Business strategy and the management of digital marketing

The internet brought disruptive change to the business landscape through the creation of a whole host of digital marketing tactics. But with these new tactical options has come the need for marketing managers to (1) prioritize what they wish to accomplish and (2) determine which digital marketing tactics to invest in. We consider these issues from the perspective of four business strategies: prospectors, analyzers, low-cost defenders, and differentiated defenders. In this article, we provide marketing managers with insights into how businesses pursuing various strategies approach these digital marketing issues, with the ultimate goal being to assist managers in the efficient and effective implementation of their firm’s adopted strategy.     

How to Monitor Competitive Advertising

Marketing managers are becoming increasingly aware of the benefits from structured and continuous monitoring of competitor advertising activity. To know quickly and accurately how much competitors are spending on their media advertising and how they are utilizing their budgets can be of profound help to marketing management, advertising agency planners and creative teams. Systematic monitoring can signal moves made by competitors—introducing new products or product modifications, special offers, new strategies and approaches to markets not previously covered. Of interest to the analyst are innovations in competitor strategies.     

Consumers’ preference modeling to price bundle offers in the telecommunications industry: a game with competition among operators

Network operators are merging their services, such as fixed or wireless telephony, internet or television, into single offers, called bundles. It is essential to understand consumers’ preferences to define the most profitable bundles, with their associated prices, especially in the fierce competitive current market. We start by defining a random linear utility model and then, analyze the competition between an integrated operator and new entrants proposing substitutable services. Each operator ignores the consumers’ reservation prices for his offers and has to deal with uncertainties about the marketing strategies of competitors, due to potential different size and cost structure. A two-level game is introduced and solved by backward induction. In the second level, the operators determine their optimal offer prices for each possible combination of marketing strategies while the consumers select their most profitable purchasing processes; the natural framework is that of Bayesian game theory. Finally at the top level, knowing the outcome of the other level, the operators identify which marketing strategy to use between market share expansion, segment targeting or multi-level price discrimination, to maximize their expected utilities conditionally to their private informations.     

The Contingency Effects of Supplier Influence Strategies and Their Implications for Retailer Cooperation

Abstract

The success of manufacturers' consumer marketing programs often hinges on whether they are implemented at the retail level. Manufacturers use various influence strategies to persuade retailers to adopt their marketing programs. We investigate how well those influence strategies shape the retailers' positive attitudes toward their suppliers' marketing programs. We find that the effectiveness of those influence strategies depends upon the extent of uncertainty in the retailers' market. We also find that the manufacturer's investment in specific assets to support its relationship with the retailer strongly affects the retailer's attitude toward the supplier's programs.     

The quantitative strategic planning matrix: a new marketing tool

Originally introduced in a 1986 Long Range Planning article, the Quantitative Strategic Planning Matrix (QSPM) has become widely used in strategic management but is only rarely used in marketing strategy. This paper reveals how and why the QSPM should be commonly used in marketing strategy to assess the relativeness attractiveness of alternative strategies being considered. An example QSPM is developed in this paper for a firm considering two alternative marketing strategies: (1) Increase Advertising Expenditures by 50% vs. (2) Lower Menu Prices 10%. The QSPM process is exemplified and limitations are discussed herein. The primary contribution of this paper was to reveal how and why the QSPM can be useful, both theoretically and practically, in a devising an effective marketing strategy.     

Evaluation and Choice as a Satisficing Process

The question of whether individuals are rational or irrational in their decision‐making has long been an area of interest to academics and marketers, as the different decision styles require differing use of information sources and choice criteria by consumers during the buying process. As such, marketers would be required to adopt different communication strategies and stress different marketing mix or product features if they were to be successful in influencing the consumer’ s final choice.

The debate can be classified into whether or not consumers follow a formalised decision sequence of search and evaluation leading to final product choice. If consumers are not prepared to commit themselves to the cognitive and behavioural effort required by this formal process then they will satisfice their decision‐making, applying simplifying strategies to arrive at a satisfactory, although not the optimum, choice.

