boldly Go
What's it Worth?
References and Further Reading
Case Acknowledgements
Chapter 8: Finding the Right Marketing Space
The Role of Space and Place
Go with the Flow
Right Time, Right Place
More than Just Numbers
Mission Critical
References and Further Reading
Case Acknowledgements
Chapter 9: Communication Heaven
Join Together
Can You Hear Me Now?
Mixing it Up
Media Matters
References and Further Reading
Case Acknowledgements
Chapter 10: Maverick Marketing
Why Marketing Needs Mavericks
The Ways Things Are Done Around Here
A Call to Service
The New Frontier
References and Further Reading
Case Acknowledgements
Glossary
Acronyms Used
Index
End User License Agreement
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Guide
Cover
Table of Contents
Begin Reading
List of Illustrations
Figure 1.1
Figure 1.2
Figure 1.3
Figure 1.4
Figure 2.1
Figure 2.2
Figure 3.1
Figure 3.2
Figure 5.1
Figure 8.1
Figure 8.2
Figure 9.1
List of Tables
Table 1.1
Table 2.1
Table 3.1
Table 3.2
Table 3.3.1
Table 3.3.2
Table 4.1
Table 4.2
Table 4.3
Table 5.1
Further praise for The Marketing Pathfinder
“In
The Marketing Pathfinder
David Stewart and Michael Saren bring teachers and students a valuable resource for marketing management and strategy courses. The book views marketers as reflective practitioners – not only do they need to access appropriate concepts and frameworks to assess the situation, but also to have the confidence to make the right decision. Building a capacity for reflective enquiry, where the art of practice is linked to theories and frameworks becomes central. This book embraces this concept fully and the book should be considered as required reading or the basis for a marketing management and strategy course. I strongly recommend it.”
Professor Rod Brodie, Professor of Marketing, University of Auckland Business School, New Zealand
“A highly engaging and accessible read which cuts through the theoretical technicalities of marketing. Excellent ‘live’ micro cases, featuring a plethora of brands and topical issues, offer students a sharp and usable resource for navigating the pathfinder concepts and undertaking their own research. A cracking read for those interested in quickly getting to grips with marketing.”
Professor Sally Dibb, Professor of Marketing, Director of Social Marketing, Open University, Milton Keynes, UK
“
The Marketing Pathfinder
is unique as it calls for a coherent pluralism of marketing perspectives rather than claiming the leadership of a particular marketing perspective. Nor do the authors adopt an overarching integrative approach or any kind of ‘Grand Theory’ of marketing. Each micro-case study enables the student to understand how each theory, necessarily sub-determined, makes its own contribution to make sense of a situation and to solve marketing issues.”
Professor Bernard Cova, Professor of Marketing, Kedge Business School, Marseille, France
“
The Marketing Pathfinder
suits perfectly both as comprehensive textbook for teaching purposes as well as an inspirational reading for practitioners. For the marketing professors and students it offers a balanced combination of easy-to-perceive concepts and multiple cases illustrating their application in companies all around the globe. It also helps the marketing practitioners to structure their experience, obtain a helicopter view of what they are doing and explore dimensions of possible improvements. Presented in the mind map format it provides marketing concepts and enhances marketing thinking in a more convenient and reader-oriented format.”
Professor Margarita Zobnina, Associate Professor of Marketing, National Research University, Higher School of Economics, Moscow, Russia
“This is an original, fascinating, and much-needed book by two of the more iconoclastic thinkers in marketing. The approach is novel and engaging, the mix of content is very much in tune with today's environment, and the use of mind maps is an excellent pedagogical tool. This book is going to be extremely useful to instructors in marketing, and very popular with students. The world needs more reflective practitioners in marketing, and this book will help to create them.”
Professor Nick Lee, Professor of Sales and Management Science, Loughborough University, School of Business and Economics; Honorary Professor of Marketing and Organizational Research, Aston Business School; Editor in Chief for European Journal of Marketing Research Methods; Section Editor for Journal of Personal Selling and Sales Management
“Written in a lively and interesting style by two senior thought-provoking academics, Stewart and Saren, have written an excellent marketing text that will particularly appeal to marketing students undertaking their placements and internships and marketing practitioners at various levels looking to deepen their marketing and company case knowledge – no reflective marketing practitioner should be without it!”
Professor Paul Baines, Professor of Political Marketing, School of Management, Cranfield University, UK
“Most textbooks fail to inspire but this book captures all the life and excitement of business. Arming you with the latest and most interesting marketing theory, it will put you in the position of real managers making real decisions, about an eclectic and international range of organizations (from Audi to Zapp!).
The Marketing Pathfinder
will engage and challenge you, and make you a better marketer.”
