You are on page 1of 10

The current issue and full text archive of this journal is available at

Market research
The impact of Porter’s strategy and CRM
types on the role of market
research and customer
relationship management
Received December 2005
Michael J. Valos and David H.B. Bednall Revised November 2006,
Deakin University, Melbourne, Australia, and December 2006
Accepted January 2007
Bill Callaghan
Strategic Mapping, Melbourne, Australia

Purpose – This paper seeks to investigate the influence of Porter’s strategy types on the use of
customer relationship management (CRM) techniques and traditional market research, against
theoretical and empirical evidence that differences in strategy types may result in variation in
favoured marketing information sources and procedures.
Design/methodology/approach – Depth interviews generated a series of scale items, which were
combined with others derived from the literature in a questionnaire measuring strategy types, the roles
of market research, and the characteristics of CRM systems. Responses were obtained from 240 senior
marketing managers in Australia, and applied to the testing of five research propositions.
Findings – ANOVA found no differences in CRM usage among the strategy types. Variation was
widespread, however, in four roles of traditional market research: enhancing strategic decision
making, increasing usability of existing data, presenting plans to senior management, and achieving
productivity and political outcomes.
Research limitations/implications – Future researchers using the Porter strategic types should
separate “marketing differentiators” from “product differentiators” because they function and compete
Practical implications – All organisations can benefit from CRM systems, but “marketing
differentiators” exhibit a relatively higher usage of traditional market research. This is likely to be
because they compete by creating softer product differences, while others do so on harder
characteristics such as price or product functionality.
Originality/value – This is the first study to use the Porter types to explain differences between the
roles and uses of market research and CRM within organisations.
Keywords Marketing strategy, Market research, Market information systems, Customer relations,
Marketing management, Decision support systems
Paper type Research paper

Marketing managers face new choices when seeking information to facilitate their
business strategy. According to Malhotra and Peterson (2001) the information
provided by customer relationship management (CRM) systems may complement or Marketing Intelligence & Planning
Vol. 25 No. 2, 2007
corroborate that from traditional market research. CRM has been defined in a number pp. 147-156
of ways, but here we are treating it as the collection and analysis of customer data (its q Emerald Group Publishing Limited
internal use) rather than as a builder of relationships with customers (its external role). DOI 10.1108/02634500710737933
MIP Recent research has highlighted the various alternative roles that market research
25,2 plays in strategic decision-making. Toften (2005) found “instrumental” use (applying
findings to an immediate problem) and the “conceptual” role (general enlightenment on
future issues) to be correlated with marketing performance. In contrast, the “symbolic”
and “political” modes of use did not improve performance. Ganeshasundaram and
Henley (2006) found a paradox in the roles for market research in practice: while much
148 more “background” research was being conducted, it was considered of less value than
“decision” research.
This paper reviews the literature dealing with the roles of marketing research, CRM
and business strategy. Hypotheses are presented regarding the impact of strategy in
explaining differences in how organisations use both marketing research and CRM.
The findings are reported of a quantitative survey carried out to examine differences
between the types and uses of traditional and CRM methods of data collection,
conclusions drawn and implications discussed. The paper concludes with guidelines
for the use of both types by marketing managers in practice.

Traditional roles of marketing research

A number of typologies and taxonomies classify market research roles. Several
functions of market research have been described: action-oriented versus
knowledge-enhancing (Slater and Narver, 2000), strategic versus tactical (Raphael
and Parket, 1991), risk-identifying versus opportunity-identifying (Sherman, 1999),
exploratory versus confirmatory (Hart et al., 1999), strategic direction-setting,
opportunity analysis, monitoring and control (Roberts, 1992), and even a role as
evidence to win an argument (Culkin et al., 1999).
Traditionally, the role of market research is to support strategic decision-making
(Hamlin, 2000; Raguragavan et al., 2000). Yet the review by Hart et al. (1999) of 20 years
of academic literature examining “factors influencing the use of marketing
information” did not include business or marketing strategy amongst the nine
variables it considered. The fact that our own review has covered the major seminal
studies, such as those of Deshpandé and Zaltman (1982, 1987) suggest a gap in the
market research literature. It could be that too much market research is not appropriate
for the strategic context in which the organisation finds itself, reducing its role as a
decision-making support. Thus, the influence of general marketing strategy may
explain differences in the observable roles of marketing research.

