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MARKETING STRATEGY & COMPETITIVE POSITIONING
Sixth Edition
Marketing Strategy and Competitive Positiowning 6e deals with the process of developing and
implementing a marketing strategy. The book focuses on competitive positioning at the heart of Sixth Edition
marketing strategy and includes in-depth discussion of the processes used in marketing to achieve
competitive advantage.
The book is primarily about creating and sustaining superior performance in the marketplace.
It focuses on the two central issues in marketing strategy formulation – the identification of MARKETING STRATEGY
& COMPETITIVE
target markets and the creation of a differential advantage. In doing that, it recognises the emergence
Marketing Strategy
& Competitive
Positioning
Graham Hooley • Nigel F. Piercy •
Brigitte Nicoulaud • John M. Rudd
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • São Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan
First published in 1993 as Competitive Positioning: The key to market success (print)
Second edition published 1998 by Prentice Hall Europe (print)
Third edition 2004 (print)
Fourth edition 2008 (print)
Fifth edition 2012 (print)
Sixth edition published 2017 (print and electronic)
The rights of Graham Hooley, Nigel Piercy, Brigitte Nicoulaud and John M. Rudd to be identified as
authors of this work has been asserted by them in accordance with the Copyright,
Designs and Patents Act 1988.
The print publication is protected by copyright. Prior to any prohibited reproduction, storage
in a retrieval system, distribution or transmission in any form or by any means, electronic,
mechanical, recording or otherwise, permission should be obtained from the publisher or,
where applicable, a licence permitting restricted copying in the United Kingdom should be obtained
from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN.
The ePublication is protected by copyright and must not be copied, reproduced, transferred,
distributed, leased, licensed or publicly performed or used in any way except as specifically
permitted in writing by the publishers, as allowed under the terms and conditions under which
it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution
or use of this text may be a direct infringement of the authors’ and the publisher’s rights and those
responsible may be liable in law accordingly.
All trademarks used herein are the property of their respective owners. The use of
any trademark in this text does not vest in the author or publisher any trademark
ownership rights in such trademarks, nor does the use of such trademarks imply any
affiliation with or endorsement of this book by such owners.
Pearson Education is not responsible for the content of third-party internet sites.
10 9 8 7 6 5 4 3 2 1
20 19 18 17 16
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
Preface xi
Acknowledgements xiii
Publisher’s acknowledgements xiv
4 Customer Analysis 88
13 C
ompeting Through Superior Service
and Customer Relationships 332
14 S
trategic Customer Management and the Strategic
Sales Organisation 365
References 521
Index 545
Preface
Acknowledgements
xi
xiii
Part 2
Publisher’s acknowledgements xiv Competitive Market
Analysis
Part 1 Chapter 3
The Changing Market Environment
MARKETING STRATEGY 54
Introduction 55
3.1 A framework for macro-environmental analysis 56
Chapter 1 3.2 The economic and political environment 57
Market-Led Strategic Management 4 3.3 The social and cultural environment 59
Introduction 5
3.4 The technological environment 63
1.5 The role of marketing in leading strategic 3.7 The Five Forces model of industry
management 23
competition 68
Summary 25
3.8 The product life cycle 72
Case study: Amazon eyes online sales 4.1 What we need to know about customers 89
Case study: Adidas kicks off US drive 8.1 A priori segmentation approaches 190
6.6 Dynamic marketing capabilities 149 9.1 The process of market definition 216
6.7 Resource portfolios 151 9.2 Defining how the market is segmented 218
6.8 Developing and exploiting resources 152 9.3 Determining market segment attractiveness 220
Case study: Family tradition in domestic 9.5 Making market and segment choices 229
Part 3
Identifying Current
and Future Competitive Part 4
Positions Competitive Positioning
Strategies
Chapter 7
Segmentation and Positioning Chapter 10
Principles 158 Creating Sustainable Competitive
Advantage 238
Introduction 159
7.1 Principles of competitive positioning 160 Introduction 239
7.2 Principles of market segmentation 163 10.1 Using organisational resources
7.3 The underlying premises to create sustainable competitive
of market segmentation 163 advantage 239
7.4 Bases for segmenting markets 164 10.2 Generic routes to competitive advantage 241
7.5 Segmenting consumer markets 165 10.3 Achieving cost leadership 242
7.6 Segmenting business markets 176 10.4 Achieving differentiation 245
7.7 Identifying and describing market segments 180 10.5 Sustaining competitive advantage 253
7.8 The benefits of segmenting markets 181 10.6 Offensive and defensive competitive
7.9 Implementing market segmentation 182 strategies 255
11.5 The extended marketing mix – people, 14.2 The new and emerging competitive
processes and physical evidence 292
role for sales 372
Summary 295
14.4 Strategic customer management tasks 382
Case study: Sensory ploys and the scent 14.5 Managing the customer portfolio 384
of marketing 296
14.6 Dealing with dominant customers 386
Summary 397
Case study: Power of the ‘mummies’ key
Chapter 12 to Nestlé’s strategy in DR Congo 398
Introduction 299
Chapter 15
Strategic Alliances and Networks 400
12.1 Innovation strategy 300
12.2 New products 314 Introduction 401
12.3 Planning for new products 317 15.1 Pressures to partner 402
