European Journal of Marketing

Emerald Article: Management processes in marketing planning

Gordon Greenley, Graham Hooley, John Saunders

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European Journal of Marketing, Vol. 38 Iss: 8 pp. 933 - 955
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Management
Management processes in processes
marketing planning
Gordon Greenley, Graham Hooley and John Saunders
Aston Business School, Aston University, Birmingham, UK 933
Keywords Marketing planning, Management activities, Decision making, Adaptability, Received May 2002
Flexible organizations, Competitive analysis Revised October 2002

Abstract There has been concern in the literature about the adequacy of the traditional model of
marketing planning, which focuses on what decisions should be made and not on how to make
them. The aim of this article is a new conceptualisation that proposes key management processes
about how marketing planning decisions are made in a dynamic context. The motives for this
conceptualisation are to contribute to understanding by advancing the traditional model of
marketing planning, to stimulate academic and practitioner debate about how marketing planning
decisions are made, and to initiate new directions in marketing planning research. Two new
competing models of marketing planning are developed, which address key management processes
about how marketing planning decisions are made in a dynamic context, and research directions
are proposed.

Introduction
Marketing planning has been defined as all rational, incremental and intuitive
processes that guide a firm’s marketing to its future (Saunders et al., 1996). In the
literature the tradition has been to prescribe marketing planning as a model of
logical-sequential decision making, incorporating objectives, strategies, tactics,
implementation and control (Ferrell et al., 1999; Jain, 1999; Lambin, 2000; McDonald,
1996). However, there has been concern in the literature about the adequacy of this
traditional model, as it focuses on what marketing planning decisions should be made,
and not on how to make them. For example, the traditional model fails to adequately
consider management processes that are inherent within marketing planning (Dunn
et al., 1994; John and Martin, 1984; Martin, 1987; McDonald and Leppard, 1991), and it
fails to address the organisational context of marketing planning adequately (Greenley
and Oktemgil, 1996; McDonald and Leppard, 1991; Piercy and Morgan, 1994; Speed,
1994). The aim of this article is a new conceptualisation that proposes key management
processes about how marketing planning decisions are made in a dynamic context.
The motives for this conceptualisation are to contribute to understanding by
advancing the traditional model of marketing planning, to stimulate academic and
practitioner debate about how marketing planning decisions are made, and to initiate
new directions in marketing planning research.
In guiding a firm’s marketing to its future, marketing planning decision making is
used to pursue dynamic market opportunities. As market opportunities change, firms
will need to adapt their plans in order to pursue these developing opportunities.
Adaptation is achieved through the process of flexibility in marketing planning European Journal of Marketing
Vol. 38 No. 8, 2004
decision making, which is the extent to which managers are willing to explore pp. 933-955
alternative and new decision-making options, with respect to objectives, strategies, q Emerald Group Publishing Limited
0309-0566
tactics, implementation and control. In turn, the strategic management literature DOI 10.1108/03090560410539104
EJM suggests that flexibility is determined by other management processes. However, these
38,8 processes have not been explicated in either the strategic management or marketing
planning literatures. Therefore, there is little understanding about how to achieve
flexibility in marketing planning decision making, and hence adaptation to market
opportunities. For the conceptualisation proposed in this article, six key management
processes are proposed. First, proactive management, which is managerial eagerness
934 to pursue market opportunities. Second, competitive aggression, being propensity to
challenge competitors intensely. Third, innovative management, which is developing
novel ideas for change to pursue market opportunities. Fourth, organisational learning,
being purposely gaining knowledge, insights and experience. Fifth, market orientation,
which is moulding corporate culture and managerial behaviour with respect to market
intelligence. Sixth, deploying slack resources, which are the means for achieving
flexibility in marketing planning.

Inadequacies of the traditional model

There has been some commentary about the inadequacy of the traditional model of
marketing planning.

Managerial behaviour
There are claims that the traditional marketing planning model does not sufficiently
incorporate management processes. Piercy and Morgan (1990, 1994) propose that
traditional marketing planning should be extended to include managerial behaviour
and organisational dimensions, such as corporate culture, information systems and
communications. Greenley and Bayus (1994) and Piercy and Morgan (1994) report
empirical support for this proposal, and conclude that a fuller understanding of such
dimensions is required. Managerial behaviour and organisational structure in
marketing planning have been researched by John and Martin (1984) and Martin
(1987), while the role of corporate culture in marketing planning has been researched
by Dunn et al. (1994) and McDonald and Leppard (1991). These studies also conclude
that a fuller understanding of such dimensions is required.
Prahalad (1995) has listed examples of the many changes that industries have
experienced over the last decade, such as technological discontinuities, increasing
global competition, and changing customer expectations, which pose major challenges
to companies, with respect to their influence over their markets. Prahalad (1995) claims
that there has been little systematic study of processes that firms use to influence
markets, when addressing such change. Similarly, Saunders et al. (1996) and Speed
(1994) have suggested that, although marketing planning should facilitate addressing
market turbulence, managers may have difficulty in planning during turbulent market
conditions. Indeed, traditional marketing planning theory does not include processes
for addressing change and turbulence, and for enhancing market influence.