Impact of CRM on traditional roles of marketing research

A second gap in the market research literature relates to the emerging role of CRM
systems, which provide information that may complement or corroborate information
from traditional market research (Malhotra and Peterson, 2001) or even replace it.
Authors such as Javalgi et al. (2006) propose a two-way information flow between
traditional market research on the one hand and CRM systems on the other. This occurs
through the intelligence generation and intelligence gathering aspects of market
orientation. O’Malley and Mitussis (2002) assert that CRM systems with “adequate”
customer databases and data mining techniques are required for the implementation of
relationship marketing and the achievement of “customer intimacy” because individual
customer preferences must be understood. Baker and Mouncey (2003, p. 417) ask
“. . . whether the pursuit of relationship marketing, perhaps through CRM initiatives,
demands any changes in how market research is undertaken or delivered”. Their answer Market research
relates to the concept of a “listening organization” which combines the traditional role of and CRM
market research with integration of internal databases, customer contact points and
other internal customer listening systems.
Since, market research and CRM may fulfil similar functions in providing
information to support strategic decision-making, their use should likewise be related
to the firm’s strategy. Yet research is minimal with respect to differences in either MkIS 149
(Ashill and Jobber, 2001) or CRM, according to organisational strategy.

Strategy and marketing information

Recent research by Maltz et al. (2006) examined links between strategy and market
information usage, comparing organisations that competed, respectively, with an
innovation orientation and a speed (of response) orientation.
Generic conceptualisations of strategy are still in use when academics seek to
examine its impact on differences in the internal characteristics of organisations.
O’Regan and Ghobadian studied differences in strategic types and leadership,
departmental cooperation and culture. Strategic typologies devised by Miles and Snow
(1978) and Porter (1980) assume that the classification of business units or
organisations according to marketing strategy provides more specific and appropriate
guidelines for human resource, organisational structure and information requirements.
According to Porter (1980), there are three successful generic strategies. The
differentiator strategy achieves competitive advantage through offering something
uniquely different from competitors. In contrast, the cost leader strategy does so by
greater efficiency in production and resource usage. The focus strategy can be adopted
by differentiators or cost leaders, but differs in that it targets a market niche rather
than the broad market. These internal contrasts suggest that differentiation and cost
leadership require contrasting roles for market research and CRM systems.
In this paper, we use the Porter strategic types as a means of examining the impact
of strategy on both CRM usage and alternative roles of market research. For example,
it is possible that a differentiator would use CRM to build strong differentiating
customer relationships while cost leaders, with a lesser focus on innovation, might use
it as part of a more defensive customer retention strategy. Further, differentiators
might well use market research in a background role, as they focus on innovation and
the future, while cost leaders may consider background research of less value than
decision research, and find the instrumental role more relevant than the conceptual
Hagen and Amin (1995) found differences in external environment scanning and
opportunity analysis practices between differentiators and cost leaders. While the
amount of market research was similar for both strategies, the type of issues being
researched differed. However, Hambrick (1982) found no differences between the
external environmental scanning of these two strategy types.
Drawing on non-Porter literature, Du Toit (1998, p. 207) found differences between
Miles and Snow’s prospectors, analysers and defenders in “the way in which
information was managed [for competitive advantage]” in terms of internal records,
competitive information and external information. More recently, Narver and Slater
suggested that there would be differences among those three types in terms of their
approach to the generation of market intelligence.
MIP To sum up, a gap exists in the market research literature in the matter of differences
25,2 between Porter’s strategy types and a number of roles for market research: enhancing
strategic decision-making, increasing the usability of existing data, presenting
marketing activities to senior management, and achieving productivity and political
outcomes. Piercy (1983) observed the non-rational use of market research in response to
the politicised information environment inside firms. There is also a gap with respect
150 to differences among the Porter types in terms of relative reliance on and usage of CRM

