With Shaikh Ghazi for

MBA Students
 Consumption is the sole end and purpose of all production;
and the interest of the producer ought to be attended to, only
as far as it may be necessary for promoting that of the
consumer.
 The maxim is so self-evident that it would be absurd to
attempt to prove it.
 But in the mercantile system, the interest of the consumer is
almost constantly sacrificed to that of the producer; and it
seems to consider production, and not consumption, as the
ultimate end and object of all industry and commerce. Adam
Smith, Wealth of Nations, 1776
 Definitions of marketing abound, from the lengthy and all-
embracing academic versions to the short and snappy
favoured by advertising executives. The concept is not new, it
is not difficult to understand, it is not difficult to explain to the
troops, and our customers love it.
 Why then does it seem almost impossible to implement? Why,
when we look at the quotation from Smith, do we wonder
whether we have made any progress at all over the past 200
years?
 Remember Sales is about ensuring the customer buys what the
company makes. Marketing is about ensuring that the
company makes what the customer wants to buy.
 There are four distinct but interrelated aspects to the concept
of marketing. It is at one and the same time:
 (1) An attitude of mind;
 (2) A way of organizing the business;
 (3) A range of activities;
 (4) The producer of profits.
 The marketing literature’s apparent obsession with marketing
as a range of activities has tended to overshadow the first two,
much more important, aspects. This is the first, but not the
last, time that we will see how Western society’s preference
for doing rather than thinking has too often made it more
difficult for real businesses to make real profits.
 Finally, we must mention recent developments in marketing,
brought about by marketers themselves. We have seen that,
originally, marketing was devised as an ’integrative’ function
that would work to understand and anticipate customer needs
and wants and then work with other functions within the
organization to help them to understand the ’customer
imperative’ and how it is related to their activities.
 In this way the organization became customer/market oriented
and its activities gained greater customer acceptance, customs
and profits resulted.
 This is what is known as ‘market orientation’. Marketing is a
fundamental business philosophy; it is a state of mind, which
should permeate the entire organization.
 It states quite categorically that we recognize that our
existence, and future survival and growth, depends on our
ability to give our customers what they want. Internal
considerations must be subservient to the wider needs of the
marketplace. In other words, ‘the customer is king’.
 The marketing concept then leads us to make some
obvious (but difficult to swallow) conclusions:
 Market(ing) is about customers.
 All the money the organization makes (revenue) comes from
customers.
 If we have happy customers, they might come to us more often
and spend more money with us.
 If we have unhappy customers, they take their business
elsewhere.
 We could have the ‘best’ product or service on offer and still the
customer takes their business elsewhere.
 If enough customers take their business elsewhere, we go bust.
 If we accept that the organization exists and will continue to
exist only as long as it continues to satisfy the needs of its
customers, we must ensure that the organization has a structure
that will enable it to deliver.
 How many times have you, as a customer, tried to phone a large
company to get some information or to register a complaint?
 If you get past the press one if you have an order query, press
two if you have a technical query..., and are then passed from
one person to another, from one department to another, like an
unwelcome guest, you might get the impression that the
organization had been designed for its own convenience rather
than for you, the customer. You might be right.
 Organizational structure and design are critically important to
marketplace success. No purpose is served by instilling and
nurturing the market philosophy if the structure of the
organization makes it impossible for the people to deliver on
their promises.
The traditional structure of larger organizations, the functional
pyramid, is designed for internal efficiency but is relatively rigid
in the face of a constantly changing marketplace.
The temptation for this type of organization is to attempt to
mould the market to its own needs rather than adapting itself to
the needs of its customers.
 If an organization is to survive in today’s ever faster changing
environment, it must make itself more responsive to its
customers. Typically this will mean:
 Shorter chains of communication and command (fewer ‘levels’
or ‘grades’);
 Fewer people employed in ‘staff ’, ‘headquarters’ and other non-
customer related functions;
 An overall structure and business design that reflects the
different needs of the people who buy from the organization
rather than technical specializations of the people who work
inside it.
 As any good industrial psychologist will tell
us, structure gives behaviour. The appropriate
organizational structure can play a major part
in reinforcing the marketing attitude of mind
over the longer term.
 Market(ing) is also a range of specific
activities used by the market(ing)
department to meet market(ing) and
business objectives.
 Centred mainly on the concept of the
marketing mix (traditionally accepted as
including product, price, place and
promotion), this is the technical ‘how to’ of
the discipline.
 It is still not generally accepted that
marketing is responsible for producing
profits. Sales, operations, distribution and
even finance (how do they arrive at that one
may wonder) might produce profits but not
market(ing).
 Only marketing and innovation produced
profits for an organization, and all other areas
should be regarded as costs.
 Profits are generated by markets. Profits are not
generated by products, efficiency, management
or even diligent workforces. It is only the
customer’s willingness to pay the right
(premium) price for the right product or service
which keeps us in business.
 Marketing, as the primary interface between the
organization and the markets that it serves, is
then the primary producer of the organization’s
profit stream (Figure I.1).