Gap between theory and practice

Evidence suggests that only about one-fifth of companies practice marketing planning,
as prescribed in the traditional marketing planning model (Cosse and Swan, 1983;
Greenley, 1987; Hooley et al., 1984; McDonald, 1982). Also, some managers may not
have the capabilities to be effective planners (Cespedes and Piercy, 1996; Greenley,
1988). For example, Day (1994) claims that many firms have failed to change their
marketing to become market-driven. He proposes that a market orientation is achieved Management
and sustained through distinctive capabilities, which are difficult for competitors to processes
imitate. Such gaps between theory and practice suggest inadequacy in the traditional
marketing planning literature.

Coordinating role of marketing planning

Zinkhan and Pereira (1994) observe that although marketing planning is a sub-set of 935
strategic planning, which includes other business operations, there is little integration
of marketing planning and other operations. Ruekert and Walker (1987) say that
marketing personnel have an important coordinating role in linking demands from
outside the organisation with the operational departments that satisfy these demands.
They propose that such coordination and integration are based on social systems,
driven by common organisational objectives, although managerial conflict can arise,
owing to differences among operational objectives. Although marketing planning has
potential for providing such coordination and integration, this role has not been
explicated in the marketing planning literature.

Modelling management processes in marketing planning

In order to develop understanding, stimulate academic and practitioner debate and
initiate new research directions, two competing models are proposed (see Figures 1
and 2). As market opportunities change, firms will need to adapt their plans in order to
pursue these developing opportunities. The central decisions are changing marketing
objectives to exploit these dynamic opportunities, and changing marketing strategies
and tactics to attain the chosen objectives. Adaptation has been given several
perspectives in the literature; a series of choices about how an organisation could
respond to perceived opportunities and threats (Bowman and Hurry, 1993; Sharfman
and Dean, 1997); gradual and incremental organisational change, rather than radical
and discontinuous change (Jennings and Seaman, 1994); and surviving environment
conditions (Chakravarthy, 1982). The latter differentiates between the process of

Figure 1.
Management processes in
marketing planning –
Model 1: direct effects
model
EJM
38,8

936

Figure 2.
Management processes in
marketing planning –
Model 2: moderator effects
model

adaptation to environment conditions as carried out by managers, and the outcome of