12.4 The new product development process 320 15.2 The era of strategic collaboration 406
12.5 Speeding new product development 326 15.3 The drivers of collaboration strategies 407
12.6 Organising for new product development 326 15.4 Network forms 411
Summary 329 15.5 Alliances and partnerships 413
Case study: Apple moves into fashion 15.6 Strategic alliances as a competitive force 417
business with Watch launch 330 15.7 The risks in strategic alliances 419
15.8 Managing strategic alliances 420
Competing Through Superior Case study: UPS and FedEx turn focus
Service and Customer to consumer behaviour 426
Relationships 332
Introduction 334
Chapter 16
Strategy Implementation
13.1 The goods and services spectrum 337
and Internal Marketing 429
13.2 Service and competitive positioning 339
13.3 Relationship marketing 342 Introduction 430
13.4 Customer service 347 16.1 The strategy implementation challenge
13.5 Providing superior service 347 in marketing 433
13.6 Customer relationship management 351 16.2 The development of internal marketing 436
13.7 E-service quality 352 16.3 The scope of internal marketing 437
13.8 Measuring and monitoring customer 16.4 Planning for internal marketing 447
satisfaction 354 16.5 Cross-functional partnership as internal
Summary 357 marketing 450
Case study: Property portals hand control 16.6 Implementation and internal marketing 456
to homeowners 358 Summary 457
Chapter 17
Corporate Social Responsibility
and ethics 460
Part 6
Introduction 461
Conclusions
17.1 Marketing strategy and corporate
social responsibility 465 Chapter 18
17.2 The scope of corporate social responsibility 467 Twenty-First Century Marketing 500
17.3 Drivers of corporate social responsibility
initiatives 470
Introduction 501
17.4 The other side of corporate social 18.1 The changing competitive arena 501
initiatives 478
18.3 Competitive positioning strategies 510
Since the fifth edition of this book, published in 2011, In parallel the technology revolution is in full swing:
developed economies around the world have continued driverless cars are a reality, members of the Y genera-
to feel the aftershocks of the deepest recession since the tion communicate and share their feedback via social
Great Depression of the 1930s that started with the media, customers are looking for consistent experi-
well-publicised “credit crunch”. Despite some continu- ences across all shopping channels even the traditional
ing academic debate about the causes and extent, there taxi business model has been disrupted by an app.
is now little doubt that climate change and global Within this context, throughout this sixth edition
warming is beginning to have a significant impact on we have attempted to identify new approaches to doing
our physical environment. Technology and the ever- business that will promote sustainability, both for the
growing acceptance and use of social media are having organisations adopting them and for the environment
a profound effect on customer expectations and (economic, social and natural) in which they operate.
experience. Marketing Strategy and Competitive Positioning 6e
Whilst appearing to move out of recession and deals with the process of developing and implement-
beginning to enjoy some degree of economic growth, ing a marketing strategy. The book focuses on competi-
governments of major national economies are still left tive positioning at the heart of marketing strategy and
with unprecedented levels of national debt and auster- includes in-depth discussion of the processes used in
ity programmes introduced in 2010 are continuing in marketing to achieve competitive advantage within the
an attempt to rebalance the books for example in the context introduced above.
European Union. These have caused severe hardship to The book is primarily about creating and sustaining
citizens of countries such as Greece and Spain where superior performance in the marketplace. It focuses on
unemployment reached a high of around 24% in 2015. the two central issues in marketing strategy formulation
Despite these on-going economic difficulties climate – the identification of target markets and the creation
change has not been ignored. Caused by a combination of a differential advantage. In doing that, it recognises
of factors including build up of CO2 in the atmosphere the emergence of new potential target markets born
due to emissions from the burning of fossil fuels such of the recession, increased concern for climate change
as coal and oil, deforestation and animal agriculture, and disruption from on-going technological advances.
and feedback loops created through the shrinking of It examines ways in which firms can differentiate their
the polar ice caps and glaciers that reflect solar radia- offerings through the recognition of environmental and
tion, a number of implications are becoming apparent. social concerns and innovation.
As ice melts so sea levels rise, and weather patterns Topics examined include service quality and rela-
become less predictable. Extreme weather events come tionship marketing, networks and alliances, innovation,
more frequent, water and food security become greater internal marketing and corporate social responsibility.
concerns, and subtropical deserts expand. Climate Emphasis is placed on the development of dynamic
change poses significant challenges for businesses. Sus- marketing capabilities, together with the need to reas-
tainable energy technologies such as wind, solar, wave sess the role of marketing in the organisation as a criti-
and thermal biomass are now being pursued more vig- cal process and not simply as a conventional functional
orously and attempts to reduce energy consumption specialisation.