Research question and propositions

On the basis of our literature review, the main research question this study addresses is:
RQ1. Does strategy explain differences in the use by organisations of marketing
research and CRM?
The answer is sought by the testing of five research propositions.
P1. Differentiators will place greater reliance on market research in its “enhancing
strategic decision-making” role than will cost leaders or focus strategists.
This proposition assumes that differentiators face major and more difficult decisions in
terms of investing in product innovation, and invest more in brand building. Their
marketing decisions will be less about price and more about maintaining a unique
difference compared with their competitors:
P2. Cost leaders will place greater reliance on market research in its “increasing
usability of existing data” role than will differentiators or focus strategists.
This proposition assumes that cost leaders will use “incremental” market research to a
greater extent than the “breakthrough” variety, and have a greater need for market
research to explain past findings. Their culture is more cost conscious, and any
investment capable of which leveraging past research will be regarded favourably:
P3. Differentiators will place greater reliance on market research in its
“communicating marketing activities to senior management” role than will
cost leaders or focus strategists.
This proposition assumes that differentiators operate in an area of greater uncertainty
and faces higher risks in their decision-making. Senior management will demand
greater confidence that the actions taken by marketing managers are “on track”
because the chance of a “big” mistake is greater.
P4. Cost leaders will place greater reliance on market research in its “achieving
productivity and political outcomes” role than will differentiators or focus
This proposition assumes that cost leaders need to show a more immediate return on
marketing expenditure. On the other hand, differentiators operate in an area of greater
uncertainty and have longer term payback scenarios.
P5. Cost leaders and focus strategists will place greater reliance on CRM systems
than differentiators.
This proposition assumes that cost leaders enjoy greater certainty in their product and Market research
customer decisions, and are more familiar with their customers whose needs change and CRM
This research agenda dictates a quantitative analysis in which strategies can be
compared in terms of the usage of traditional marketing research and CRM.

In the first phase of the study, 16 preliminary discussions about market research and its
value to the organisations were held with senior marketers and research managers in
Australia and the USA. The objective was to generate additional scale items for the
eventual survey instrument, to supplement those available for modification from the
literature review. The discussion agenda focused on the roles of market research and
the characteristics of CRM systems in general, and in particular on recent trends and
issues, including the role and usage of marketing metrics and single-source databases,
outsourcing and the impact of new organisational structures on the research function.
Academic colleagues reviewed the questionnaire before administration to the eventual
respondents, as a check on completeness and clarity.
In the second phase, a survey sample was selected from the Dun & Bradstreet list of
the top 1,000 senior marketing managers in for-profit Australian companies. After
preliminary contact to establish contacted to confirm the name of the person with
major responsibility for marketing, a self-completion questionnaire was distributed by
mail. Follow-up, as necessary was by letter, telephone or e-mail. A return of 24 per cent
was achieved.
To measure the role of market research, the seven-item scale of Maltz and Kohli
(1996) was used, plus 11 items generated from the depth interviews.
The role and usage of CRM systems and subsystems within the company was
measured by five items derived from the depth interviews, which covered CRM, data
warehousing, and sales, service and billing databases. To classify business strategy
types, a non-hierarchical Ward’s cluster analysis was undertaken on eight items
measuring Porter strategy types from Pelham and Wilson (1996) and three items from
the depth interviews. The focus was initially on the three-cluster solution, given the
Porter typologies expected, but other solutions were also explored.
One-way ANOVA was used to identify differences between market research roles
and CRM usage among the Porter types. ANOVA “determines the degree to which
differences found between the means of different groups or categories can be attributed
to sampling error” (Hair et al., 1995, p. 617). Statistical significance was established at
the 5 per cent level, which is consistent with a sample of this size. Dunnett’s T3 test of
significance was further applied, as the Levene test showed unequal variance within
the variables used in the ANOVA.