this process as a consequential state of adaptation of the company. Three
consequential states of adaptation are proposed by Chakravarthy (1982): a neutral
state where a firm can withstand most environmental change; a stable state where a
firm can only react to environmental change; and an unstable state, where a firm is
extremely susceptible to environmental change. The neutral state is likely the most
desirable, as there is more managerial choice in decision making, and less detrimental
impact from environmental change. The outcome of adaptation is similar to the
concepts of coalignment and strategic fit. While there are several meanings of these
concepts (Venkatraman, 1990), they are the extent of efficient alignment of resources
and capabilities with opportunities and threats (Bourgeois, 1980; Powell, 1992;
Venkatraman, 1990). The implication is that, rather than three discrete states of
adaptation as proposed by Chakravarthy (1982), there can be various states of
adaptation. In both the competing models, state of adaptation to market opportunities
is the dependent variable, as a consequence of the adaptation of marketing plans.
A key process for achieving adaptation is flexibility, which is the extent to which
companies explore alternative and new options in their decision making (Aaker and
Mascarenhas, 1984; Evans, 1991; Feigenbaum and Karnani, 1991; Greenley and
Oktemgil, 1997; Sharfman and Dean, 1997). With respect to marketing planning, it is
willingness on the part of managers to generate different options in marketing
planning decision making, for pursuing market opportunities. It will involve
considering alternative objectives, and alternative marketing strategies and tactics for
pursuing these objectives. It will also involve considering different options for
implementing strategies and tactics and for controlling this implementation to achieve
the chosen objectives. The consideration of several decision-making options is more
likely to lead to choosing the most effective for adapting to market opportunities,
compared to scant consideration of few options. Consequently, in both the competing
models, flexibility of marketing planning decision-making has a direct effect on the
resultant state of adaptation to market opportunities.
The extent of flexibility and hence adaptation that a firm is able to achieve is
determined by other management processes (Aaker and Mascarenhas, 1984;
Chakravarthy, 1982, 1986; Evans, 1991; Greenley and Oktemgil, 1997; Nutt, 1993).
Volberda (1996) proposes variety in managerial capabilities for exploring new options, Management
while Evans (1991) proposes preparedness for change. However, these are only outline processes
suggestions, and detailed proposals of the management processes that are likely to
promote flexibility and adaptation have not been developed. Given the lack of guidance
in the literature, the theory developed in this article argues that the key management
processes are proactive management, competitive aggression, innovative management,
organisational learning, market orientation, and slack resources. Proactive 937
management is included because it explains managerial eagerness to pursue market
opportunities (Dutton, 1993; Mullens and Cummings, 1999; Venkatraman, 1989).
Competitive aggression is included because it is propensity to challenge competitors
intensely (Lumpkin and Dess, 1996; Venkatraman, 1989). Innovative management is
included because it uses novel ideas for changing the organisation, to pursue market
opportunities (Amabile et al., 1996; Damanpour, 1991; West and Farr, 1990).
Organisational learning is included because it is purposely gaining knowledge,
insights and experience about changing market opportunities (Huber, 1991; Lant et al.,
1992; Sinkula et al., 1997). Market orientation is included because it provides a potential
barrier for protecting marketing planning from competitive imitation (Narver and
Slater, 1990; Peteraf, 1993; Rumelt, 1982, 1984). Slack resources are included because
they are the means for achieving flexibility and adaptation in marketing planning
(Greenley and Oktemgil, 1998; Sharfman and Dean, 1997).
In model 1 (Figure 1) it is proposed that all six management processes have a direct
effect on flexibility, consistent with the literature cited earlier. In model 2 (Figure 2) it is
proposed that only two management processes have direct effects, while the other
processes generate moderator effects, as a competing stance to model 1 (Figure 1). As
proactive management means being eager to pursue market opportunities, it is likely to
lead to willingness to explore options in decision making, giving flexibility. Therefore,
proactive management is a direct predictor of flexibility. Similarly, as competitive
aggression is propensity to challenge competitors, it is likely to lead to willingness to
explore options in decision making as flexibility in order to identify the most effective
challenges. Therefore, competitive aggression is a direct predictor of flexibility. These
arguments are further developed below. For a moderator effect the moderator variable
interacts with a predictor variable to affect the form of the association between a
predictor variable and the dependent variable (Jaccard et al., 1990; Sharma et al., 1981).
In the following sections arguments are presented that propose that innovative
management, organisational learning, market orientation and slack resources produce
moderator effects, as they are processes for using capabilities and resources that will
promote the effectiveness of proactive management, competitive aggression and
flexibility in impacting on the state of adaptation. These effects are shown in Figures 1
and 2.