(of cars, buildings and airplanes) are creating new busi-
ness opportunities. Increasingly companies, public sec- The book structure
tor organisations, individuals and nations are signing
up to measures such as sourcing more raw materials Part 1 is concerned with the fundamental changes that
locally to reduce ‘carbon miles’ and limiting the use are taking place in how marketing operates in organisa-
of high-emission travel options to reduce their carbon tions and the increasing focus on marketing as a process
footprint as in the Paris Agreement of December 2015 rather than as a functional specialisation. The central
where 195 countries adopted the first ever legally bind- questions of the market orientation of organisations
ing climate deal. and the need to find better ways of responding to the
volatile and hard to predict market environments lead us Part 5 examines implementation issues in more
to emphasise the market-led approach to strategic man- detail. The section includes chapters on strategic cus-
agement and the framework for developing marketing tomer management and corporate social responsibility
strategy which provides the structure for the rest of the as well as updated chapters on strategic alliances and
book. Our framework for strategic marketing planning networks and internal marketing.
provides the groundwork for two critical issues on which Part 6 provides our perspective on competition for
we focus throughout this volume: the choice of market the second decade of the 21st century. The various
targets and the building of strong competitive positions. themes from the earlier parts of the book are draws
Central to this approach is the resource-based view of together in order to identify the major changes tak-
marketing and the need to develop, nurture and deploy ing place in markets, the necessary organisational
dynamic marketing capabilities. responses to those changes and the competitive posi-
Part 2 deals with the competitive environment in tioning strategies that could form the cornerstones of
which the company operates and draws specifically effective future marketing.
on recent changes brought about by recession and
concerns for sustainability. Different types of strate-
New to this edition:
gic environment are first considered, together with
the critical success factors for dealing with each type. ● Updated content to reflect the on-going global eco-
Discussion then focuses on the ‘strategic triangle’ of nomic crisis and its impact on business and market-
customers, competitors and company in the context ing.
of the environment (social, economic and natural) that ● New coverage including the impact of emerg-
the firm operates in. Ways of analysing each in turn are ing markets on innovation, the perverse customer
explored to help identify the options open to the com- as a market force, the new realities in competing
pany. The emphasis is on matching corporate resources, through services and market analysis and segmen-
assets and capabilities to market opportunities. tation.
Part 3 examines in more detail the techniques avail- ● Updated chapters on strategic customer manage-
able for identifying market segments (or potential tar- ment and strategic alliances.
gets) and current (and potential) positions. Alternative ● Increased emphasis on competing through innova-
bases for segmenting consumer and business markets tion including new business models such as Uber,
are explored, as are the data collection and analy- Netflix and new types of retailing.
sis techniques available. Selection of market targets ● Updates vignettes at the beginning of chapters fo-
through consideration of the market attractiveness and cusing on companies such as Amadeus, Mastercard
business strength is addressed. and Samsung Pay and including discussion ques-
Part 4 returns to strategy formulation. The sec- tions.
tion opens with discussion of how to create a sustain-
● New cases throughout the book including Ryanair,
able position in the marketplace. Three chapters are
Amazon and Lego.
concerned with specific aspects of strategy formula-
● Up-dated online resources include an Instructor’s
tion and execution. The new chapter on competing
Manual and PowerPoint slides for instructors,
through the marketing mix has been retained from the
along with additional case studies for students.
fifth edition and expanded to reflect increasing use of
new media to promote, distribute and create market The book is ideal for undergraduate and postgradu-
offerings. The roles of customer service in relationship- ate students taking modules in Marketing Strategy,
building and innovation to create competitive advan- Marketing Management and Strategic Marketing
tage are considered in depth. Management.
We wish to acknowledge the support of many friends, Hassan, J. Mac Hulbert, Nick Lee, Peter Leeflang, Ian
colleagues, students and managers who have helped Lings, David Jobber, Hans Kasper, Costas Katsikeas,
shape our ideas over the years. Philip Kotler, Giles Laurent, Gary Lilien, Jim Lynch,
Our first and biggest thanks must go to Professor Malcolm MacDonald, Felix Mavando, Sheelagh Mat-
John Saunders, our friend, colleague and co-author of tear, Hafiz Mizra, Kristian Müller, Neil Morgan, Hans
the first three editions of this book. John is an out- Muhlbacher, Niall Piercy, Leyland Pitt, Bodo Schle-
standing marketing scholar who has made a very sig- gelmilch, David Shipley, Stan Slater, Anne Souchon,
nificant contribution to both marketing thought and Jan-Benedict Steenkamp, Vasilis Theohorakis, Rajan
practice over the years. Much of his contribution to Varadarajan, Michel Wedel, David Wilson, Berend
the early editions remains in the current edition and we Wirenga, Robin Wensley, Michael West, Veronica
thank him for his generosity in allowing it to continue Wong and Oliver Yau.
to be included. We would like to pay particular tribute to the role
We would also like to acknowledge the contribu- of our friend and colleague, the late Peter Doyle. We
tions of a number of outstanding management and have learned an enormous amount from Peter over the
marketing scholars with whom we have been fortunate years and owe him and incalculable debt for helping us
to work and learn from over recent years: Professor shape and sharpen our ideas.
