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Summary Strategic Marketing [Lecture Notes and Articles]
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I. BASICS – DIGITAL – ROLE OF MARKETINGLecture notes
Resource-based view of competitive advantage (RBV) / emerged early 1990’s
- Management of strategic capability is central to achieving a sustained competitive
advantage -> importance of building on core competencies
- Specific assets that make the firm what it is: Valuable-Rare-Inimitable-Nonsubstitutable
Marketing capabilities - the processes that deploy the assets to create a competitive
advantage (inside-out focus, internal eficiency, replicability of resources)
- Marketing capabilities enable a firm to build sustainable relationships with customers
- Ex.: advertising, promotion, selling, pricing and tendering, product/service management,
distribution and logistics
Marketing assets - resource endowments the firm has built or acquired over time
- Customer based assets
- Supply chain assets
- Internal marketing support assets
- Alliance-based marketing assets
Profits
- Revenue growth (total sales) and margin growth as the two primary components of profit
growth
- Marketing capabilities infuence both revenue growth and margin growth, although CRM
capabilities and brand management have opposing efects (Morgan, 009)
The increasing market complexity and developments such as increasing numbers and types
of media, empowered customers, and availability of data require adaptive marketing
experimentation, alertness, curiosity and open marketing networks
External factors
- Macro environment: broad environmental factors that impact to a greater or lesser extent
all organisations
- Industry: organisations producing the same product/services or substitutes
- Sector: the concept of industry for public services
- Competitors and markets: within industries
- Strategic groups: similar characteristics, strategies, and customers; Based on two
categories of characteristics (1) Scope of activities: product range, geographical
, coverage, distribution channel, ( ) Resource commitment: vertical integration, brand and
marketing spending
Main advantages: understanding who the direct competitors are and what
distinguishes the organisation; analysis of strategic opportunities and analysis of
mobility barriers: moving from one group to another is not always easy
- As there is high level of uncertainty, and it’s dificult to predict the future impact of
diferent factors, scenario analysis is important -> detailed and plausible view of how the
business environment might develop in the future, based on key drivers of change
Especially useful when there are limited number of key factors, high level of
uncertainty about the infuence, outcome could be rapidly dificult, substantial
commitments are required
Does being the right, profitable, industry matter more than having the right kind of skills and
resources?
- Internal approach: look inside the organisation, Richard Rumelt
- External approach: look outside the organisation, Michael Porter
SWOT -> Confrontation matrix: how to react to the outcomes of the analysis
Business model (Wirtz et al, 016) – a simplified and aggregated representation of the
relevant activities of a company; it describes how marketable information, products and/or
services are generated by means of company’s value-added component; strategic, customer
and market components are also taken into consideration in order to achieve the
superordinate goal of generating, or rather securing the competitive advantage. It should
always be critically regarded from a dynamic perspective, thus within the consciousness that
there may be the need for business model evolution or business model innovation, due to
internal or external changes over time.
, Montgomery, Moore, Urbany: Reasoning About Competitive Reactions: Evidence from
Executive
- Much of the empirical research on competitive reactions describes how or why rivals
react to a firm’s past actions, but stops short of examining whether managers attempt to
predict such reactions, which we call strategic competitive reasoning
- Three exploratory studies: evidence of managers thinking about competitors’ past and
future behaviour, but no strategic competitive reasoning -> after analysis, appears to be
due to perceptions of low returns from anticipating competitor reactions more than to the
high cost of doing so
- Day and Reibstein: two strategic errors companies make – ‘the failure to anticipate
competitors’ moves and the failure to recognise potential interactions over time’
(reactions to own moves)
- (1) To what extent do practicing managers consider competitors and their anticipated
reactions when deciding on their own moves, and ( ) how do experienced managers
account for the answer we get to Question (1)?
- Goal: to explore whether managers incorporate competitor behaviour, particularly the
prediction of future competitor reactions to their own moves, into their own decision
making in strategic marketing settings
Competitive reasoning: the assessment and consideration of competitors that serves as an
input into the firm’s decision making; can take three forms:
- Managers may study their competitors in a manner that results in a description of the
competitor but make no predictions about future actions
- Managers may make predictions about competitors’ behaviour, but only about actions,
not reactions
- Third form of competitive reasoning is strategic competitive reasoning; goes beyond both
describing and predicting future moves -> stepping into the shoes of the competitor and
predicting their reactions to one’s own moves
- Pricing decisions, contrasted with other strategic decisions, are more visible, occur more
frequently, and can more easily be linked to sales and profit outcomes; research has
shown that pricing decisions are more likely than non-pricing actions to evoke
competitive reactions
Results from study 1: managers do report considering competitors in their decision making,
competitive considerations focus primarily on competitors’ past or current behaviour rather
than competitor reactions
, - Respondents frequently mentioned the difficulty of obtaining competitive information.
Two predominant dimensions of the costs of competitive analysis emerged. The first is
related to the accessibility of information about competitor behaviour; the second
dimension addressed the difficulty of competitive analysis even if competitive information
was available.
- Reasons why the costs of gathering and analysing competitor information may be
perceived to be high: limited opportunity to actually learn about competitor: respondents
suggested this limitation may be due to infrequent observations, the delay between an
action and its reaction, or the time pressure associated with the decision. The second
reason that emerges is risk aversion.
- Reducing the perceived returns from competitive reasoning are based on irresolvable
uncertainty, the greater importance of internal factors and customer factors, and the
decision-making culture of the firm
- Reasoning about potential competitor reactions is more likely for pricing decisions: (1)
The firm feels the impact of a competitor’s reaction to pricing more quickly and more
obviously than in other areas, ( ) competitor information about pricing is easier to gather
because of its visibility, and (3) competitor information about pricing, once gathered, is
easier to analyse.
- There is a general tendency to weight more heavily decision inputs that can be assessed
more easily, predicted with greater confidence, are felt to be more controllable, and
provide a stronger basis for justifying decisions within the organisation
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