Proactive management
Proactive management is smanagerial eagerness to pursue market opportunities in the
absence of environment threats or poor performance, in this context market
opportunities, whereas reactive management occurs in response to threats or poor
performance (Dutton, 1993; Jackson and Dutton, 1988; Miller and Friesen, 1978;
Mullens and Cummings, 1999; Mullens and Walker, 1996; Venkatraman, 1989). A
central issue in the strategic management literature is the extent to which change in the
EJM external environment determines decision making and adaptation to market
38,8 opportunities, rather than the proactiveness of managers (Astley and Fombrun,
1983; Astley and Van de Ven, 1983; Bourgeois, 1984; Grant, 1996). The environment
determinism perspective posits that environment change determines organisations and
their strategy decision making (Aldrich, 1979; McKelvey and Aldrich, 1983), while the
managerial choice perspective posits that companies are able proactively to choose
938 their strategies and manipulate their environments (Child, 1972; Pfeffer and Salancik,
1978; Yasai-Ardekani, 1986). The two are not necessarily exclusive, representing a
continuum of organisational adaptation between pure environment determinism and
unrestrained freedom of choice (Astley and Van de Ven, 1983; Hrebiniak and Joyce,
1985; Veliyath and Srinivasan, 1995; Zammuto, 1988).
Mullens and Cummings (1999) propose four key disciplines of proactive
management for adapting to change, which are pertinent to market opportunities
and marketing planning. First, uniform encoding among managers of the change
situation, to yield a common understanding of market opportunities. Second,
consensus among managers about the appropriate objectives and strategy options to
pursue market opportunities. Third, motivation to implement the agreed strategy
options, which will involve various individual and organisational incentives. Fourth,
organisational ability to implement the chosen strategy options, by marshalling
implementation capabilities and resources. Similarly, Dutton and Duncan (1987)
propose that the momentum in companies for adapting to change is created from
managers’ perceptions of their understanding of change, and their beliefs about the
firm’s capabilities for adapting; the extent to which change is diagnosed as urgent and
feasible; and the extent of resources for adapting to change.
Therefore, proactive management that is disciplined and systematic in the above
fashion is predicted to result in careful consideration of environment change and
market opportunities, and greater flexibility of marketing planning decision making,
through eagerness to formulate alternative objectives and strategies for pursuing
market opportunities. It is therefore predicted that proactive management is an
essential process for achieving effective marketing planning for adapting to market
opportunities, overcoming environment determinism, achieving managerial choice,
and moving towards a neutral state of adaptation. As it is argued that proactive
management is an integral part of marketing planning decision making, it is predicted
to have a direct effect on flexibility:
H1. The greater the proactive management, the greater the flexibility of
marketing planning decision making, and successively the greater the
adaptation to market opportunities (models 1 and 2).
Despite the above, overcoming environment determinism may be problematic. There
are several problems in addressing environment change. First, managers may simplify
their perceptions of the environment and may undermine the challenges posed by
external uncertainty (Amit and Schoemaker, 1993; Senge, 1990). Second, internal
managerial conflict may follow environment turbulence, as managers often develop
conflicting solutions for addressing turbulence (Wiersema and Bantel, 1992). Third, a
lack of accord among managers about their ability to manipulate and exploit change in
their environments can be problematic (Bourgeois, 1984; Hrebiniak and Joyce, 1985;
Whittington, 1988). Fourth, more managerial attention will likely be given to recent
experiences, rather than forecasting future events (Lant et al., 1992). Fifth, recent Management
success in exploiting change may bias managers toward an illusion of control, processes
resulting in unrealistically high objectives (Langer, 1975). Sixth, managers may
mistakenly believe that successful outcomes arising through chance are a result of
their capabilities (Fischhoff and Beyth, 1975). In some companies there may be limited
recognition of the necessity to address these problems of environment determinism.
Even where there is recognition, overcoming them may not be straightforward. 939
However, proactive management that is systematic and disciplined should yield
careful consideration of environment change and market opportunities, and greater
flexibility in considering alternative objectives and strategies in marketing planning
decision making. Therefore, proactive management is likely more effective in
overcoming environment determinism problems than reactive management, and in
achieving adaptation to market opportunities:
H2. The greater the application of proactive management to overcoming
environment determinism, the greater the flexibility of marketing planning
decision making, and successively the greater the adaptation to market
opportunities (models 1 and 2).