Duncan Angwin and Stephen Cummings, co-authors of The Strategy Pathfinder
THE MARKETINGPATHFINDER
KEY CONCEPTS AND CASES FOR MARKETING STRATEGY AND DECISION MAKING
DAVID STEWART — MICHAEL SAREN
SERIES EDITORS:STEPHEN CUMMINGS — DUNCAN ANGWIN
This edition first published 2014
© 2014 John Wiley and Sons Ltd
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Library of Congress Cataloging-in-Publication Data
Stewart, David, 1948-
The marketing pathfinder : key concepts and cases for marketing strategy and decision making / David Stewart and Michael Saren.
pages cm
Includes bibliographical references and index.
ISBN 978-1-119-96176-5 (paperback)
1. Marketing– Management. 2. Strategic planning. I. Saren, Michael. II. Title.
HF5415.13.S875 2014
658.8′02– dc23
2014020570
A catalogue record for this book is available from the British Library.
ISBN 978-1-119-96176-5 (paperback), ISBN 978-1-118-75876-2 (ebk)
ISBN 978-1-118-75891-5 (ebk)
Cover design: Cylinder
Cover image: © Shutterstock/Dr Hitch
Pathways to Marketing
The role of marketing in an organization is becoming increasingly important as the focus is on building long-term customer relationships instead of focusing on short-term profit. Marketing is vital to success but it does not possess a one size fits all solution. Therefore, rather than relying on a prescriptive model to solve problems the marketer must be nimble, able to think on their feet and willing to change. This is even more imperative as each marketing situation is different and context dependent.
As part of the Pathfinder series, the book takes a novel approach, building on the work of Donald Schön (1983) by viewing marketers as reflective practitioners. Adopting this concept means that marketers not only need to access appropriate concepts and frameworks to assess each situation but also to have the confidence to make the right decision. Therefore it is not a matter of technical problem solving but the development of reflective enquiry, where the art of practice is linked to theories and frameworks to make sense of a situation.
The book is also different in that marketers are positively encouraged to take an eclectic approach to the subject. The book does not build on one perspective alone but instead fuses four different approaches to the marketing discipline which are outlined in Chapter 1. Some more critical perspectives are provided in Chapter 10, for example, about which the reader needs to be reflective regarding the implications.
Another key feature of the Pathfinder Series is that the text covers the main concepts on the topic within each chapter in a format that can be covered in a single module, with room for case discussion. At the end of each chapter a list of references is provided which enables the student to explore areas in detail if they so wish.
In addition to the core concepts the idea is that the micro cases at the end of each chapter allow students to relate these concepts to practice and come to grips with some real-world issues faced by marketers. These micro cases are “live” case studies – unlike the traditional case study format, where all the information is detailed in a 20-page document with the primary goal being detailed analysis to solve a problem. Students are encouraged to conduct their own research by obtaining additional information, conducting an Internet search, discussing the issues with colleagues, drawing on past experiences and forming their own opinions, thereby taking ownership of the case.
At the end of the first micro case of each chapter (apart from the last where you are encouraged to take ownership of the case), brief ideas are presented on how the case questions might be answered. This gives the student the opportunity to discuss the ideas and provide alternative views or additional insights. The cases have been prepared for classroom discussion only and are not intended to illustrate effective or ineffective marketing management decisions.
The student will note that some of the cases overlap between chapters. In other words, whilst it may be a pricing case, questions of segmentation may arise, or it may be a brand building case but product innovation and adoption are also relevant issues. This is deliberate as not many marketing problems occur as an isolated topic. Frequently other issues with the market or organization play a part.
A case study mind map is provided. Alongside the name of each micro case is the name of the company. Students are urged to use the mind map dynamically by linking concepts and ideas between cases by drawing lines, thus creating a spider's web. For example, there are linkages regarding modular manufacturing between the Audi AG and the Raleigh bicycle cases.
The questions at the end of each case are for the student to apply concepts and frameworks presented in the chapter. The case will also give rise to other questions, some of which may be borrowed from other cases in the book. By adding your own research and questions, the cases are dynamic rather than static. It is not a matter of looking for the ‘right’ answer, but rather adding to the conversation, not merely repeating the conversation.
Finally, a chapter mind map is presented showing how the chapters are interrelated. Central to the mind map are the firm and the buyer and the relational exchange that binds the two together. Note the double-headed arrows, indicating that the two parties influence each other. The mind map has a logical flow to it and goes in a clockwise direction. We start the mind map with the organization and how it delivers value. Next is the development of products/services that represent that value. The next chapter concentrates on the buyers and how a marketer can attempt to understand their willingness and ability to partake of an offering, including the price they are prepared to pay. From there the issue of promising is explored and how it relates to the customer experience. Finally, the remaining chapters explore activities the firm can undertake to enhance the relational exchange.