 Production orientation: The production-
oriented organization’s primary concern is to
maintain a constant and uninterrupted flow
of materials and product through the
production process. This organization is in the
business of finding any market it can for what
it happens to make. It is much more
concerned with what it makes than what the
market wants.
 Product orientation: The product-oriented
organization’s primary concern is to produce
‘the best product’. It works to create an ever-
better mousetrap and then waits for the world
to beat a path to its door.
 This organization firmly believes that the best
product will sell itself (and always quotes Rolls-
Royce as its model). Unfortunately, this
organization is so wrapped up in the technical
possibilities emerging from research and
development that it is disconnected from
customers and their needs.
 It does not know what constitutes ‘the best
product’ — from the customer’s point of view —
so continually improves and enhances the
product with its own opinion of the needed
features and wonders (honestly) why sales do
not double overnight.
 This organization still relies heavily on sales
volume to feed the production process but
knows too little about marketplace demand to
offer any useful direction to the sales effort.
 Sales orientation: The sales-oriented
organization, unlike the product-oriented
organization, believes that fundamentally all
products and/or services are really the same.
 In what it sees as a commodity market, it follows
that success will come to the company that sells
the hardest. This organization has little
allegiance to the product or the production
process and may even buy in product from
outside suppliers.
 It believes that sales volume is the only
measure of success and it is prepared to
support the sales activity fully in terms of
heavy promotional activity and price
competition — anything to maintain sales
revenue levels and volume.
 Once again the sales activity is given little
direction but revenue (rather than profit)
targets are an integral part of the corporate
culture.
 The market-oriented organization does not
start the whole process with the product. The
most important factor for this organization is
the customer. It understands that it is not, in
fact, selling products but is providing
solutions to match identified customer needs
or problems.
 This organization realizes that it can be
dangerous to become too closely associated
with the product or service it produces because
customer demand may change, forcing the
organization into new or different technologies
to retain its markets.
 It realizes that it will still have to produce and
deliver efficiently, but that long-term success
will ultimately depend on its ability to listen to
its customers and prospects.
It is therefore essential, when one has
fourteen armies, that each wages a kind of
war relative to the overall plan for the war
(strategy), and to the strength and
circumstances – whether topographical or
political – of the opposing state.
Napoleon Bonaparte
 The word strategy has become one of the
most commonly (and badly) used words in
business writing. Everywhere we look we see
terms such as business strategy, corporate
strategy, marketing strategy, strategic
marketing, product strategy, pricing strategy,
advertising strategy, Internet/online strategy
and even discount strategy.
 We are not helped by the original, flexible use
of the Greek word ‘strategos’ from which our
word strategy derives. In its original form, it
meant the art of the General or Commander
of the armies.
 The first time the word ‘strategy’ was used in
a business context was by William Newman,
in a book published as recently as 1951. Now
the word ‘strategy’ is almost synonymous
with ‘important’.
 Strategy is all about how an organization will
achieve its objectives. Best described as
‘business strategy’, the original meaning
concentrated on how the key decision-
making unit of the organization or the board
was going to marshal its resources in order to
achieve its stated ‘business objective’.
 At this point, however, we need to highlight
the most significant aspects of strategy. This
should help to dispel some of the major
misconceptions that have sometimes been
encouraged by sections of the marketing
literature.
 some simple ‘rules’ about strategy, so that we
all understand what the term means:
 Strategy is longer term: As strategy is about
marshalling the gross resources of the
organization to match the needs of the
marketplace and achieve the business
objective, this cannot be a short-term
activity.
 Every organization is complex and any
change takes time to accomplish. Strategic
decisions, like the General choosing his
battleground, will have long-term
implications. Strategic decisions, such as
which business areas to enter, cannot be
reversed at a moment’s notice — momentum
has to be built over a planned period.
 Strategy is not changed every Friday:
 Constant change produces uncertainty,
confusion, misdirection and wastage — not
results. Tactics are designed to change on a
weekly or even a daily basis in response to
changes in the marketplace caused by
customer needs or competitive response.
 Tactical change causes no problems of
uncertainty because the strategy, the broad
overall direction of the organization, remains
constant.
 Strategy is not another word for important
tactics: Tactics can be likened to manoeuvres
on the field of battle and can be changed as
often as required in response to the changing
situation faced by the organization in its
markets.
 Strategy is not top management’s secret:
 Strategy is undoubtedly top management’s
responsibility to define and agree but not to
keep as one of the organization’s most
closely guarded secrets. Top management
can decide the strategy on their own (it is
normally safer by far that they involve others
in the process too) but they cannot
implement it alone.
 Strategy is most effective when those that
have to implement it not only understand it
but also believe it and can see their own role
in carrying it out. As Mintzberg (The Rise and
Fall of Strategic Planning, Prentice Hall,
Englewood Cliff, 1996) states, Every failure of
implementation is, by definition, also a failure
of formulation.
 The only reason for formulating strategy is to
create some profitable activity in the
marketplace. If people are to implement,
they must know what, how and why. Despite
management’s traditional reluctance,
communication and active involvement will
often be the key to success.