Competitive aggression
Competitive aggression is defined as propensity to directly and intensely challenge
competitors, with the aim of outperforming them in the marketplace (Covin and Covin,
1990; Davidson, 1997; Lumpkin and Dess, 1996; Porter, 1985; Venkatraman, 1989). For
example, pursuing ambitious market share objectives to challenge competitors;
entering a market segment dominated by a competitor; outspending competitors on
communications; imitating competitors’ strengths; and aggressive price competition.
Competitive aggression also reflects managerial willingness in being unconventional
in marketing planning, rather than relying on conventional methods of competing
(Fombrun and Ginsberg, 1990; Lumpkin and Dess, 1996). Miller and Camp (1985) found
that the most successfully aggressive firms are those that pursue a wide breadth of
markets and products. However, as some opportunities feature high risk, such as
market entry or a new product launch, it is suggested that competitive aggression is
particularly important in such risky situations, to gain an advantage over competitors
(MacMillan, 1982; Porter, 1985). Consequently, competitive aggression is likely
accompanied by high risk taking propensity (Covin and Slevin, 1989). Timing may be
important for successful competitive aggression, and “fast followers” timing may be as
effective as “first mover advantage” timing (Lumpkin and Dess, 1996).
The realisation of this aggression propensity will be through managers being eager
to be competitively confrontational in the flexibility of their marketing planning
decision making, by setting objectives that are threatening to competitors, and by
selecting a marketing strategy and tactics that are challenging and hostile to
competitors. This may involve formulating decision-making options that shift the
balance of attention away from customers and more toward competitors. This could
mean that marketing strategy options are formulated that are more concerned with
gaining market share from competitors than attracting new customers into the market.
If aggressive marketing strategy options are unconventional and address a breadth of
markets and products, then they are likely risky. This suggests that careful attention is
needed in formulating and choosing options, ensuring that potential opportunities
EJM equate to risk, although competitive aggression is likely accompanied by high risk
38,8 taking propensity.
Competitive aggression will also be realised through managerial behaviour in
implementing marketing strategies and tactics, by monitoring their progress in
achieving the set objectives, and by taking action to challenge any counter strategy
moves by competitors. However, to ensure that competitors are outperformed a wide
940 range of marketing planning decision-making options will need to be considered, in
order to select the most effective way of beating competitors’ current marketing
strategies, and to overcome any counter strategy moves by them. Again this may mean
selecting options that are risky, but again competitive aggression is likely associated
with high risk taking propensity. Indeed, the general principle in the flexibility
literature is that planned offensive moves against competitors will lead to a necessity
to consider several options in decision making, as a search is made for the most
effective competitive challenge (Bowman and Hurry, 1993; Evans, 1991). These options
can be offensively formulated as competitive aggression to force competitors to disturb
their current marketing plans, or offensive options can be formulated in response to a
change in a competitor’s marketing strategy. Competitive aggression will also be
reflected in the timing of the implementation of marketing strategies and tactics. As
suggested earlier, although “first mover advantage” timing may be the most
aggressive option, “fast follower” timing may be a more appropriate option in some
situations, as it will allow for learning about competitors’ strategies and tactics. It is
therefore predicted that competitive aggression is an essential management process for
achieving effective marketing planning for adapting to market opportunities. As it is
argued that competitive aggression is an integral part of marketing planning decision
making, it is predicted to have a direct effect on flexibility:
H3. The greater the competitive aggression, the greater the flexibility of
marketing planning decision making, and successively the greater the
adaptation to market opportunities (models 1 and 2).

Innovative management
Innovation is the generation and implementation of new and creative ideas, processes,
products and services, providing the means for changing an organisation (Amabile
et al., 1996; Daft, 1978; Damanpour, 1991; Damanpour and Evan, 1984; Thompson,
1986; Stata, 1989; West and Farr, 1990). Nutt (1993) and Sharfman and Dean (1997)
advocate that to achieve flexibility and adaptation managers should make strategy
choices that are innovative, by differentiating from the competitive norm. Amabile et al.
(1996) and Van de Ven (1986) emphasise that innovation is the successful
implementation of creative and novel ideas in an organisation. West and Farr (1990)
emphasise that innovation is restricted to intentional attempts to derive anticipated
benefits. With respect to processes, innovation involves intentionally initiating creative
and novel ways for gaining anticipated benefits, giving innovative management.
Innovative management will be needed to intentionally create new and modified
marketing strategies and tactics in marketing planning decision-making options, for
exploiting and adapting to changing market opportunities, and challenging
competitors’ strategies. This will involve generating novel ways of using the
marketing mix to achieve competitive advantage, and novel ways for positioning in
existing or new market segments, relative to competitors’ positioning. Innovative
managerial processes can be for planning and implementing the full range of the Management
marketing mix, and for controlling implementation to achieve marketing objectives.
Novel ideas within this innovation can be intrinsic within the elements of the mix, and
processes
also novel ideas for motivating staff to develop their capabilities. Innovation can also
be new technology for gaining competitive advantage, as in product technology for
enhancing customer benefits, and new technology for improving marketing
communications, distribution and customer service. This new technology may also 941
raise managerial confidence to deliver a more effective marketing strategy, again
enhancing their capabilities. However, as emphasised by West and Farr (1990), such
innovation needs to be intentionally directed at achieving intentional outcomes, in this
case planned marketing objectives. Therefore, by being innovative in their marketing
planning, companies will be able to formulate and consider alternative options for
flexible decision making, moving towards a neutral state of adaptation. It is therefore
predicted that innovative management is an essential management process for
achieving effective marketing planning for adapting to market opportunities. As
innovative management may be an integral part of marketing planning decision
making, it may exert a direct effect on flexibility:
H4a. The greater the innovative management, the greater the flexibility of
marketing planning decision making, and successively the greater the
adaptation to market opportunities (model 1).
However, processes for idea generation, innovative management may have more
influence on the impact of proactive management and competitive aggression on
flexibility, than directly on flexibility. Innovative management can provide creative
and novel ways to allow managers to be proactive in pursuing market opportunities. It
can also provide creative and novel ways for challenging competitors. This suggests
moderating effects, giving the following competing hypotheses to H4a:
H4b. The greater the innovative management, the greater the impact of proactive
management on the flexibility of marketing planning decision making
(model 2).
H4c. The greater the innovative management, the greater the impact of
competitive aggression on the flexibility of marketing planning
decision making (model 2).
Grant (1996) has emphasised the role of managerial capabilities in innovative
management. Capabilities for architectural innovation are particularly important, the
latter being implementing creative ideas across organisational boundaries (Abernathy
and Clark, 1985; Baden-Fuller and Stopford, 1994). Grant (1996) suggests that
imagination, intuition and creativity are key capabilities for architectural innovation,
although creativity is seemingly the most important. However, a creative idea will not
be realised unless there are organisational conditions that foster innovative
management and until the idea is implemented (Van de Ven, 1986). Several
organisational conditions have been proposed for fostering the creation of novel ideas,
such as support of managers in risk taking and evaluating new ideas; autonomy in
day-to-day work; resource availability for developing novel ideas; and control of time
pressure when developing new ideas (Amabile et al., 1996; West, 1997; West and
Anderson, 1996).
EJM Such conditions are applicable to marketing planning decision making. Much
38,8 decision making in the marketing mix is clearly creative, such as creating brand
images, developing USPs, enhancing customer care and creating advertising
messages. In order to create new ideas that will lead to flexibility and adaptation to
market opportunities, supportive organisational conditions will be needed. As many
innovative marketing mix decisions carry considerable risk with respect to market
942 success, there needs to be a common understanding and acceptance of these risks
within the management hierarchy. As a considerable investment of resources is likely
to pursue an innovative decision, such as new product development (NPD) and product
launch costs, then a common understanding is needed in the management hierarchy of
the potential benefits compared to associated risks. There also needs to be company
support for the time pressures associated with innovative marketing mix decisions,
such as first-mover advantages for achieving competitive advantage, break-even
periods in NPD, and likely lagged effects in advertising expenditure. In some
companies there may be limited recognition of the necessity to address these
conditions, but even where there is, addressing them may not be straightforward.
However, by establishing conducive conditions for fostering innovative management,
companies can be more flexible in their marketing planning decision making, moving
towards a neutral state of adaptation:
H5. The more a company addresses organisational conditions for creativity in
innovative management, the greater the flexibility of marketing planning
decision making, and successively the greater the adaptation to market
opportunities.