Reference
Schön, D.A. (1983),
The Reflective Practitioner. How Professionals Think in Action
, New York: Basic Books Inc.
The Marketing Pathfinder Map
1. Mobilizing the Marketing Endeavour
Boundary spanning → Four views of marketing → Delivering value → Creating value propositions
2. Developing Products and Services
Product and service typology → Importance of innovation → Product life cycle → Diffusion of innovation → First mover advantage
3. Analysis and Understanding
Demand forecasting → Market analysis → Competitor analysis → Market research
4. Understanding Why They Buy
The influence of culture → The rise of neo-tribes → Prosumers → The decision-making process → Means-end chain
5. How Much Are They Prepared to Pay?
Break-even analysis → Price points → Value proposition → Pricing strategies → Revenue management
6. Over-Promising, Ethics, and Sustainability
The role of promises → How and why over-promising occurs → The importance of ethics → Sustainable marketing
7. Successful Brand Building
Strategic brand management → Types of brands → Semiotics → Brand extensions → Brand equity →
8. Finding the Right Marketing Space
Distribution → Marketing channels → Channel structures → Impact of IT → Role of logistics
9. Communication Heaven
Integrated marketing communications → Communication objectives → Communication mechanisms → Media choices
10. Maverick Marketing
Marketing mavericks → Marketing as practice → Marketing as service → Digital marketing
About the Authors
David Stewart is a senior lecturer at the Victoria University of Wellington Business School. He teaches on the marketing management and business research courses for the MBA programme and additional post-experience programs. His research interests include the philosophy of social science, marketing strategy and brand management.
Michael Saren is Professor of Marketing at Leicester University, UK. He previously held chairs at the universities of Stirling and Strathclyde and is honorary professor at St Andrews University. His research interests focus on the development of marketing theory, particularly regarding marketing knowledge, consumer culture and issues of creativity and sustainability. He was one of the founding editors of the journal Marketing Theory and joint winner of the George Fisk 2012 Macromarketing prize. He was made an honorary fellow and lifetime member of the UK Academy of Marketing in 2007.
Chapter 1Mobilizing the Marketing Endeavour
This chapter covers the following topics:
Boundary spanning
Four views of marketing
Delivering value
Creating value propositions
Border Patrol
Marketing activities take place within the wider contexts of organizations, industries, cultures, and countries. So the marketing endeavour is often viewed as a boundary-spanning role between the organization and its environment. Of course the most immediate environment for marketing is the organization in which it takes place, but marketing is considered to extend beyond the marketing department or function itself. This is because, although most organizations nowadays have a function or department labelled “marketing”, it is sometimes little more than a sales unit, which delivers advertising, personal selling and promotion activities. Such organizations can be described as “sales oriented”. In order to be fully “marketing oriented” however, all the activities of the organization must be centred on the customer; therefore marketing must be undertaken by all functions, not just those in the department called “Marketing”.
In order to provide something of value to their customers or users outside, the activities and departments involved inside the organization each must deliver their part of the process to the other units and functions. For instance, the research department must develop the new system for IT, who must integrate it into existing IT systems for manufacture, which must make the products to order for sales, and the service division must back up sales, etc. In this way, each internal activity can be viewed as having an output and thus a customer inside the organization. This is the notion of internal marketing (see Piercy, 1991) where all departments, not just that labelled “marketing”, are users of others' output and have “customers” in other functions. And this is why Evert Gummesson (1997) says that everybody in the organization should act as a “part-time marketer”.
So marketing can be regarded as the business function located at the boundary between the firm and the outside world. Its role is to manage activities inside the firm in order to focus those outwards, particularly towards customers. One complication with this view is that the distinction between the organization and its environment is not as clear-cut as this “internal versus external” explanation suggests. For example, many companies contract out large parts of their marketing to other firms, where functions such as market research, advertising and technical research are contracted to outside agencies. They often do this in order to avoid permanently employing lots of specialists and to allow more flexible operations, but are more likely to retain control of overall marketing and core activities like marketing strategy and planning, sales management, in-store promotions, costing and pricing. In practice, many marketing operations span the internal–external divide, making the boundary itself between inside and outside the firm even more unclear. Nevertheless, bearing this qualification in mind it is more helpful to think about and discuss the external aspects of the organization's context separately here in order to then lead on to consider how these boundaries can best be managed by marketing.
The notion of the external environment at its basic level implies that the marketing activities of a company take place between and are crucially determined by other organizations and people in the immediate micro-environment such as suppliers, buyers, competitors, etc. The company has some control over these immediate influences through its marketing activities; for example by lowering its price it may encourage buyers to purchase more, but also may encourage competitors to reduce their price. Other factors in the more distant macro-environment are also powerful influences, such as technology, cultural norms, economic conditions, etc.
