Marketing

Strategy &
Management
© Diane M. Phillips
Effective Instructional Strategies: From Th
eory to Practice 3rd Edition © 2012 SAGE
 Chapter 1

Setting the stage:

The purpose and promise of
marketing
 Learning objectives
1. Describe the core responsibility of marketing and its
place within the organization.
2. Discuss the critical nature of the value proposition.
3. Describe how a marketing strategy builds upon and
extends the core principles of marketing.
4. Explain the four key developments in the evolution of
our understanding of the responsibility of marketing:
stakeholder theory, corporate social responsibility,
shared value and sustainability.
5. Argue for the importance of sustainability as a strategic
imperative for marketing.

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 Prelude
• Marketing myopia – a very narrow and constrained
view of the role of marketing.

• Marketing – the activity involves a set of institutions and

processes for creating, communicating, delivering and
exchanging offerings that have value for customers, clients,
partners and the society at large.
– This definition acknowledges the critical importance of the
consumer to the process.
– ‘Things that have value’ include not only products but also
other things such as services, ideas, people or places.
– The concept of exchange is central to the definition of
marketing.
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 BUSINESS DEFINITION

 Outlines the scope of operations

 Is neither obvious nor easy to define

 A firm defines its business by:

• The customers served and their needs

• The means or technology used to satisfy needs

 What “business” is the Encyclopedia

Britannica in?
 Business Definition

https://hbr.org/video/3590615227001/the-explainer-marketing-myopia

PPT 1-7
 Do Customers Always Know What They Want?

• Some managers argue that customers cannot

always articulate their needs and wants, in part
because they do not know what kinds of products
or services are technically possible.
• Critics of a strong customer focus argue that
paying too much attention to customer needs and
wants can stifle innovation and lead firms to
produce nothing but marginal improvements or
line extensions of products and services that
already exist.

1-8
Blockbuster vs Netflix

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 Marketing strategy
• it is an integrated set of decisions and processes designed
to deliver value to consumers in order to help the
organization achieve specific objectives. Marketing strategy
is dynamic, research-based, competitive and customer-
centric.

• Good strategy is personal; it considers the characteristics of

the situation and context.
• Good strategy builds and nurtures the organization’s
strengths.
• Good strategy is flexible; it adapts to the needs of the
situation.

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 Theories of Strategy
• Evolutionary Theory - Organizations need to evolve in order to
exist in an ecosystem of continual creative destruction.
• Economic Theory - generally follow from neo-Classical
economics, where markets and people are rational agents
• Contingency Theory - there is no best way to organize a
corporation, to lead a company, or to make decisions. optimal
course of action is contingent (dependent) upon the internal and
external situation.
• Resource-based View - focused on the firm's distinctive
competencies, whether current or potential, which enable it to
provide superior value in its offerings
• Strategic Choice Theory - the strategy makers’ perceptions and
interpretations of the environment, are most relevant in
examining the role of the ‘opportunities’ and the ‘threats’ playing
in a strategy formulation process
Identifying and defining the competition
– Healthy competition provides better products.
– Defining the competitive landscape involves precisely
determining how broadly or narrowly one must define the
competition.
The
definition
cannot be
too broad...

... or too
narrow

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The Five Competitive Forces Model
• The Five Competitive Forces Model (Porter) takes a broad
perspective on competition. Competition can come from
1. The threat of new entrants – the ease with which a
competitor can enter the market.
2. The bargaining power of buyers – the extent to which
buyers are very powerful and thus would force
concessions.
3. Threat of substitute products or services – the extent to
which our offering is unique or critical to our customer’s
business/life.
4. Bargaining power of suppliers – the extent to which the
firm’s suppliers are very powerful and might not be
motivated to offer better terms.
5. Rivalry among existing competitors – the extent to
which the existing competition may be frequent and fierce.
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• The best strategies leverage more than one of the five forces.
The Five Competitive Forces Model

Title |  Author | Year | SAGE Publishing

Strategic implications of the Five Forces
Model
– Position the company – situate the organization within the
industry so that it exists where the competitive forces are
relatively weak.
– Exploit industry change – monitor and anticipate shifts in the
industry such that the organization can stake a claim to an
advantageous strategic position before the competition has a
chance to do so.
– Shape industry structure – through innovation, lead a
transformation of the industry for the better. Ideally, the
innovative nature of the transformation will shift the competition
in a direction in which your own organization can excel.
– Define the industry – draw boundary lines around the industry
such that it is neither too broad nor too narrow. This will more
precisely define the scope of the competition as well as
sources of profit within the industry.
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 The value proposition
• The value proposition is the set of needs a company can
satisfy for its target market customers that the competition
cannot.
– ‘Objectively’ better performance is not necessary (e.g.
American beer preferences).
– Product quality is just one part of the value proposition.

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 The Customer Value Proposition

Perceived benefit to customer:

• Functional

• Emotional

• Social

• Self-Expressive

PPT 1-18
 The value proposition Asymmetry

customer value propositions Company positionings

Company Customer
Price
Speed Price
Convenience Speed
Consistency Quality
Locations
Cool
 Marketing’s role and obligation
• Marketing has a unique role within the organization. Marketing
strategy emphasizes the importance of creating an integrated set of
decisions and processes such that they are not only integrated with
previous decisions, research and priorities, but that they are also
integrated with the activities of the organization and its other
functional units and strategic business units (SBUs).

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 Marketing’s role and obligation
• Because of its role as a bridge between the external
environment and the organization, marketing is often called
upon to be the standard-bearer for the organization’s ethical
principles and standards. Because of this, marketing strategy
should abide by three key principles:
– Responsible – all stakeholders should have a voice.
– Respectful – all individuals should be enabled to achieve
their highest level of aspiration.
– Resilient – marketing and marketing strategy should work
toward the goal of continuous improvement.