Organisational learning
Although it has many definitions, organisational learning is a process for purposely
gaining knowledge, insights and experience, that develops company understanding of
connections among managerial actions and the environment, and that influences future
managerial behaviour (Fiol and Lyles, 1985; Huber, 1991; Lant et al., 1992; Nevis et al.,
1995; Schein, 1996; Sinkula, 1994). In marketing planning, learning will lead to
increased understanding of the dynamics of market opportunities, and of managers’
capabilities for making effective marketing planning decisions. It is proposed that the
outcome of learning, through this increased understanding, will be more effective
adaptation to environment change (Grant, 1996; Kilmann, 1996; Sinkula, 1994; Sinkula
et al., 1997). Thus learning promotes firm heterogeneity through managerial
capabilities, resulting in competitive advantage (Cohen and Levinthal, 1990;
Mahoney, 1995; Senge, 1990). In marketing planning this increased understanding
through learning should foster confidence among managers to formulate and consider
several decision making options in their marketing planning, and to be bold in their
decision making, resulting in more flexibility. Sinkula et al. (1997) found that learning
results in increased market information and dissemination, and there is evidence that
learning is associated with high levels of market orientation. It is therefore predicted
that organisational learning is an essential management process for achieving effective
marketing planning for adapting to market opportunities. As organisational learning
may be an integral part of marketing planning decision making, it may exert a direct
effect on flexibility:
 H6a. The greater the organisational learning, the greater the flexibility of Management
marketing planning decision making, and successfully the greater the processes
adaptation to market opportunities (model 1).
However, as a process of gathering information and changing understanding,
organisational learning may have more influence on the impact of proactive
management and competitive aggression on flexibility. By generating a greater 943
understanding of market dynamics and of managers’ capabilities, it will give managers
more confidence to be proactive. Similarly, it will provide more understanding and
confidence to challenge competitors. This suggests moderator effects, giving the
following competing hypotheses to H6a:
H6b. The greater the organisational learning, the greater the impact of proactive
management on the flexibility of marketing planning decision making
(model 2).
H6c. The greater the organisational learning, the greater the impact of competitive
aggression on the flexibility of marketing planning decision making
(model 2).
There are several impediments to learning. First, Day and Nedungadi (1994) found that
managers tend to pay selective attention to their environments and define reality in
narrow terms (Kiesler and Sproull, 1982). Consequently, managers have inadequate
perceptions of environmental change, and therefore less scope for effective learning
(Levinthal and March, 1993). Second, even if there is an adequate environment
intelligence system, there may be resistance in the company to change attitudes and
behaviour (Osland and Yaprak, 1995; Schein, 1996). Therefore, managerial resistance
to change may limit the benefits of learning. Third, there may be managerial inertia to
change marketing plans, particularly when they have been effective in achieving
previous performance objectives. Therefore, benefits of learning will not be fully
realised (Kiesler and Sproull, 1982; Lant et al., 1992). Fourth, there may be a tendency to
ignore the long run. Focusing on short-term performance may lead to ignoring future
trends, so that learning is short-run focused and therefore limited (Levinthal and
March, 1993). Fifth, there may be a tendency to overlook failures. Basing learning on
past successes gives a biased understanding of reality, so that learning should also be
from failures (Lant et al., 1992; Levinthal and March, 1993). Sixth, there is evidence that
functional heterogeneity in the top management team contributes to learning (Lant
et al., 1992; Wiersema and Bantel, 1992). A diversity of managerial backgrounds gives
a richness of perspectives when addressing decision making, giving many learning
opportunities. Therefore, a lack of diversity may be an impediment to learning. In some
companies there may be little recognition of such impediments, but even where there is
recognition, overcoming them may not be straightforward. However, by addressing
these impediments, companies can be more flexible in their marketing planning
decision making, moving towards a neutral state of adaptation:
H7. The more a company addresses impediments to organisational learning, the
greater the flexibility of marketing planning decision making, and
successively the greater the adaptation to market opportunities.
EJM Market orientation
38,8 Market orientation is generating and internally disseminating intelligence about
customers and competitors, and moulding corporate culture and managerial behaviour
with respect to this intelligence (Hunt and Morgan, 1995; Kohli and Jaworski, 1990;
Narver and Slater, 1990). It is proposed that an effective market orientation is difficult
for competitors to imitate, as it is achieved through idiosyncratic management, which
944 can be difficult for competitors to both identify and copy, creating a barrier to imitation
(Day, 1994; Hunt and Morgan, 1995; Lippman and Rumelt, 1982; Mahoney and
Pandian, 1992; Oktemgil et al., 2000). The following characteristics of idiosyncratic
management contribute to achieving inimitability.