Forces in the macro-environment affect marketing more indirectly by influencing conditions such as the disposable income of customers, the opportunities for new products, the reach and effects of advertising, etc. The organization has little influence over the macro-environment, determined much more by the state of the general economy, social forces, technological advances, government policies, etc. One criticism of the conventional view depicted in Figure 1.1 is that it is too company-centred, not customer-centric. A truly marketing-oriented view of the environment would turn the diagram inside out, situating consumers in the middle and competing companies on the outside because according to the marketing concept the depiction of the marketing environment should be centred on the consumer, not the seller. The firm's environment should show the consumer at the centre, with sellers fighting for their custom from the outside and competing for distribution channels, retail space, advertising media, etc.
Figure 1.1 The marketing environment.
Source: Adapted from Saren, M. (2006) Marketing Graffiti: The View from the Street. Oxford: Butterworth Heinemann
The role of the external environment is not all encompassing for marketing however, but selective and partial. Companies cannot possibly affect or even engage with all of it. Most firms are not even aware of all the macro forces and trends in technology, society, economy, and public policy that may affect them. There are many examples where managers complain that an important external event occurred “out of the blue”. Marketers will have their own individual view about which particular external elements are important for their business and will also select a small subset of these to monitor, investigate, or exploit. This is what is called environmental scanning, which is systematic information gathering to monitor important trends in the environment.
For example, oil and gas companies undertake regular scanning of oil prices, availability, costs, etc., and forecast future possible scenarios. Also, they constantly monitor key long-term macro-environmental factors such as government stability and national policies in selected countries where they might have or seek exploration licences. Other factors that are assessed include new technologies, regulation of automobiles, transport investments, road infrastructure capacity, and taxation of emissions. In other words, managers in companies such as these select to investigate forecast and monitor only a small part of all the possible factors that might be or become relevant to their companies' markets and their marketing. They cannot look at everything, nor can they operate and market everywhere. That part of the macro-environment that sellers choose to engage with is called the enacted environment. And the part which managers consider relevant is determined by the way they look at their business and the outside world.
In order to manage the firm–environment boundary, marketers also need to gather regular and extensive information. Most obviously, marketers need information about consumers, their wants and needs, and what will satisfy them. Consumer information aids marketing decision-making—pricing decisions, promotion decisions, product decisions, and distribution decisions and so on should all be aimed at satisfying the consumer, so this requires data beyond the basic facts about what they buy, where they shop, their price limits, etc. Marketing also requires knowledge about consumers' fundamental needs, their future preferences, and what determines these. For example, the purpose of loyalty cards in UK retail stores is not just to encourage repeat visits by customers or even to generate “loyalty”; the aim is primarily to generate on a daily basis lots of useful information for the retailer about buyers' purchasing habits. The collection and use of this type of data about consumers' buying behaviour is not sufficient though. Lots of other types of information are needed to aid marketers' decision-making, such as costs, production, competitors, industry; indeed, information about the whole context of the market. Nor is it sufficient to possess and collect information. Marketers also need the ability to integrate and frame such information within the context of their experience, expertise, and judgement.
Whatever Way You Look at It
There are four main approaches to managing marketing's boundaries. These are:
Functionalist
Managerialist
Collaborative
Relational
We outline the theoretical and historical bases of these approaches first before moving on to consider how these can be implemented.
1. Functionalist
The functionalist approach studies marketing behaviour as a system and tries to establish ways of making it work better, more efficiently. It is associated with the great marketing theory pioneer Wroe Alderson, writing in the 1950s and 1960s (see Alderson, 1957). Academic study and development of marketing as a separate discipline is essentially a twentieth-century occurrence. It corresponds to the increasing distance of the producer from the final consumers, over whom manufacturers have thus lost control and influence, with distributors, agents and retailers filling the gap.
Figure 1.2 illustrates this shift in market structure and power over the second half of the twentieth century. The rise of marketing was seen by Alderson and others as the solution to this problem for manufacturers. In other words, marketing started to be used by producers of agricultural and manufactured products in order to attempt to wrest knowledge, contact, control, and influence over consumers, back from the various middlemen in the elongated distribution channels. The early editions of the main marketing publication, the Journal of Marketing, from 1936 contained papers that used the term “marketing” to mean primarily aspects of distribution as the flow of goods and services from the place of production to the point of consumption. Functionalist marketing utilizes the techniques, tools, and language of systems analysis to acquire the means for producers to directly reach and communicate with customers, who came to be regarded by marketing as the espoused central focus of all business systems.