This paper reviews the common assumptions of search and choice, suggesting a three‐stage model which can be used to guide marketing strategy. Research into the decision process used by consumers in the acquisition of a video recorder is used to illustrate the operation of the satisficing model. Implications for marketing strategy are then discussed.     

The quality of British marketing: A comparison with US and Japanese multinationals in the UK market

This paper presents the findings of an empirical study comparing the marketing strategies and organisations of a matched sample of British companies and their US and Japanese competitors in the UK. Hypotheses about Japanese marketing are tested and provide a framework for the comparative analysis of the marketing effectiveness of the three sets of competitors. The findings highlight significant weaknesses in the marketing effort of British companies, these being exacerbated by excessive focus on short‐run financial gains. The US competitors, equally concerned with short‐term profits, were less committed to the UK market than their Japanese rivals, their market position being in danger of deteriorating further as the Japanese close the technological gap between them. The Japanese were unmistakably aggressive, single‐minded in their pursuit of market share and undeniably more market‐oriented than their US and British counterparts. This research was funded by the ESRC.     

Effectiveness of some simple pricing strategies under varying expectations of competitor behavior

A firm needs to tailor its pricing strategy to the particular competitive setting it faces. We show how a firm can select a pricing strategy that yields higher expected profit than other simple pricing strategies for the competitive conditions encountered. We show that no one strategy yields the highest expected profit for all competitive settings. In particular, we find that a more aggressive pricing strategy is needed for those markets that are either very cooperative or very competitive, while a more cooperative pricing strategy is preferred for markets which have a moderate degree of competition. We also find that a more aggressive pricing strategy is needed as the number of competitors increases. Our results suggest how to choose the pricing strategy that yields the highest expected profit given the likely behavior of a firm's competitors.The authors thank Terry Elrod and Robert Lusch for their comments on earlier versions of this paper.     

Are movie theaters doomed? Do exhibitors see the big picture as theaters lose their competitive advantage?

After three straight years of decline, movie theaters in the US may have recently ended a period of crisis with an increase in annual admissions (+ 3%) in 2006. This article argues, however, that major problems are not over for the industry. Most movie theaters in the multiplex era have adopted a remarkably similar strategy, one which is also very vulnerable to recent trends such as the explosion of home cinema, pay TV, video-on-demand (VOD), discounting by mass merchandisers of DVDs, computer games, and the collapse of video windows. Just as technological convergence has created a challenge for movie theaters, as it has in the past, so too can new technologies and creative use of assets (combined with multiple target marketing) offer a counter measure for at least some movie theaters; at least, until the next challenge arises. What is unlikely to succeed is the status quo, especially when so many multiplexes offer the same format as their competitors, appear to adopt a narrow definition of what business they are in, and manifest a ‘one-size-should-fit-all’ approach to customers. The industry has employed differentiation and niche marketing much less than other industries. As the extensive variety of necessary strategies cannot comprehensively be explored herein, this article focuses on two new technologies from the IMAX Corporation, DMX and MPX, as an example of how a theater operator might counter audience declines.     

The role of seeding in multi-market entry

Firms introducing new products into multi-markets often face the dilemma of how to dynamically allocate their marketing resources during penetration. The aim of this study is to examine which responsive allocation strategy is more effective for these firms. We explore three major resource allocation strategies: uniform strategy, in which the firm distributes the marketing efforts evenly among its regions regardless of market development; support-the-strong strategy, under which the firm invests its efforts proportional to the number of adopters in that region (at least up to a certain market coverage); and support-the-weak strategy, in which the firm invests its efforts proportional to the remaining market potential.Using both formal analysis and complex systems simulations, we find that strategies that disperse marketing efforts, such as support-the-weak and uniform strategies, are generally superior to support-the-strong strategy. Not only is this finding surprisingly robust to market conditions and variations on these strategies, but it also runs counter to conventional wisdom prevailing in international marketing. The conditions under which support-the-strong policy might become more effective include: (a) fixed entry or operation costs above a certain level; and (b) substantial variance between regions in responsiveness to marketing efforts. However, variance in intrinsic innovativeness between regions does not imply the superiority of support-the-strong strategy.     