Responsible

Resilient Respectful

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 Marketing’s role and obligation
• Stakeholder theory – considers a wide variety of constituencies that
impact and are impacted by the actions of the organization.
– Internal stakeholders – have a direct connection to and relationship
with the company.
 Financiers, employees and customers
– External stakeholders – have a more indirect connection with the
organization.
 Business partners, society, the environment, NGOs, the media,
activists and consumer advocacy groups, competitors and the
government.
A new take on Stakeholder Theory: Stakeholders, Stakewatchers and
Stakekeepers – this new conceptualization allows the management
team to more precisely focus its efforts on those entities that are
genuinely an integral part of the organization. While other outside
entities also should be monitored, communicated with and may even
present some opportunities for collaboration, their influence on the
strategic direction of the organization is less important than that of
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 Marketing’s role and obligation

Stakeholders – have a
genuine, concrete stake in the
organization, as well as some
degree of loyalty to the
organization (our internal
stakeholders).

Stakekeepers – independent regulators

who exert indirect influence and control
Stakewatchers – do not have a direct
over the organization. In a way that is
stake in the organization. However,
similar to the concept of a ‘gatekeeper’,
they endeavour to protect the interests
stakekeepers include government
of stakeholders and notify the
agencies and other certifying groups
organization when concerns arise
that impose regulations and hold the
(labour unions or community watchdog
organization accountable.
groups).

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 Marketing’s role and obligation
• Corporate social responsibility (CSR) – a strategic
approach that seeks to achieve core business objectives,
while also creating value for society and the environment.
– In 1996, CSR Europe became the leading European
business network for CSR efforts.
– CSR Europe has more than 10,000 members worldwide.

• Shared value – a perspective that suggests that there is a

synergistic effect when the organization focuses on both
economic and social/environmental problems.
– This is a paradigm shift or a completely new and innovative
way of thinking about the role of marketing and business.

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Marketing’s role and obligation

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 Marketing’s role and obligation
• Shared value vs. CSR

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 Marketing’s role and obligation
• The Sustainability Perspective – builds on the shared
value perspective, but places particular emphasis on the
importance of the well-being of the natural environment.
– Sustainable development – meets the needs of the
present without compromising the ability of future
generations to meet their own needs (United Nations,
1987).
– The Intergovernmental Panel on Climate Change
(IPCC) – a UN-funded organization that publishes
comprehensive assessment reports and special reports
on the state of the climate, its impacts and possible
mitigation strategies.

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 Marketing’s role and obligation
• The Sustainability Perspective

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 Marketing’s role and obligation
• The Sustainability Perspective

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 United Nation Sustainable Development Goals 12

• “Producers” develop, create and sell sustainable products and

services – i.e. products and services that reduce non-sustainable
resource consumption.
• “Users” seek to embody sustainable business practices in the way
they carry out their operations.
 STATS
• According to the Food and Agriculture Organization of the United
Nations (FAO), about one-third of all food produced for human
consumption in the world is never eaten.
• The countries with the highest waste creation are Australia (361 kg),
followed by the U.S. (278 kg).
• countries with the lowest food waste generation per capita include
Greece and China (44 kg per year), followed by India (51 kg)

By reducing food loss and waste, we can not

%
only address the need to feed the rapidly
growing global population, but also to reduce Fruits &
Vege
the substantial environmental impact of 13% Fish &
30% Seafood
growing food that presently is wasted. It has 13% Cereals
been said that if food waste was a country, it Dairy
20% Meat
would be the one with the third largest 23%
carbon footprint.
 Marketing’s role and obligation
• Sustainability: a strategic imperative:
– Sustainability focuses on the health of the
natural environment, especially the climate. The
health of the natural environment and the health
of society are inextricably linked – without a
thriving natural environment, neither society nor
business can thrive.
– It is integrative, broadly considering a variety of
challenges faced in numerous contexts, as well
as potential solutions offered by different
sources.
– It is flexible; it is able to meet the changing
needs of different situations and contexts.
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 Marketing’s role and obligation
• Sustainability: a strategic imperative:
– It takes a long-term perspective, considering the
long-term strategic positioning of the organization, as
well as the long-term viability of society and the
natural environment.
– It endeavours to outmanoeuvre the competition, just
like any good strategy. Efforts include helping move
consumers away from competitive non-sustainable
choices and behaviours.
– It acknowledges that sustainability is a constantly
moving target – new technologies as well as new
challenges often arise.

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 Marketing’s role and obligation
• Sustainability: a strategic imperative:
– It nurtures and builds on the strengths of the organization
and its stakeholders.
– It is objective-oriented, like any good strategy.
– It allocates resources to achieve its objectives.

B Lab was founded in 2006 to certify

companies that operate in ways that not
only have strong and transparent
corporate governance, but operate to
directly benefit workers, communities,
the environment and customers.

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 Marketing’s role and obligation
• Benefits to B Corps and other third-party
certifications:
– It is an important differentiator in the marketplace,
and brands that are differentiated from the
competition perform better financially.
– Amidst a sea of greenwashing, smaller firms need
to work harder to prove their sustainability
credentials and certification gives them the
credibility to make these claims.
– Given the prevalence of corporate misdeeds, many
organizations and their leaders want to join the
effort to redefine what success means in business.

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Chapter summary

• As the bridge between the organization and the outside

world, marketing has a unique obligation within the
organization.
• The value proposition is a set of needs that the organization
can satisfy its customers that the competition cannot.
• There have been four key developments in the evolution of
our understanding of the responsibility of marketing:
stakeholder theory, corporate social responsibility, shared
value and sustainability.
• Sustainability is a strategic imperative for marketing.

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