Figure 1.2 Shift from suppliers' market to buyers' market
2. Managerialist
The next development shifts the focus from a functionalist, systems approach to analysing markets to one which focused on managerial and buyer behaviour. The managerial and buyer behaviour view of the 1960s and 1970s studied individual firms and consumers to discover how to control their market behaviour in order to maximize their profit (firms) and satisfaction (consumers). The buyer behaviourist view regarded the consumer as a conditioned organism, open to reconditioning and treated as a “behaving machine”, performing cognitive functions within a black box (see Shankar and Horton, 1999). Managerial marketing attempts to influence the behaviour of this “buyer machine” through manipulating the so-called marketing mix or 4Ps of product, place, promotion, and price.
The task for marketers is to develop an optimal marketing mix solution for competing for the preferences of a chosen target segment of consumers, households, or organizational buyers. In order to achieve this they utilize the techniques, tools, and language of market research to acquire the means to understand and analyse buyer preferences, choose a target market, differentiate and position the product in relation to the competing product alternatives, and estimate the customer reactions in terms of attitudes, buying intentions, or sales. The title of Philip Kotler's (1967) classic textbook Marketing Management: analysis, planning and control epitomizes the managerialist approach to managing the marketing boundaries.
There are several problems with this approach. It prioritizes management interest and values and the role of managers is the main focus, not that of consumers, employees, and other boundary actors—in fact this often represents a minority interest. As Figure 1.3 illustrates, managerialist marketing is mainly concerned with how managers and their firms are perceived in the market, i.e. how they look to customers.
Figure 1.3 Managerialist marketing approach
As such this approach is highly normative and firm-centric and it assumes that managing complex marketing boundaries can be enacted through a “how-to”, step-by-step guide, rather than by analysing and problematizing the boundary relations and management issues in the first place. Above all, however, although it espouses business as the most important form of boundary relationship and organization, managerialism is surprisingly silent about the organization of marketing activities. It does not contain any theory-based prescriptions for organizing marketing activities. The marketing mix is offered as a decision set or output of marketing, not its organization. A further limitation concerns the absence of attention to strategic issues. Although it covers tactical mix decisions the managerialist view is silent about which specific markets the firm should be in and how to compete in these markets.
The importance of these limitations make all the more surprising the belief that it can also be applied to any other form of non-business activity such as a health service or university education. The recent extension of the application of the managerial view of marketing into almost every aspect of business, public, civil, charitable, social, and even military and scientific activity in modern societies does nevertheless demonstrate that this is indeed what has occurred (see McKenna, 1991).
3. Collaborative
Another view of marketing's boundary management role highlights the fact that buyers and sellers do not only compete with each other for the best deal, they must also often collaborate. This emphasis developed largely due to the wider influence of the business thinking and culture of firms from the Far East and Asia. For example, Japanese business methods and ideas of collaboration, quality control, employee relations, and procurement practices have all had an enormous impact on business methods and thinking in the West. Chinese culture and business also operates with the notion of “guanxi”, which is an alternative culture-based value system to the western market basis of legal frameworks, property rights, and contracts. In the West, the concept of trust is nevertheless critical for any marketing collaboration or partnership to work.
As Morgan and Hunt emphasize “commitment and trust are ‘key’ because they encourage marketers to (1) work at preserving relationship investments by cooperating with exchange partners, (2) resist attractive short-term alternatives in favour of the expected long-term benefits of staying with the existing partners, and (3) view potentially high risk actions as being prudent because of the belief that their partners will not act opportunistically. When commitment and trust—not just one or the other—are present they produce outcomes that promote efficiency, productivity and effectiveness” (Morgan and Hunt, 1994).
Proponents of this approach to managing marketing boundaries agree with Evert Gummesson (1997) that “collaboration in a market economy needs to be treated with the same attention and respect as competition”. Three main types of collaborations can be identified, similar to those of competition:
Firms collaborate with other firms, even competitors, in alliances and joint ventures. For instance, airlines collaborate to provide global services (e.g. BA, Qantas, Swissair) and IT firms combine with suppliers and business partners to provide a “platform” or whole offering for customers, e.g. Pentium, Intel, IBM.
Figure 1.4
illustrates how in the automobile industry various organizations collaborate in supply chains in order to provide a unified offer to customers. Indeed as the diagram shows, they actually collaborate with customers, who themselves become involved in value creation as part of the collaborative network constructed around the leading brand of Ford, Nissan, or Volkswagen.
Buyers also collaborate with each other. This can be a formal cooperation, e.g. customer cooperatives, buying clubs, user groups (services, gym, health), enthusiast societies (e.g. cars, football supporters). Alternatively, this can be an informal or social arrangement through information sharing, instruction, or friends.