Creativity in marketing management—a unified approach

This paper sets out to identify how marketing management can provide the lead in adopting a more creative approach to innovation at the idea generation stage.

Both the proactive and reactive approaches to innovation strategy are discussed in the context of change factors and the sourcing of new ideas for innovation. Four loci of idea initiation are identified, which appear to vary in importance according to industry sector.

Although evidence is presented to suggest that heuristic techniques are being used increasingly to enhance creativity, their use is limited both by the perception of their function and the strategic mode adopted by the organisation. The concept of the marketing‐centred creative circle is introduced to counter these limiting factors. It is argued that the creative circle offers a bridging function in the generation of new ideas for innovation and in extending the existing stock. As well as performing this function, a more creative and entrepreneurial atmosphere will emerge as lateral relationships develop. With the development of successive marketing‐centred creative circles within the organisation, a unified approach to creative innovation will evolve as the traditional proactive and reactive strategies merge.     

The impact of internal,external, and competitor factors on marketing strategy performance

ABSTRACT

Strategy formulation is commonly understood as the match between a firm’s internal resources and skills and its external environment. Marketing strategy performance is the function of a dynamic, interactive process incorporating internal firm resources, external environmental factors, and competitive actions. The study aims to assess the impact of competitor actions on marketing strategy performance. We develop a model that accommodates the effects of 29 variables (comprising internal marketing strategy variables, external environmental factors and competitors’ marketing mix variables) on business performance. We empirically test the model using simultaneous equation modelling of time-series data on UK car manufacturers collected from publically available resources and annual reports. The results show that external factors, in particular competitors’ marketing mix elements, have a greater influence on a company’s business performance than internal (marketing and non-marketing) strategy variables. Implications for marketing theory and management are discussed.     

New product success in the consumer packaged goods industry: A shopper marketing approach

Marketing activities that influence shoppers along the various stages of their path-to-purchase are gaining attention from both manufacturers and retailers. Using a dataset with detailed information on 105 new products (NPs) launched in the U.K. by 44 leading brands and sold across 13 major retail banners, we provide strong support for the prominent role of both upper- and lower-funnel marketing actions that influence consumers before (upper) or during (lower) their shopping trip. We show which of these shopper-marketing instruments have the largest effect on NP performance at a retailer, and whether and how their effect is moderated by the retailer's store context. When it comes to NP success, the lifeblood of CPG companies, the lower-funnel marketing actions targeting shoppers directly at the point-of-purchase predominantly decide your fate. Thus, manufacturers should work ever harder to collaborate with retailers and push the store-specific shopper-marketing instruments in a favorable direction through information sharing and tailoring of their marketing program to individual retailers. Indeed, not all news is bleak for brand manufacturers. We identify five pieces of good news that brand manufacturers can use to their advantage.     

Perceiving competitive reactions: The value of accuracy (and paranoia)

An assumption of much of the literature in marketing strategy is that a firm accurately knows the nature of its interaction with competitors. This study examines this assumption and explores the relationship between firm performance and accuracy in perception. Teams in the Markstrat2 simulation game reported their reactions to competitors, while simultaneously indicating their perceptions of whether competitors had reacted to their decisions in the past. Teams were in general inaccurate in identifying competitive reactions. Further, missing a competitive reaction (not perceiving a competitor's stated reaction) significantly reduced a team's performance. The data suggest that teams may benefit from being paranoid about their competitors; late in the game, the more competitive reactions a team perceived to its moves, the better the firm performed, regardless of accuracy.     

Can Western-Style Marketing Be Applied in Transitional Economies?