Gary Armstrong, George Avionitis, Amanda Beat-
son, Suzanne Beckmann, Jozsef Beracs, Pierre Ber-
thon, Günther Botschen, Amanda Broderick, Rod
Brodie, Peter Buckley, John Cadogan, Frank Cespedes, Graham Hooley
David Cook, David Cravens, Adamantios Diaman- Nigel F. Piercy
torpoulos, Susan Douglas, Colin Egan, Heiner Evan- Brigitte Nicoulaud
schitztky, John Fahy, Krzysztof Fonfara, Gordon Foxall, John M. Rudd
Mark Gabbott, Brandan Gray, Gordon Greenley, Salah December 2016
We are grateful to the following for permission to reproduce Association; Figure 17.4 from ‘The link between competitive
copyright material: advantage and corporate social responsibility’ by Michael E.
Porter and Mark R. Kramer, December 2006. Copyright ©
Figures 2006 by the Harvard Business School Publishing. Used by
Figure 3.2 from The Economist Newspaper Limited, London permission; Figure 17.5 adapted from ‘Walmart’s European
09/09/2008; Figure 3.5 adapted from ”Supplier Relationships: adventure’, in Market-Led Strategic Change: Transforming
A Strategic Initiative,” by Jagdish N. Sheth, Emory University the Process of Going to Market Taylor & Francis (Piercy,
and Arun Sharma, University of Miami. Figure 2, Shift in N.F.) p. 39 (ISBN 9781856175043), reproduced by permission
Organizational Purchasing Strategy, page 18. This paper of Taylor & Francis Books UK.
extends research published by the authors in Industrial Mar-
keting Management (March 1997). Please address correspon- Tables
dence to Arun Sharma, asharma@bus.miami.edu, Table on page 9 from Market Driven Management, John
Department of Marketing, University of Miami, P.O. Box Wiley & Sons (Webster, F.E. 1994), Reproduced with permis-
248147, Coral Gables FL 33124, Telephone: (305) 284 1770, sion of Blackwell Scientific in the format Republish in a book
FAX: (305) 284 5326; Figure 3.6 from COMPETITIVE via Copyright Clearance Center; Table 6.1 from The Global
ADVANTAGE: Creating and Sustaining Superior Perfor- Top Ten Brands, Interbrand’s 2001, 2009, 2010, 2013 Best
mance, Simon & Schuster, Inc. (Porter, M.E. 1998) Copyright Global Brands Report, www.interbrand.com; Table 7.1 from
© 1985 by Michael E. Porter. Reprinted with the permission Occupation Groupings: A Job Dictionary, 6th ed, 2006.
of Free Press, a Division of Simon & Schuster, Inc. All rights https://www.mrs.org.uk/pdf/occgroups6.pdf. The Market
reserved; Figure 3.9 from iPodlounge.com, Data are for every Research Society.
two months from November 2001 to May, 2004. Thus 11 is
November 2001, 1.02 is January 2002 etc.; Figure 3.12 Text
adapted from Competitive Marketing: A Strategic Approach, Case Study on page 4 from Puma gives the boot to cardboard
3rd ed, Cengage (O’Shaughnessy, J. 1995) Reprint rights shoeboxes, Financial Times, 14/04/2010 (Wilson, J. and
ISBN: 978-0-415-09317-0, Table 9.1, Porter’s evolutionary Milne, R.), © The Financial Times Limited. All Rights
stages vs traditional PLC approach, page 315. Reproduced by Reserved; Case Study on page 25 from Lego enters a new
permission of Cengage Learning EMEA Ltd; Figure 6.9 dimension with its digital strategy, Financial Times,
adapted from Competing for the Future, Harvard Business 27/09/2015 (Milne, R.), © The Financial Times Limited. All
School Press (Hamel, G. and Prahalad, C.K. 1994) used by Rights Reserved; Case Study on page 28 from Asos founder
permission; Figure 9.1 adapted from Market-Led Strategic turns to online homeware, Financial Times, 28/06/2010
Change: Transforming the Process of Going to Market, Tay- (Kuchler, H.), © The Financial Times Limited. All Rights
lor & Francis Books (Piercy, N.F. 1997) (ISBN 9781856175043), Reserved; Quote on page 44 from Gov.uk website, https://
p. 298; Figure 10.4 adapted from COMPETITIVE ADVAN- www.gov.uk/government/organisations/uk-export-finance/
TAGE: Creating and Sustaining Superior Performance (Por- about, accessed 2014, September, Gov.UK. OGL, licensed
ter, M.E. 1985) Copyright © 1985 by Michael E. Porter. under the Open Government Licence v.3.0; Case Study on
Reprinted with the permission of Free Press, a Division of page 50 from Amazon eyes online sales boost through “Fire”
Simon & Schuster, Inc. All rights reserved; Figures 11.5 and smartphone, Financial Times, 19/06/2014 (Mishkin, S.), ©
11.6 from New Scientist, 2004, October 16. www.newscien- The Financial Times Limited. All Rights Reserved; Case
tist.com. Reed Business Information Ltd; Figure 12.2 and Study on page 54 from Recession-hit Aga trials green energy,
Figure 16.4 adapted from Market-Led Strategic Change: Financial Times, 12/03/2010 (Jones, A.), © The Financial
Transforming the Process of Going to Market, 4th ed (Piercy, Times Limited. All Rights Reserved; Case Study on page 86
N. 2009) Copyright Butterworth-Heinemann (2008); Elsevier from Food group shifts strategy to volume growth, Financial
Ltd, Global Rights Department c/o Butterworth-Heinemann; Times, 10/01/2010 (Daneshkhu, S. and Wiggins, J.), © The
Figure 13.4 from Relationship Marketing for Competitive Financial Times Limited. All Rights Reserved; Case Study on
Advantage, Butterworth-Heinemann (Payne, A., Christopher, page 88 from Amadeus set to soar on airline bookings, Finan-
M., Clark, M. and Peck, H. 1995). Elsevier Science Ltd (UK); cial Times, 26/02/2015 (Hale, T.), © The Financial Times
Figures 13.6 and 13.11 adapted from Parasuraman, A., Limited. All Rights Reserved; Case Study on page 105 from
Zeithaml, V.A. and Berry, L.L. (1985), ‘A conceptual model Balderton plugs into teenagers’ attention spans, Financial
of service quality and the implications for further research’, Times, 18/06/2010 (Bradshaw, T.), © The Financial Times
Journal of Marketing, Fall, 41–50. American Marketing Limited. All Rights Reserved; Case Study on page 106 from
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Limited. All Rights Reserved; Case Study on page 128 from Power of the mummies key to Nestlé’s strategy in DR Congo,
Adidas struggles to catch up with Nike’s runaway success, Financial Times, 01/10/2014 (Manson, K.), © The Financial
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Financial Times Limited. All Rights Reserved; Case Study on UPS and FedEx turn focus to consumer behaviour, Financial
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Rights Reserved; Case Study on page 188 from E-reader mar- graph on page 460 from Porter, M.E. and Kramer, M.R.