Tacitness
This is accumulated skills-based capabilities, resulting from experience and learning
by doing, which is difficult for competitors to imitate (Polanyi, 1967). These tacit
capabilities make up idiosyncratic management. Understanding and addressing
customers and competitors requires tacit capabilities that are based on experience and
learning by doing, for the effective use of intelligence in marketing planning decision
making. Tacit capabilities are also needed to achieve and sustain a market-focus in the
corporate culture and managerial behaviour.

Complexity
This results from using large numbers of interrelated tacit capabilities, which creates
identification problems for competitors (Peteraf, 1993; Lippman and Rumelt, 1982).
Market orientation covers a wide range of complex organisational phenomena,
requiring many organisation-wide skills. Such skills are needed to establish a market
orientation, to achieve its organisation-wide dissemination across many job functions,
and to sustain market-focused corporate culture and managerial behaviour.

Specificity
This is dedicating particular capabilities to specific aspects of market orientation, such
as developing long-term customer relationships. Dedicated capabilities are needed to
build an effective market orientation, and to mould corporate culture and managerial
behaviour. It should be difficult for competitors to identify and understand these
dedicated capabilities.

Non-transferability
Should a competitor identify the mix of capabilities that led to a successful market
orientation, they would then need to acquire them to achieve imitation. Transferring a
market orientation to another company will likely be difficult, featuring high
transaction costs, given that it is inherent within corporate culture, the values and
attitudes of managers, and their behaviour (Chi, 1994; Peteraf, 1993). Indeed, these
issues are the very essence of the unique human fabric of a company.