Table I shows the role variables derived from a Varimax factor analysis and
subsequent Cronbach a test, based on data collected by seven-point Likert scales.
Three strategies were identified by the cluster analysis: cost leadership, marketing
differentiator (i.e. brand differentiation) and product differentiator (i.e. differentiation
by innovative feature). Somewhat surprisingly, the focus strategy was not confirmed in


Table I.

strategy type
ANOVA comparison of

CRM reliance, by Porter

market research roles and
Marketing Product
Cost leader differentiator differentiator
strategy strategy strategy
(CL) (n ¼ 99) (M) (n ¼ 89) (P) (n ¼ 51)
Market research role propositions Mean (SD) Mean (SD) Mean (SD) Significant different means F ratio F prob.

Enhancing decision making (0.90) 4.18 (1.81) 4.71 (1.57) 3.52 (2.4) M.P 6.52 0.00
Increasing usability of existing data (0.76) 3.28 (1.68) 3.99 (1.51) 2.55 (1.99) M . P, M . CL 12.2 0.00
Communicating actions to senior management (0.67) 3.51 (1.77) 3.82 (1.52) 2.88 (2.18) M.P 4.58 0.01
Achieving productivity and political outcomes (0.63) 3.10 (1.52) 3.62 (1.52) 2.75 (2.06) M.P 5.08 0.01
CRM proposition
CRM reliance (0.77) 3.94 (2.26) 4.02 (2.18) 3.62 (2.11) N/S 0.54 0.58
the cluster analysis solution. Previous researchers, for example Miller (1987), have also Market research
found variations from the original Porter typology when using cluster analysis. and CRM
The findings show that marketing differentiators rely more than product
differentiators on market research for enhancing strategic decision-making,
increasing usability of existing data, presenting marketing activities to senior
management and for productivity and political outcomes. The sole difference between
marketing differentiators and cost leaders in terms of any of the four roles of market 153
research under study was that they allocated a stronger role for market research in
“increasing usability of existing data”.
Lastly, and surprisingly, no significant differences were found among marketing
differentiators, product differentiators and cost leaders in the usage of CRM systems to
support marketing decision-making.

Discussion and contribution

The first gap in the research literature to be examined by this study was the impact of
marketing strategy on four roles market research fulfils in organisations. Four research
propositions were tested, with marketing strategy as an explanatory variable. In other
words, the research propositions assumed the role of market research would change
according to strategic context.
While differences were found among each of the four roles of market research,
related to strategy type, the only one relating to cost leaders was that they have less
need for the market research that “increases usability of existing data”. It may be that
adopters of this strategy use market research to find price points or features that can be
deleted from products to reduce production or marketing cots, and hence prices.
This market research is perhaps more straightforward to interpret than the sort
commissioned by marketing differentiators, which is likely to be related to product
positioning or advertising tracking and may involve the development of emotional
bonds with target customers.
On the other hand, each of the four roles for market research differed in the
comparisons between marketing differentiators and product differentiators, varieties
of Porter’s single “differentiator” first identified by Miller (1987). Marketing
differentiators rely more than their product-focused counterparts on each of the four
market research roles discussed in research P1-P4, possibly because they differentiate
themselves on branding and intangible aspects of their offer rather than on functional
and objective product criteria. They may consequently be more uncertain about ways
to differentiate themselves in the absence of “real” rather than “perceived” product
In contrast, product differentiators appear to favour intuitive decision-making over
market research in their product innovation decision-making. They concentrate on
features to develop rather than developing the emotional aspects of brands. It seems
likely that the marketing managers of the marketing differentiators were more
sophisticated in their use of market research, given that the role of research is stronger
in this group than for either cost leaders or product differentiators.
Another difference between these two strategic types is that marketing
differentiators are more likely to use market research in non-rational or internal
political roles. Piercy (1983) has previously identified this as “misuse” of market
MIP The second research gap addressed in this study was the impact of marketing
25,2 strategy on the role of CRM as a source of marketing information. Cost leaders appear
to be no more or less reliant than either kind of differentiator on CRM systems. There
were also no significant differences in the role of CRM between marketing
differentiators and product differentiators. One interpretation of these findings is that
cost leaders rely more on retention of customers than on acquisition, on account of their
154 lower priced and older generation products, and that database marketing and CRM are
consequently more likely to be useful. A competing view might be that differentiators
need to offer higher levels of service and spot demand trends quickly, and that CRM
can facilitate the achievement of those objectives.
This study makes an overall contribution to the study of the role of market research
as a facilitator of strategy implementation and enhancer of strategic decision-making.
This is the first study to examine the influence of Porters strategic types on firstly,
CRM usage and secondly, the roles for which market research is used. It is necessary to
include CRM as CRM can usurp the traditional role of market research. CRM does this
by obtaining information form data mining and tracking consumer interactions and
consumer behaviour. It can thereby address a number of marketing questions
effectively that were historically answered by primary external market research
(Weber, 2001; Malhotra and Peterson, 2001). Previous authors (Hart et al., 1999) have
not included strategy as a contingent variable to explain the different ways
organisation utilise market research.
The technical limitations of the study include: a cross sectional design, a cross
industry sample and a single respondent for each business unit surveyed.
Nevertheless, the respondents were senior marketing executives the sample was large.