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D.), © The Financial Times Limited. All Rights Reserved; January–February, 62–77; Case Study on page 460 from Eco-
Case Study on page 212 adapted from A passion that became friendly fabrics, Financial Times, 16/04/2010 (Sims, J), © The
a brand, Financial Times, 24/02/2010 (Simonian, H.), © The Financial Times Limited. All Rights Reserved; Case Study on
Financial Times Limited. All Rights Reserved; Case Study on page 496 from How Skanska aims to become the world’s
page 214 from The public image: Kodak, Financial Times, greenest construction ...Innovation begins at home: Group
10/05/2010 (Bradshaw, T.), © The Financial Times Limited. puts its slant on sustainable housing. http://www.ft.com/
All Rights Reserved; Case Study on page 234 from No-frills cms/s/0/73a1bea4-a61a-11e3-8a2a-00144feab7de.
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Business Review, July–August, 10; Case Study on page 365 Zai Rider Simon.
Introduction
Peter Doyle (2008) points out that the primary overarching goal for chief executives of
commercial companies is to maximise shareholder value. Is this at odds with increasing
awareness and attention to environmental and social responsibility? Surely firms seeking to
maximise shareholder value will pay scant regard to the natural and social environment in
which they operate, taking what they can irrespective of the consequences, to make a quick
buck? Isn’t this the essence of market-based capitalism – red in tooth and claw?
Wrong! The essence of the shareholder value approach is the long-term sustainability of the
organisation through the creation of lasting value. Indeed, Doyle also argues that shareholder
value is often confused with maximising profits. Maximising profitability is generally consid-
ered to be a short-term approach (and may result in eroding long-term competitiveness through
actions such as cost cutting and shedding assets to produce quick improvements in earnings).
Maximising shareholder value, on the other hand, requires long-term thinking, the identification
of changing opportunities and investment in the building of competitive advantage.
The role of marketing in the modern organisation poses something of a paradox. As Doyle
(2008) again points out, few chief executives come from a marketing background, and many
leading organisations do not even have marketing directors on their boards. Indeed, in many
firms, the marketing function or department has had little or no strategic role; being relegated
to public relations (PR), advertising or sales roles. However, there has been a change over
the last decade or so, regarding the importance of the marketing concept in setting the stra-
tegic direction and influencing the culture of firms. Greyser (1997), for example, notes that
marketing has successfully ‘migrated’ from being a functional discipline to being a concept of
how businesses should be run. Similarly, marketing is talked of as a key discipline in organisa-
tions other than conventional commercial enterprises, for example in not-for-profit enterprises
such as charities and the arts, in political parties, and even in public sector organisations, such
as universities and the police service.
Managers increasingly recognise that the route to achieving their commercial or social
objectives lies in successfully meeting the needs and expectations of their customers
(be they purchasers or users of services). The concept of the customer has always been
strong in commercial businesses, and as supply has outstripped demand in so many indus-
tries so customer choice has increased. Add to that the vast increase in information available
to customers through media sources such as the Internet, and the power in the supply chain
has shifted dramatically from manufacturer, to retailer/supplier, to end customer. In such
a world, organisations that don’t have customer satisfaction at the core of their strategic
decision making will find it increasingly hard to survive.
In the not-for-profit world the concept of the ‘customer’ is taking more time to get estab-
lished but is no less central. Public sector organisations talk in terms of ‘clients’, ‘patients’,
‘students’, ‘passengers’, and the like. In reality all are customers, in that they ‘receive’ benefits
from an exchange with an identifiable entity or service provider. Where customers can make
choices between service providers (within the public sector or outside it) they will choose
providers who best serve their needs. Increasingly private sector providers are identifying
areas where customers are not well served by the public sector, and providing new choices
(in healthcare, education, security services and transport, for example).