Buyers and sellers collaborate. The very act of buying requires information sharing, dialogue, agreement, and trust between the buying and selling parties. Especially in business-to-business (B2B) and service markets, the buyer is often involved with the seller in producing or making together some key aspect of the delivery or transaction or use.
Figure 1.4 Supply chain collaboration in the automotive industry.
Source: Adapted from Morgan and Hunt (1994)
The idea of market as collaboration links to the fields of relationship and network marketing which developed from studies of marketing in B2B and services where collaboration and relationships have been found to be central to success. All these relational approaches emphasize long-term collaboration (as opposed to competition and exchange) between market and social actors.
It is actually possible for all marketing activities, problems, systems, and behaviour to be conceptualized and conducted by focusing on the collaborations involved to identify best practices, analyse behaviour, and provide solutions. For example, network theory has been applied extensively to industrial marketing by the north European IMP group (see Ford, 1990) which has enabled them to explain the behaviour of marketing systems in terms of networks of relationships and collaboration.
4. Relational
The move towards the relational approach to managing marketing boundaries began to become popular in the early 1990s when some academic researchers and marketing practitioners began to criticize the managerialist marketing mix approach for its essentially product orientation as opposed to customer orientation and for its short-term transactional view of marketing exchange as opposed to a longer-term relational perspective (see Grönroos, 1994). Their focus on relationships obviously relates directly to the management of organization-environment boundaries and it encompasses all marketing relationships including some which can be beyond and independent of markets and commodity exchange, such as those with stakeholders, employees, and the general public (see Webster, 1992; Payne, 2000).
The relational approach to marketing has arisen for a number of reasons: fragmentation of mass markets through information and communication technologies, the ability to collect and analyse more data about individual customers, higher levels of product quality forcing companies to seek competitive advantage in other ways, more demanding customers and rapidly changing customer buying patterns. The relational approach developed from a combination of ideas in business to business marketing, information technology-enabled developments in database and direct marketing, and the wider application of some key characteristics from services marketing (see Möller and Halinen, 2000).
Consequently, by utilizing these developments in technologies and relationship marketing thinking companies have sought new ways of establishing relationships with customers, and ultimately, ways of maintaining these relationships in order to retain customers that they attract. This requires a fundamental shift in marketing from a focus on transactions (i.e. sales) to relationships (i.e. retention) as companies move from short-term transaction-oriented marketing activities to that of long-term relationship-building. The key differences between these approaches are shown in Table 1.1.
Table 1.1 Transactional vs relationship marketing approaches
Transactional Marketing
Relationship Marketing
Focus on single sales
Focus on customer retention
Orientation to product feature
Orientation to customer value
Short timescale
Long timescale
Little emphasis on customer service
High customer service emphasis
Moderate customer contact
High customer contact
Quality is primarily a concern of production
Quality is the concern of all
Limited customer commitment
High customer commitment
Source: Adapted from Payne (2000)
The difference in the relational approach to marketing's boundary management is its explicit focus on marketer–supplier relationships and the dynamics of these relationships. It also emphasizes that both the seller and customer can be active participants in these relationships, as opposed to the managerial view which sees the marketer as the active agent and the customer as essentially reactive or passive. The key task for marketing now becomes that of managing these relationships with customers and others, not just the management of products, channels, organizations, or an internal “mix” of marketing variables.
Above and Beyond
The approach adopted to managing the marketing boundaries depends on the assumption that managers make about the conceptualization of the environment and the organization's relationship with it.
Increasingly business managers realize that customers are their most important assets and view customer relationships as mutually beneficial exchanges which are all the more important if Vargo and Lusch (2004) are correct that the customer is always a “co-creator of value”. The formation and maintenance of relationships with external marketplace entities in a business to customer (B2C) context is typically captured nowadays by the concept of customer relationship management (CRM) (see Srivastava, Shervani, and Fahey, 1999).
The ability to generate and deliver value above and beyond the product or service is critical for CRM. However, it is much less clear how managers can identify what this value is in the eyes of their customers, and how they can develop and mobilize the necessary competencies for generating this value. It is in this task that there is significant potential of CRM in identifying and delivering customer value.
In the past the formula for identifying customer value seems to have been to listen to your customers and learn from previous mistakes. However, rapidly changing and more fluid boundaries and marketing contexts mean that managers are frequently confronting totally new situations, which reduces the value of lessons from the past. Customers can normally only communicate existing preferences and needs, providing very few clues or vision for the future which requires new learning cycles for marketers and customers alike. Inter-industry competition with new players reaching across established industry sectors (e.g. supermarkets as banks; AA as insurance; mobile phone as camera) challenges established competitive marketing approaches. In these constantly changing conditions, experience counts for less and managers must always be learning; they must be able, as it were, to remember to forget! The Internet and e-commerce have created a new market space for buying and selling that requires different organizational and marketing competencies. Information technologies have increased customer knowledge and therefore their level of expectations from their suppliers.