Research implications
Future researchers using the Porter types should ensure that differentiators are split
into their marketing and product sub-types. Differences between those were found in
this study, in terms of the respective roles allocated to market research, and treating
them as a single group potentially obscures important variation in strategy
implementation. It would also be beneficial to separate traditional market research into
the two categories identified by Ganeshasundaram and Henley (2006), “decision
research” and “background research” and study each role separately. This would
permit examination of the notion that cost leaders operate in a more certain and
predictable environment and their research is more for insurance or long-term
knowledge than short-term action; they consequently favour background research.
In contrast, it is to be expected that the more innovative and dynamic environment in
which product differentiators operate will require research to lead to immediate action;
decision research may therefore be preferred.

Practical implications
All marketing managers appear to benefit from CRM, given that strategy is not a
determinant of CRM usage. However, different approaches to the implementation of
marketing strategy do suggest guidelines for the usage of traditional market research.
Marketing managers need to consider their organisational structure in choosing the
roles for market research. For example, organisations with centralised structures are
likely to encourage non-rational and political uses of market research.
Market research managers operating in a strategic environment designed by Market research
market differentiators may require enhanced communication skills, because the and CRM
requirements they have to specify in their briefs to research sub-contractors and
the findings they must subsequently convey to marketing managers are typically
subtle and complex aspects of branding and differentiation, given that their products
and services have limited objective competitive advantage. On the other hand, the
market research undertaken for product differentiators and cost leaders will relate to 155
more obvious competitive advantages, such as functionality or price, and thus be easier
to communicate.