While organisational structures, operational methods and formal trappings of marketing
can and should change to reflect new developments and market opportunities, the philoso-
phy and concept of marketing, as described in this chapter, are even more relevant in the
business environment faced today than ever before.
This first chapter sets the scene by examining the marketing concept and market orienta-
tion as the foundations of strategic marketing, the role of marketing in addressing various
stakeholders in the organisation, and the developing resource-based marketing strategy
approach.
At its simplest, it is generally understood that the marketing concept holds that, in
increasingly dynamic and competitive markets, the companies or organisations which are
most likely to succeed are those that take notice of customer expectations, wants and needs
and gear themselves to satisfying them better than their competitors. It recognises that there
is no reason why customers should buy one organisation’s offerings unless they are in some
way better at serving their wants and needs than those offered by competing organisations.
In fact, the meaning and domain of marketing remains controversial. In 1985 the American
Marketing Association (AMA) reviewed more than 25 marketing definitions before arriving
at their own (see Ferrell and Lucas, 1987):
Marketing is the process of planning and executing the conception, pricing, planning and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organisational objectives.
This has since evolved further, but very much embraces the broad ideas expressed in this
initial definition. The AMA’s most recent (July 2013) definition of marketing is:
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.
Figure 1.1
Mutually beneficial
exchanges
also reinforce the notion of the centrality of the marketing concept, value, process, mutu-
ally beneficial exchange and customer relationships. These issues may or may not be man-
aged by a marketing department or function. These definitions lead to a model of ‘mutually
beneficial exchanges’ as an overview of the role of marketing, as shown in Figure 1.1.
Definitions of marketing are, of course, extremely useful, however the reality of what
marketing means operationally, and in reality, is a much more difficult topic. Webster
(1997) points out that, of all the management functions, marketing has the most difficulty
in defining its position in the organisation, because it is simultaneously culture, strategy and
tactics. He argues that marketing involves the following:
● Culture: marketing may be expressed as the ‘marketing concept’ i.e. a set of values
and beliefs embedded in employees that drives organisational decision making through
a fundamental commitment to serving customers’ needs, as the path to sustained
profitability.
Strategy: as strategy, marketing seeks to develop effective responses to changing market
environments by defining market segments, and developing and positioning product
offerings for those target markets.
● Tactics: marketing as tactics is concerned with the day-to-day activities of product
Figure 1.2
Components and
context of market
orientation
This view of market orientation is concerned primarily with the development of what
may be called market understanding throughout an organisation, and poses a substantial
management challenge.
In another seminal contribution to this discussion, Narver and Slater (1990) defined
market orientation as:
The organisational culture . . . that most effectively and efficiently creates the necessary
behaviours for the creation of superior value for buyers and, thus, continuous superior
performance for the business.
From this work a number of components, and the context of marketing, are proposed
(see Figure 1.2):
● customer orientation: understanding customers well enough continuously to create
superior value for them;
● competitor orientation: awareness of the short- and long-term capabilities of
competitors;
● interfunctional coordination: using all company resources to create value for target
customers;
● organisational culture: linking employee and managerial behaviour to customer
satisfaction;
● long-term creation of shareholder value: as the overriding business objective.
Although research findings are somewhat mixed regarding the impact and efficacy
of market orientation, there is a significant and compelling amount of support for the
view that market orientation is associated with superior organisational performance, i.e.
financial performance and non-financial performance such as employee commitment, and
esprit de corps (Jaworski and Kohli, 1993; Slater and Narver, 1994; Cano et al., 2004;
Kumar et al., 2011).
However, it has also been suggested that there may be substantial barriers to achieving
market orientation (Harris, 1996, 1998; Piercy et al., 2002). The reality may be that execu-
tives face the problem of creating and driving marketing strategy in situations where the
company is simply not market oriented. This is probably at the heart of many strategy
implementation problems in marketing (see Chapter 16).
An interesting attempt to ‘reinvent’ the marketing concept for a new era of different
organisational structures, complex relationships and globalisation, which may be rel-
evant to overcoming the barriers to market orientation, is made by Webster (1994).
He presents ‘the new marketing concept as a set of guidelines for creating a customer-
focused, market-driven organisation’, and develops 15 ideas that weave the ‘fabric of the new
marketing concept’ (Table 1.1).
Webster’s conceptualisation/ ‘checklist’ represents a useful and helpful attempt to
develop a pragmatic operationalisation of the marketing concept.
We can summarise the signs of market orientation in the following terms, and under-
line the links between them and our approach here to marketing strategy and competitive
positioning:
● Reaching marketing’s true potential may rely mostly on success in moving past market-
ing activities (tactics), to marketing as a company-wide issue of real customer focus
(culture) and competitive positioning (strategy). The evidence supports suggestions that
marketing has generally been highly effective in tactics, but only marginally effective in
changing culture, and largely ineffective in the area of strategy (Day, 1992; Varadarajan,
1992; Webster, 1997; Varadarajan, 2012).