 Strategy is not just a public relations exercise:
One of the first rules of strategy formulation,
it must be capable of implementation. Hence
the British military strategy in the first years
of the Second World War was, despite the
fine words and propaganda, not aimed at
beating the German armies.
 Strategy is based on analysis and
understanding, not straws in the wind: While
tactics are properly based on short-term
market developments, they can be either
active or re-active in nature. Effective tactics
often depend on a rapid summing up of the
market situation followed by fast
implementation. Strategy, on the other hand,
is about the long term.
 An analysis of the macro and market
environments is essential even for the more
‘emergent’ strategic routes that the
organization may favour.
 Strategy is essential to an organization’s
survival: If you don’t know where you are
going, then any road will take you there. A
well thought—out strategy will allow
managers to test actions and propose tactics
against that strategy and the overall business
objective to ensure the consistency which is
essential to continued success.
 Without a clear guiding strategy, managers will
continue to spend time and money agonizing
over decisions that could be made in minutes if
only they knew what their organization was
trying to do.
 Worse, managers will take decisions that look
reasonable given the tactical information
available but which will have to be undone at a
later stage because of conflict either with other
tactical decisions made elsewhere in the
organization or with top management’s
privately held view of the future direction.
 A well communicated and understood
strategy brings the organization together and
provides a common purpose. It, like market
orientation, involves everyone in the
organization and challenges them to relate
what they do to what the whole organization
is trying to achieve
 If people and departments are not all looking
in the same direction, they cannot help but
be working against each other. In the more
competitive days ahead, it is less and less
reasonable to expect customers to pay for
our inefficiency.
 It is worthwhile reproducing here a selection
of some of the better-known definitions of
market(ing) strategy, in addition to those in
the second edition, for example:
 Marketing strategy indicates the specific
markets towards which activities are to be
targeted and the types of competitive
advantage to be exploited.’ Dibb and Simkin
 ‘A strategy can be defined as a set of
decisions taken by management on how the
business will allocate its resources and
achieve sustainable competitive advantage in
its chosen markets.’ Doyle
 ‘Marketing strategy is the marketing logic by
which the business unit expects to achieve its
marketing objectives.’ Kotler
 ‘Choosing market targets and a strong
market position based on differentiating
capabilities to create a robust and sustainable
value proposition to customers and networks
of critical relationships.’ Piercy
 ‘A marketing strategy identifies customer groups
which a particular business can better serve than its
target competitors, and tailors product offerings,
prices, distribution, promotional efforts, and services
toward those market segments.
 Ideally, the strategy should address unmet customer
needs that offer adequate potential profitability. A
good strategy helps a business focus on the target
markets it can serve best.’ US Small Business
Administration
 ‘A marketing strategy is an integrated set of choices
about how we will create and capture value, over long
periods of time.’ MIT
 Ultimately, market success is about winning
customer preference
 Also, within the different definitions, we see a
whole range of market(ing) strategies that seem
to be designed for a specific purpose. Terms such
as these abound to describe particular ‘brands’
of market strategy:
 Market dominance:
 Leader —
 Challenger —
 Follower —
 Nicher
 Porter’s generic strategies: —
 Cost leadership —
 Product differentiation —
 Market segmentation
Treacy and Wiersema’s excellence strategies:
Product leadership —
 Management efficiency —
 Customer intimacy
 Innovation strategies:
 Pioneers
 Close followers
 Late followers Growth strategies:
 Horizontal integration
 Vertical integration
 Diversification (or conglomeration)
 Intensification
 Aggressiveness strategies
 (1): — Building — Holding — Harvesting
Ultimately, market success is about winning
customer preference. Marketing Strategy
Aggressiveness strategies
 (2): — Prospector — Analyser — Defender —
Reactor
 Warfare-based strategies:
 Offensive marketing warfare strategies —
Defensive marketing warfare strategies —
Flanking marketing warfare strategies —
Guerrilla marketing warfare strategies
 Flanking marketing allows one company to
displace a competitor in a peripheral market.
Those companies that engage such strategies
aim to capture a market segment that is not well
served by the existing competition.
 When more than one company offers the same
kind of product, each company only receives a
percentage of all sales of that kind of product.
This percentage is called a “market share,” and
any effort to take some of the market share
away from one company and bring it to another
is called an offensive marketing plan.
 Guerrilla marketing is an advertisement
strategy in which a company uses surprise
and/or unconventional interactions in order
to promote a product or service. It is a type of
publicity. The term was popularized by Jay
Conrad Levinson's 1984 book Guerrilla
Marketing.
 In a 1996 Harvard Business Review article and in an earlier book ,
Porter argues that competitive strategy is "about being different."
He adds, "It means deliberately choosing a different set of
activities to deliver a unique mix of value."
 In short, Porter argues that strategy is about competitive position,
about differentiating yourself in the eyes of the customer, about
adding value through a mix of activities different from those used
by competitors.
 In his earlier book, Porter defines competitive strategy as "a
combination of the ends (goals) for which the firm is striving and
the means (policies) by which it is seeking to get there." Thus,
Porter seems to embrace strategy as both plan and position. (It
should be noted that Porter writes about competitive strategy, not
about strategy in general.)