The authors report on research conducted to assess the marketing of personal banking products by Polish banks and determine whether Western developed marketing can be applied in transitional economies. The study comprised three parts: interviews with senior Polish bankers to identify strategies, a survey of front-line staff to determine whether strategies had been communicated and reinforced in the reward system, and a consumer survey to determine whether the strategies had successful outcomes. It finds that the concepts and tools of Western-style marketing can provide direction to bankers for strategy settings, but that successful implementation will depend on the adaptation of these concepts to the Polish context.     

A Multidimensional Approach to the Influence of Environmental Marketing and Orientation on the Firm’s Organizational Performance

Since it implies a reduction in the quality and the quantity of the natural resources, environmental degradation is a present day problem that requires immediate solutions. This situation is driving firms to undertake an environmental transformation process with the purpose of reducing the negative externalities that come from their economic activities. Within this context, environmental marketing is an emerging business philosophy by which organizations can address sustainability issues. Moreover, environmental marketing and orientation are seen as valuable strategies to improve a firm’s competitiveness. However, the literature that has analyzed the link between environmental strategies and firms’ results has been inconclusive and contradictory. In this study, we propose and test a model that analyses how the implementation of ecological issues within a firm’s marketing strategy and orientation influences organizational results. Data were obtained through a survey sent to Spanish manufacturing firms. The results show that environmental marketing positively affects firms’ operational and commercial performance and this improvement will influence their economic results. Moreover, environmental marketing is revealed as an excellent strategy to obtain competitive advantages in costs and in product differentiation. Thus, this study agrees with the researchers who affirm that environmental strategies positively affect firm’s competitiveness while reducing environmental impact.     

A Framework for Digital Marketing Research: Investigating the Four Cultural Eras of Digital Marketing

The digital marketing discipline is facing growing fragmentation; the proliferation of different subareas of research impedes the accumulation of knowledge. This fragmentation seems logically tied to the inherent complexity of the Internet, itself resulting from 50 years of evolution. Thus, our aim is to provide an integrative framework for research in digital marketing derived from the historical analysis of the Internet. Using practice theory and institutional theory, we outline a new type of institutional work: imprinting work. We apply this framework to the analysis of historical secondary sources. We find four cultural repertoires on the Internet (collaborative systems, traditional market systems, co-creation systems, and prosumption market systems) and describe the dynamics of imprinting work leading to their creation, showing how new systems are created by appropriating and assimilating existing cultural repertoires. We contribute to the digital marketing literature by providing a cultural framework and a theory explaining the dynamics of the creation of four cultural repertoires. Moreover, we outline three paths of potential evolution of the digital landscape. Our framework may help managers make sense of their digital strategy and navigate the various Internet systems.     

How well do ‘off-price’ retailers satisfy consumers?

Off-price retailing is a new form of discount or low-price retailing that has become prominent in the U. S. during the past decade. In an attempt to satisfy today's quality-and price-conscious consumers, off-price retailers have utilized a marketing strategy of ‘brand and designer names for less’. Based on research assessing consumers' attitudes towards apparel offerings of off-price versus conventional retailers, we suggest that off-price retailers are not yet successful at satisfying consumers' needs and wants in their special niche of the market. We recommend several revised marketing strategies to enable off-price retailers to satisfy consumers better, and thereby maintain their niche in the ever competitive consumer market. We conclude by observing that it is important that consumer-orientated professionals take an advocacy role in encouraging retail institutions such as off-price stores to revise their marketing strategies to serve consumer interests better.     

论顾客价值的理解与创造

在关系营销中对于顾客价值的研究始终是一个重点和热点问题,实际上企业与顾客之间的关系本质是一种追求各自利益与满足的价值交换关系,顾客看中的是企业提供的优异的价值,企业让渡给顾客的价值对保留顾客起着极为重要的影响,只有不断为顾客提供比竞争者更多的价值,才能成功地创造出让客户留下来的理由,才能从发展与客户的长期关系中获得更多的利润,因此创造并交付优异的顾客价值就成为企业成功的关键