● One key is achieving understanding of the market and the customer throughout the
company and building the capability for responsiveness to market changes. The real
customer focus and responsiveness of the company is the context in which marketing
strategy is built and implemented. Our approach to competitive market analysis in Part 2
provides many of the tools that can be used to enhance and share an understanding of
the customer marketplace throughout the company.
● Another issue is that the marketing process should be seen as interfunctional and cross-
disciplinary, and not simply the responsibility of the marketing department. This is the
real value of adopting the process perspective on marketing, which is becoming more
widely adopted by large organisations (Hulbert et al., 2003). We shall see in Part 4 on
competitive positioning strategies that superior service and value, and innovation to
build defensible competitive positions, rely on the coordinated efforts of many functions
and people within the organisation. Cross-functional relationships are also an important
emphasis in Part 5.
● It is also clear that a deep understanding of the competition in the market from the
customer’s perspective is critical. Viewing the product or service from the customer’s
viewpoint is often difficult, but without that perspective a marketing strategy is highly
vulnerable to attack from unsuspected sources of competition. We shall confront this
issue in Part 3, where we are concerned with competitive positioning.
● Finally, it follows that the issue is long-term performance, not simply short-term results,
and this perspective is implicit in all that we consider in building and implementing
marketing strategy.
A framework for executives to evaluate market orientation in their own organisations
is shown in Box 1.1. However, it is also important to make the point at this early stage
that marketing as organisational culture (the marketing concept and market orientation)
must also be placed in the context of other drivers of the values and approaches of the
organisation. A culture that emphasises customers as key stakeholders in the organisation
is not inconsistent with one that also recognises the needs and concerns of shareholders,
employees, managers and the wider social and environmental context in which the organi-
sation operates.
1 Customer orientation
“It will be interesting to see whether the people who like the
somewhat over-sentimental ‘Friendship Village’ stories continue to
like Zona Gale as the far from sentimental and exceedingly skilful
author of ‘Miss Lulu Bett.’”
“To say that here also [in the conclusion] the author rises to the
occasion is simply to credit her once again with that fine and finished
art that make all her writing an abiding joy to the discriminating.” F:
T. Cooper
“The artist in her has guided her pen in careful work, and the
characters are as clearly and completely delineated as if seen on the
stage.”
+ Springf’d Republican p11a My 30 ’20
250w
The Times [London] Lit Sup p685 O 21
’20 70w
20–15149
“The Asiatic chapters, the bulk of the book, are complete enough;
they are a little too full. There is too much that is documentary, and
the vivacity of the author’s high-gaited style suffers a little, though
there is always a story or a joke to take the curse off. There is, too, a
little confusion in a treatment that takes us unawares from one
period back to an earlier without sufficient warning.”
Reviewed by W. R. Wheeler
20–6280
“In justice to Mrs Hartley I must admit that in the earlier part of
‘Women’s wild oats’ she argues for the home as against the factory.
But the second half of her book is a defense of all the things which
tend to break up the home. Even in Mrs Hartley’s early chapters the
hysterical note in her ‘womanly womanliness’ led me to expect that it
would not last.” T: Maynard
“There are those, however, who will be inclined to think that her
comparisons of English with American conditions are rather too
flattering to American life of the present day. Either that or we must
read into the English situation even darker colors than those with
which she paints it. Nevertheless hers has been a healthful effort and
should do good in clearing away some of the illusions of the
situation.” D. L. M.
“It is with some hesitation that one sets to work to criticise a book
such as ‘Women’s wild oats,’ for one wants to recognize its courage
and its sincerity, and at the same time one disagrees with certain
points of view, as one necessarily must when one is dealing with the
work which touches so many sides of a great question. One thing we
can say is that Mrs Hartley is always honest and always wise.” W. L.
George
Reviewed by K. F. Gerould
20–15339
These letters are from an uncle to his nephew, beginning when the
boy is sixteen and extending over a period of five years. They are on
puberty, with its accompanying unrest and longings, and on sex and
marital hygiene and treat these subjects with large insight, sanity and
sympathy.
20–20951
This child idyll concerns the first eight years of the latest of the
Jolyon Forsytes, whose birth was announced toward the close of the
author’s novel “In chancery.” Little Jon is a healthy and, in the words
of his mother, “loving, lovable, imaginative, sanguinary” little savage,
and, so successful in the choice of his parents that he is enabled to
live the life prompted by his dramatic instinct. The illustrations by R.
H. Sauter are a feature of the book. The story appeared in Scribner’s
magazine, November, 1920.
“The story is slight and the note of tenderness is perhaps too long
drawn out. But it throws an agreeable sidelight on the ‘Forsyte saga’
and on Mr Galsworthy’s affection for some of his creatures.” L. L.
“Since little Jon was born in 1901 it seems a safe presumption that
Mr Galsworthy’s forthcoming volume will take him up to the
threshhold of manhood. But Jon’s childhood, as here set forth, is so
charming and perfect a thing in itself that, however interesting Mr
Galsworthy may make his future career, one is almost tempted to
wish that he might remain in memory as we know him in this little
volume.”
“A few episodes in the life of a little boy of eight years old, vividly
realized and described with great charm.”
20–18929
The story is a sequel to the author’s earlier novel, “The man of
property,” and relates the further fortunes of the Forsyte family.