These dramatic changes require marketers to reassess their understanding and calculation of what constitutes “value” to their customers and how this value can be produced and delivered. Specifically, this might include detailed attention to customer, shareholder, and employee value; appreciation of the knowledge potential underlying such relationships; mutual understanding and careful positioning of relationships provide the possibilities for firms to re-invent the future with their customers, employees, and shareholders. This is the formula for firms to achieve sustainable competitive advantage for the future that the relationship marketing approach advocates because while products/service can be copied easily by competitors, long-term relationships are difficult to imitate.
Does my Value Look Big in this Proposition?
A value proposition is an implicit promise a company makes to customers to deliver a particular combination of values. The application of this concept has changed the focus of operations of many businesses, i.e. companies such as IBM have shifted the traditional, internally focused functions to customer-oriented, market-driven processes aimed at value delivery. In order to achieve such a shift in marketing thinking and practice marketers need to think in terms of different value propositions and how they can be created and delivered. According to Martinez (1999), these value propositions can then be analysed from three different perspectives—the customer perspective “what customers get?”, the marketing perspective “what marketing needs to do?”, and the operational perspective “what the company needs to do?”
Norman and Ramirez (1994) argue that there is a danger in paying too much attention to the disaggregating or breaking down of value creation activities. Indeed, they should not be treated as separate activities to be managed but rather as an integrated and seamless process flow. This raises the potential of a role for the consumer in creating value. At a minimum they play a key role in determining the ultimate value of a product or service. Until the customer lets their view be known in the market by offering to pay a given price, the market value of the final product is unknown.
If we take an example of a product which ultimately fails the final market test because the customer will not buy it (or only pays a price beneath cost), what are assumed to be value-adding activities by each firm in the supply chain (e.g. suppliers of raw materials, processing, parts, assembly, manufacture, distributors, retailers) ultimately are found not to actually add the assumed value. Therefore, value creation can only be judged after the market test and it is the customer who has the crucial deciding role in determining final value. If the customer is the focal point of marketing, value creation is only possible when a product or service is consumed. An unsold product has no value, and a service provider without customers cannot produce anything.
Beyond deciding the value of products and services in the marketplace, the role of the consumer in the value creation process is nevertheless far from clear. Norman and Ramirez (1994) go further and contend that value is co-created through the interaction between the firm and the customer. Consumers can play a key role in value creation too, not just firms, and the role of consumption, i.e. the activities, behaviours, and motivations that consumers undertake when making decisions and forming perceptions about products and services, is not just to “use up” or “deplete” value, but is also one of value creation (see also Vargo and Lusch, 2004).
Conclusion
This chapter has taken a view of the marketing endeavour as one which is about managing the boundaries of the organization's relational context, which focuses attention on key relationship learning, retention, and management processes. Within market relationships each party necessarily has a different ability to understand and manage the relationship. This follows from the heterogeneity of organizations, actors, firms, and consumers that operate in and are interconnected with different contexts or networks. Also each party necessarily has different expectations because each party seeks something different from the relationship, but in order to work together, each party must also seek a joint future (see Medlin, 2004).
These distinctions in the way each party seeks the future are important in considering the different sources or capability for each party to create their environment. This occurs because each action shapes the environment of the other party and, through interaction, also shapes the environment of the acting party. Therefore, each party's activities at the boundaries affect not only their own enactment and conceptualization of the environment, but also that of the other parties with whom they are collaborating or interacting.
Case 1-1 Striding Out
Included in the rationale used when making the bid for the London 2012 Olympics was that the games would inspire a generation of young people to engage more in sport. The Chairman of the London Olympic Committee, Sir Sebastian Coe, stated, “The greatest driver in participation is what goes on in an elite stadium. When you get that spike [of interest], you have to create that supply of infrastructure, both human and physical, that allows you to absorb that.” Overall the objective is to create a culture where playing sport is integral to a person's life.
Sport England, the funding body for organized sport in England, conducts participation surveys in April and October each year. In the latest 2013 survey it was found that a record number of people aged 26 and above were involved in sport but the number of 16 to 25-year-old participants declined by 51,000. This can be partly attributable to young people moving away from traditional, organized sport. One year later, since the initial surge of the Olympics, the overall participation levels have remained steady at 15.5 million. Swimming has the most participants at 2.9 million people, followed by athletics and cycling, with both sports having in excess of 2 million participants each. On the other hand, participation in tennis has declined, despite the success of Andy Murray at Wimbledon (see Table 1-1.1).