Ashill, N.J. and Jobber, D. (2001), “Defining the domain of perceived environment uncertainty: an
exploratory study of senior marketing executives”, Journal of Marketing Management,
Vol. 17, pp. 543-58.
Baker, S. and Mouncey, P. (2003), “The market researchers manifesto”, International Journal of
Market Research, Vol. 45 No. 4, pp. 415-33.
Culkin, N., Smith, D. and Fletcher, J. (1999), “Meeting the information needs of marketing in the
twenty-first century”, Marketing Intelligence & Planning, Vol. 17 No. 1, pp. 6-12.
Desphandé, R. and Zaltman, G. (1982), “Factors affecting the use of market research information:
a path analysis”, Journal of Marketing Research, Vol. 19, pp. 14-31.
Desphandé, R. and Zaltman, G. (1987), “A comparison of factors affecting use of marketing
information in consumer and industrial firms”, Journal of Marketing Research, Vol. 24,
pp. 114-8.
Du Toit, A.S.A. (1998), “Information management in South African manufacturing enterprises”,
International Journal of Information Management, Vol. 18 No. 3, pp. 205-13.
Ganeshasundaram, R. and Henley, N. (2006), “The prevalence and usefulness of market research,
an empirical investigation into ‘background’ versus ‘decision’ research”, International
Journal of Market Research, Vol. 48 No. 5, pp. 525-50.
Hagen, A.F. and Amin, S.G. (1995), “Corporate executives and environmental scanning activities:
an empirical investigation”, SAM Advanced Management Journal, Vol. 60 No. 2, pp. 41-8.
Hair, J.F. Jr, Anderson, R.E., Tatham, R.L. and Black, W.C. (1995), Multivariate Data Analysis,
4th ed., Prentice-Hall, Englewood Cliffs, NJ.
Hambrick, D.C. (1982), “Environmental scanning and organisational strategy”, Strategic
Management Journal, Vol. 3, pp. 159-74.
Hamlin, R.P. (2000), “A systematic procedure for targeting marketing research”, European
Journal of Marketing, Vol. 34 Nos 9/10, pp. 1038-52.
Hart, S., Tzokas, N. and Saren, M. (1999), “The effectiveness of market information in enhancing
new product success rates”, European Journal of Innovation Management, Vol. 2 No. 1,
pp. 20-35.
Javalgi, R., Martin, C. and Young, R. (2006), “Marketing research, market orientation and
customer relationship management: a framework and implications for service providers”,
Journal of Services Marketing, Vol. 20/1, pp. 12-23.
Malhotra, N.K. and Peterson, M. (2001), “Marketing research in the new millennium: emerging
issues and trends”, Marketing Intelligence & Planning, Vol. 19 No. 4, pp. 216-35.
Maltz, E. and Kohli, A.K. (1996), “Market intelligence dissemination across functional
boundaries”, Journal of Marketing Research, Vol. 33, pp. 47-61.
MIP Maltz, E., Menon, A. and Wilcox, J. (2006), “The effects of flexible firm orientations on market
information use: intended and unintended consequences”, Journal of Strategic Marketing,
25,2 Vol. 14, pp. 147-64.
Miles, R.E. and Snow, C.C. (1978), Organizational Strategy, Structure, and Process, McGraw-Hill,
New York, NY.
Miller, D. (1987), “The structural and environmental correlates of business strategy.
156 Relationships and technology: the strategic implications”, Strategic Management
Journal, Vol. 8 No. 1, pp. 221-35.
O’Malley, L. and Mitussis, D. (2002), “Relationships and technology: the strategic implications”,
Journal of Strategic Marketing, Vol. 10, pp. 225-38.
Pelham, A.M. and Wilson, D.T. (1996), “A longitudinal study of the impact of market structure,
firm structure, strategy and market orientation culture on dimensions of small firm
performance”, Journal of the Academy of Marketing Science, Vol. 24 No. 1, pp. 27-43.
Piercy, N. (1983), “A social background of marketing information: learning to cope with the
corporate battleground”, Journal of the Market Research Society, Vol. 25 No. 2, pp. 103-19.
Porter, M.I. (1980), Competitive Strategy – Techniques for Analyzing Industries and Competitors,
Free Press, New York, NY.
Raguragavan, G., Lewis, A.C. and Kearns, Z.A. (2000), “Manager’s rating of market research
projects”, Proceedings, ANZMAC Conference, pp. 1025-8.
Raphael, J. and Parket, I.J. (1991), “Commentary: the need for market research in executive
decision making”, Journal of Business & Industrial Marketing, Vol. 6 Nos 1/2.
Roberts, J.H. (1992), “Research crisis: blind leading the blind”, Marketing, February, pp. 22-7.
Sherman, J. (1999), “Researchers should be involved throughout marketing decision process”,
Advertising Age – Business Marketing, Vol. 84 No. 3, p. 10.
Slater, S.F. and Narver, J.C. (2000), “Intelligence generation and superior customer value”,
Journal of Academy of Marketing Science, Vol. 28 No. 1, pp. 15-21.
Toften, K. (2005), “The influence of export information use on export knowledge and
performance”, Marketing Intelligence & Planning, Vol. 23 No. 2, pp. 200-19.
Weber, J.A. (2001), “Illusions of marketing planners”, Psychology & Marketing, Vol. 18 No. 6,
pp. 527-63.

Further reading
Subramanian, R., Fernandes, N. and Harper, E. (1993), “An empirical examination of the
relationship between strategy and scanning”, Mid-Atlantic Journal of Business, Vol. 29
No. 3, pp. 315-30.

Corresponding author
Michael J. Valos can be contacted at:

To purchase reprints of this article please e-mail:

Or visit our web site for further details: