The term strategy has been succinctly defined by Walker, Boyd, Mullins, Lareche 2003 as a pattern of planned objectives, resources deployments and interactions in an organization with markets, competitors and other environmental factors. Mike Rukstad 2008, identified three critical components of a good strategy statement which are objective, scope, and advantage. Two other important factors covering strategy are resource deployments and synergy (Walker, Boyd, Mullins, Lareche 2003).
The scope of a strategy covers its domain namely the type and number of industries, product lines and market segments. The strategy objectives detail levels of accomplishment or performance such as volume growth, profit contribution or return on investment over a period of time. The competitive advantage strategy must be sustainable and must examine market opportunities in each business and product for competencies and strength (Collins and Rukstad 2008). Resources be it financial or human, must be deployed across businesses, product markets, functional departments, and activities. Synergy exist when a firms business, product markets and resources and competencies reinforce one another (Walker, Boyd, Mullins, Lareche 2003).Markides 2004 Page 8, illustrated that a company’s strategy should be distinctive, everyone in the company should participate in developing it, it should be flexible to change and create an environment that supports it.
Strategy can also be classified into blue ocean ( a market that exist without competitors ) or red ocean ( a market full of competitors ) (?irjevskis, Homenko, La?inova 2010, Pg 162).There is a hierarchy of strategies that exist at 3 major levels which are corporate strategy, business-level strategy and functional strategy ( Rajan, Clark 1994, Pg 94) . At corporate level the manager must coordinate the activities of multiple business units and decide what business they should be in, how much resources to allocate to each business and the objectives of each business. As a business strategy level the main issue would be sustainable competitive advantage, which competencies meet the need of the consumer and the scope in which to compete.
At the marketing strategy level the aim is to effectively allocate and coordinate the resources to accomplish the firms objectives within the segment. Figure 1 shows the 3 different levels of Strategy.Figure 1Webster (1992, p. 10) states: “In addition to the three levels of strategy, we can identify three distinct dimensions of marketing—marketing as culture, marketing as strategy and marketing as tactics.
... Marketing as strategy is the emphasis at the SBU level, where the focus is on market segmentation, targeting, and positioning in defining how to compete in its chosen field.”Figure 2 explain the relationship between strategy in its effect in the various levels of decision making.In the marketing discipline, the terms strategic marketing and marketing strategy are used interchangeably in reference to the field of study, and marketing strategy is also used in reference to the organizational strategy construct that is the principal focus of the field.
In 2007, the AMA adopted the following as its new official definition of marketing: “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.” (Marketing News 2008, p. 28) .American Marketing Association (AMA) Marketing Strategy Special Interest Group (SIG) states the domain of marketing strategy as follows: “The domain of marketing strategy research is broadly defined to include all firm-level strategic marketing issues, decisions, and problems” (ELMAR 2009). Cunningham and Robertson (1983, p.
5) stated marketing strategy, on the other hand, addresses issues of gaining long run advantage at the level of the firm or strategic business unit.”Figure 3 illustrates the application of strategy and its use in deployment.Strategy can also be differentiated with tactics. Crawford and Di Benedetto (2008, p. 372) state: “Strategic launch decisions include both strategic platform decisions that set overall tones and directions, and strategic action decisions that define to whom we are going to sell and how.
Tactical launch decisions are marketing mix decisions such as communication and promotion, distribution, and pricing that are typically made after strategic launch decisions and define how the strategic decisions will be implemented”Chief among the distinguishing characteristics of strategic marketing decisions that stem by virtue of their long-term performance implications. Strategic marketing decisions: 1) entail resource commitments that are either irreversible or relatively difficult to reverse (see Ghemawat 1991); 2) entail resource commitments that are relatively larger in magnitude; 3) entail resource commitments that are made with a relatively longer term outlook; 4) entail resource commitments that are spread over a relatively longer time period; 5) entail resource commitments that are made with a relatively greater emphasis on the achievement of a competitive cost and/or differentiation advantage; 6) entail tradeoffs 7) are made in the context of other strategic decisions, in light of inter-dependencies between them; and 8) are made at higher levels in an organization and/or at higher levels within the marketing functionExamples of sizeable resource commitments ( Varadarajan 2010, Pg 155) that are either irreversible or relatively difficult to reverse is the Boeing 787 Dreamliner (currently under development) and the recently launched Airbus 380 airplane by EADS (European Aeronautic Defense and Space Company, the European parent company of Airbus) represent new product initiatives entailing multi-billion dollar (euro) resource outlays. These new product decisions are based on different scenarios and assumptions about how the market for commercial passenger aviation is likely to evolve.While the Boeing 787 Dreamliner is a response to a future scenario in which a growing proportion of international air travel will be point- to-point between city-pairs, the Airbus 380 is a response to a future scenario in which a growing proportion of international air travel will be between major international hub airports (at substantially lower costs per passenger mile).
When introduced, the Boeing 787 Dreamliner is given the long lead times involved in the development of new products such as the above, and the large number of suppliers, sub- contractors and strategic alliance partners involved design, development, manufacturing and assembly, for all practical purposes they constitute irreversible strategic marketing decisions.An example of large resource commitments in strategy is during the 1990s, when dial-up Internet service was commonplace, America Online’s (AOL) strategy for acquisition of new customers was largely built around a portfolio of sales promotion programs that offered consumers a free trial of its dial-up Internet service. Most makes and models of new computers that were marketed to individuals and households came preinstalled with the software needed to use the free trial offer.The software, loaded on a disc, was also mailed directly to hundreds of thousands of households, distributed as an insert along with newspapers and magazines, handed out to travelers on commercial flights (along with the complimentary in-flight snack and beverage, a common practice during the 1990s), and distributed in many other ways. Collectively, the numerous consumer sales promotion programs employed by AOL to distribute several million discs via multiple distribution vehicles in order to acquire new customers by offering a no risk, free trial of its dial-up Internet service came to be characterized in the business press as an exemplar of “carpet bombing” marketing strategy (Kalakota and Robinson 2001)The importance of strategy in marketing is paramount as companies move forward or are left behind based on these decisions ( see Appendix A for types of questions asked ).
Strategies that are adaptive suit customers needs, are market driven, give focus, bring cost savings and add customer value (Slater, Hult, Olson 2010, Pg 555).Former Merrill Lynch CEO Stan O'Neal. (Harvard Business Review 2008 Pg. 82 ) developed an effective strategy called "Total Merrill" which value proposition was to provide for all the financial needs of its high-net-worth customers – those with liquid financial assets of more than $250,000 – through retirement. While a lot of brokerages cater to people with a high net worth, they focus on asset accumulation before retirement.
Merrill's view is that as baby boomers age and move from the relatively simple phase of accumulating assets to the much more complex, higher-risk phase of drawing cash from their retirement accounts, their needs change. Merrill’s business level strategy, differentiation and identifying and meeting customer needs kept them successful and ahead of the game.Another example of how marketing strategy worked wonders for a company were decisions such as how much to spend on advertising, and whether to lower, increase or maintain the current level of advertising expenditures. A case in point, in the late nineteen- twenties, Kellogg and Post dominated the market for packaged cereal.
However, in the aftermath of the Great Depression, while Post cut back on its advertising, Kellogg doubled its advertising budget, moved aggressively into radio advertising and introduced new brands. By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it emerged as the industry’s dominant player, a position that it continues to retain (see Suroweicki 2009).