Table 1-1.1 Once a week sport participation numbers (16 years and over)
Activity
October 2006
October 2013
Swimming
3,273,800
2,934,200
Athletics
1,353,800
2,016,400
Cycling
1,634,800
2,003,000
Football
2,021,700
1,838,600
Golf
889,100
751,900
Tennis
457,200
406,000
Cricket
195,200
148,300
Rugby Union
185,600
159,900
Netball
111,700
122,200
The task ahead for Sport England is to build on the momentum from the success of the Olympics by increasing sport participation at the elite and local club levels. For Run England, the athletics governing body, the challenge is to retain athletes and secure long-term involvement, as well as grow the sport. Clubs have an important role in achieving the above objectives.
One of the athletic clubs that has steadily increased its membership over the years is the Cornwall Athletic Club. The club was established in 1982 through the amalgamation of the Duchy of Cornwall Athletic Club and the West Cornwall Athletic Club, and caters for athletes from the age of nine to the age of 70 plus. Members include novices, recreational runners, and competitive athletes at the county, national, and international levels. Athletes can participate in a number of disciplines, including track and field, road running, and cross-country. A training session is organized every Tuesday evening at the Carn Brea Leisure Centre, Pool, Redruth, where the track is floodlit in the winter months.
The club has a team of over 20 UK athletics qualified coaches covering the different disciplines. A number of coaches have attained Level Four certification, the top level.
Questions
What insights would be gained if the club were to scan the environment?
Unpack the club's value proposition from three different perspectives.
What challenges does the club face?
Some Ideas
What insights would be gained if the club were to scan the environment?
By scanning the environment the club would see factors that might impact upon club membership. One factor is the demographic make-up of the Cornwall catchment area, especially the predicted number of children and teenagers. Also, the general growth trends of the population would be insightful, especially the growth in the number of baby boomers. Another factor is the rise of obesity in the population and the degree to which people are aware of the issue. Also, the economy may impact upon club membership. On the one hand the double-dip recession may affect runners' willingness to pay club fees but on the other hand it may attract potential athletes as running is a relatively low-cost sport to participate in, compared with say skiing or golf.
Unpack the club's value proposition from three different perspectives.
From the customer's perspective the value is in the training sessions, the coaching, and the social aspects of the sport. What marketing could do is to liaise with schools to help coach students, organize seminars, produce posters, and write articles for the local newspaper. It could also liaise with triathlon clubs to provide coaching and support for athletes wanting to improve their running. From the management's perspective, organizing club nights, running special events, nutritional seminars, and providing opportunities for people who want to tackle being overweight, are possible activities.
What challenges does the club face?
The club needs to find a way to increase the membership of the 16 to 25-year-old age group. This is a difficult group to motivate as they have social pressures and are either busy at work or attending a tertiary institution, often away from home. Despite this, the club needs to ensure it has a programme that meets this age group's social as well as physical needs.
Another challenge is to increase the qualifications of existing coaches and to enlist new coaches, especially people who are prepared to motivate the “couch potatoes” to join a walking group, and perhaps over time graduate to road running. The club needs to maintain its proposition that it is not only for elite athletes but for all comers.
Case 1-2 Are You Being Served?
Pret a Manger, meaning ready to eat, is a London-based gourmet food outlet. It was established by Sinclair Beecham and Julian Metcalfe who bought the company from a liquidator. They opened their first shop near Victoria Station, London and in time they were serving 7,000 customers per week. They had spotted a gap in the market as at the time there was no shop selling what they called “proper” sandwiches.
Their offering was based on three main selling points: the food was fresh, tasty, and fast. Their aim is to have customers, who have ordered their food to go, out of the shop in 60 seconds once they had made their choice. Their products contain a lot of natural ingredients without the additives or preservatives normally found in a lot of fast food. The menu includes sandwiches, baguettes, wraps, and cakes as well as hot and cold drinks. Every shop has its own kitchen and food is packaged in paperboard rather than sealed plastic. Pret a Manger customers are mainly office workers who may visit their local shop between 10 and 15 times a week. Shoppers are another segment, along with students.
Currently Pret has 14 outlets in Hong Kong, as well as 46 on the East Coast of the USA and 9 in Chicago. The company has even opened a store in Paris. Within Britain the company has 240 shops, which is small in comparison to McDonalds (1,200), Starbucks (650), and Costa (1,300). Three quarters of Pret's British shops are within the M25 commuter belt and account for 85% of its sales.
Unlike most fast food outlets, Pret is not franchised but has an open line of communication between the outlets and the head office. The aim for each store is to create what is termed the “Pret Buzz”, which customers should feel when they enter the shop. Staff are employed for their personality so that customers experience a positive feeling. Staff must be friendly and lively, as well as good humoured by nature. Recruits are told to treat customers like guests in their own home.