With one exception the possessive instinct is still strong in the male
generation, who include their wives and progeny in their property.
Soames Forsyte, after his wife, Irene, had run away with another
man lives on into middle life nursing his injuries until he poignantly
realizes that he is still without a son to inherit his fortune and his
name. Meeting Irene again, after a separation of fifteen years,
awakens the old desire to possess her, and failing of her consent,
nothing in law is too sordid for him for the attainment of a divorce.
Even the family tradition for respectability must go by the board as
he forces his cousin Jolyon—the one Forsyte that has not run true to
type—into the rôle of correspondent. At the end he marries the pretty
French girl, whom he does not love, and smothers his
disappointment at having a girl child, and no hope of another, in his
sense of proprietorship. At least—“that thing was his.”
“As a story of human persons, ‘In chancery’ should rank among his
best.” H. W. Boynton
“With grace and clearness and with a skill that holds the reader’s
attention unfailingly, the tale is told. Its accomplishment is fine and
delicate, though its convincingness is not complete.”
Reviewed by H. W. Boynton
“Once more Mr Galsworthy shows his quiet mastery, now and then
a little pontifical perhaps, but always suggesting the good rider on
the spirited horse. And once more he lights up his sober fabric with
the golden thread of beauty.”
20–9081
The book contains three plays: A bit o’ love; The foundations; The
skin game. In the first play a young clergyman, Michael Strangway, is
deserted by his wife, who returns during the first act to plead with
her husband not to divorce her out of consideration for the career of
her lover. He consents and thereby makes himself impossible with
his narrow-minded parishioners. His struggle is between his love as a
cosmic manifestation and the essence of Christianity, and his love for
the woman, his wrongs and his worldly prospects. When, at the
moment of the most hopeless desolation, he has prepared a suicide’s
noose for himself, the cry of a little child for “a bit o’ love,” and the
brave fight with his sorrow of a brother in affliction, recall him to the
world and his stronger self.
“It is sufficient of the first two, ‘A bit o’ love’ and ‘The foundations,’
to say that they are ‘good Galsworthy,’ which means that they are
more than readable and that they are beautifully constructed and
phrased. More must be said of ‘The skin game,’ the third play. It is
Galsworthy at his best.”
“Mr Galsworthy has written better plays than these, but if you care
for his plays at all you will find them worth reading.”
“Of the new plays the first, A bit of love, is undeniably the
weakest.... The skin-game has a more timeless touch. It takes the
tragicomedy of all human conflict, localizes it narrowly, embodies it
with the utmost concreteness, and yet exhausts its whole
significance. Galsworthy has never derived a dramatic action from
deeper sources in the nature of man; he has never put forth a more
far-reaching idea nor shown it more adequately in terms of flesh and
blood.” Ludwig Lewisohn
“To the reader who revolts against the rather sickly sentiment of
the first of them and who has smiled half-heartedly at the forced
comedy, in which the same sentiment still appears, in the second, the
virility and grasp of the third comes as a tonic.” S. C. C.
“These three plays will hardly add much to the fame of John
Galsworthy, although, on the other hand, enough skill and command
of character is evidenced to render them interesting additions to his
work.”
“‘A bit o’ love,’ ‘The foundations,’ and ‘The skin game’ display
ability of a high order. That fact is presumed in their authorship and
is verified in their perusal. But all three have an effect of interlude or
byplay; they are corollaries to earlier and weightier dicta.” O. W.
Firkins
20–5770
“In his earlier novels and tales there was a marked predominance
of the emotional quality over the intellectual. The two are here more
nearly in accord. With possibly one exception none of the
impressions is overwrought, or marred by sentimentality, or blurred
by loud-voiced passion. Mr Galsworthy’s restrained, softly
modulated style, as of an instrument with few overtones, wins its
effect without recourse to obvious eloquence or special pleading.” S.
C. C.
“The contents of the volume are diverse in the extreme; yet the
keynote of the whole can be expressed in one word—beauty.”
“There are pieces in this book which will probably drop out of his
collected works some decades hence. Yet we would willingly miss
none of them from the book before us. If circumstance has deprived
some of these tales and studies of the finest touch of craftsmanship
which Mr Galsworthy can give, the book as a whole is clear revelation
of one of the best and bravest minds of our time.”
“The novel is, quite simply and frankly, propaganda for the cause
of Sinn Fein. Its heroine is a vigorous, eager, impulsive, large-
hearted young woman whom the reader first sees as a gawky,
somewhat impish slip of a girl in her first teens. She gets caught in a
street fight between Orangemen and Hibernians, brought on because
some drummers of the former refuse to give way to the band heading
a procession of the others; she is knocked down, trampled and has a
narrow escape from being killed. The first thing she says when she
comes back to consciousness is to declare solemnly that she hates
both factions and thereafter will be a Fenian. To this determination
she holds with enthusiasm, becoming a Sinn Feiner when that
organization comes into activity. At one time, moved by the desire to
make a sacrifice, she enters a convent with the intention of becoming
a nun, but her desire to take part in the active measures Sinn Fein is
planning brings her out again and into the ranks of that
organization’s most ardent protagonists.”—N Y Times
Reviewed by H. W. Boynton
20–10304