Non-tradability
Capabilities may not, however, be tradable, as managers and team-based skills may be
less effective in a different corporate culture. Therefore, they may have little external
value (Chi, 1994; Dierickx and Cool, 1989; Nelson and Winter, 1982; Peteraf, 1993). A
market orientation is likely not tradable, as tacit market orientation capabilities may be Management
less effective in other corporate cultures, and they may not be openly traded. processes
Therefore, market orientation features the characteristics of idiosyncratic
management for achieving inimitability. In its dual role of moulding corporate
culture and managerial behaviour, market orientation represents management
thinking and action as part of marketing capabilities. Within this thinking and
action there is much opportunity for developing idiosyncratic management, given the 945
multidimensional nature of managerial actions for achieving an effective market
orientation, and the values to be created in corporate culture. However, as this thinking
and action is central to marketing planning, having a more effective market orientation
than competitors can create a competitive advantage. This thinking and action is
central to all the logical sequential stages of marketing planning (objectives through to
control), where increased focus on customers and competitors is likely to result in a
more effective matching of strategies and tactics with market opportunities. Indeed,
given that market orientation is intrinsic within the logical sequential stages of
marketing planning, it should contribute to protecting marketing planning from
competitive imitation. This will allow for the consideration of more decision-making
options, as their potential implementation can be protected from competitive imitation.
It is therefore predicted that market orientation is an essential management process for
achieving effective marketing planning for adapting to market opportunities. As
market orientation may be an integral part of marketing planning decision making, it
may exert a direct effect on flexibility:
H8a. The greater the market orientation, the greater the flexibility of marketing
planning decision making, and successively the greater the adaptation to
market opportunities (model 1).
However, as a process of moulding corporate culture and managerial behaviour,
market orientation may have more influence on the impact of flexibility on state of
adaptation than directly on flexibility. By providing protection from competitive
imitation of their marketing planning decision making, market orientation should
foster managerial confidence in decision making, and promote bolder decisions for
adapting to market opportunities, than with little protection. This suggests a
moderator effect, giving the following competing hypothesis to H8a:
H8b. The greater the market orientation, the greater the impact of the flexibility of
marketing planning decision making on adaptation to market opportunities
(model 2).
However, for a market orientation to contribute effectively to adaptation to market
opportunities, the literature implies that several underlying organisational conditions
are needed. First, there is an unstated assumption that values and expected behaviours
for creating a market orientation will be successfully incorporated into the corporate
culture, and that there is a mechanism for assessing this incorporation. In the Hunt and
Morgan (1995) theory there is an unstated assumption that this culture can be
incorporated into decision-making frameworks. In the Webster (1992) theory there is an
additional unstated assumption that this incorporation takes place from the corporate
level down to the SBU level, through the successful transfer of cultural values and
expected behaviours. Implicit in achieving these conditions is an assumption that
EJM effective changes can be made to company communications and managerial behaviour.
38,8 Another condition for an effective market orientation is continuous investment in its
development, giving the assumption that managers have the inclination and resources
to make this investment. Finally, to sustain an effective market orientation with time,
there is an underlying assumption that managers will have capabilities for finding new
ways for disguising the make-up of their company’s market orientation to avoid
946 imitation. In some companies there may be little recognition of the necessity to address
these conditions, but even if there is recognition, addressing them may not be
straightforward. However, establishing these facilitating conditions will enhance the
effectiveness of market orientation, contributing to flexibility of marketing planning
decision making, and moving towards a neutral state of adaptation:
H9. The more a company addresses facilitating organisational conditions for
creating a market orientation, the greater the flexibility of marketing
planning decision making, and successively the greater the adaptation to
market opportunities.

Slack resources
A proposition in the strategic management literature is that companies should not fully
deploy their resources, but should retain some spare or slack resources to enable
change to strategies (Bourgeois, 1981; Chakravarthy, 1986; Miller, 1994; Milliken and
Lant, 1991; Sharfman and Dean, 1997). Cyert and March (1963) defined slack as:
. . . that cushion of actual or potential resources that allows an organisation to successfully
adapt to change, by providing the means for adapting strategies to the external environment.
Slack resources provide the means for adapting to the environment and for pursuing
opportunities in the future (Bourgeois, 1981; Dess and Origer, 1987; Greenley and
Oktemgil, 1998; Sharfman et al., 1988; Yang et al., 1992), as they can be used in a
discretionary manner, given that they are not committed to necessary expenditure
(Dimmick and Murray, 1978; Riahi-Belkaoui, 1998).
Slack consequently provides potential for flexibility in strategy decision making
(Bourgeois, 1981; Miller and Leiblein, 1996; Segars and Grover, 1994; Sharfman et al.,
1988), allowing for adaptation to new environment conditions. These general principles
apply to marketing planning, as slack resources provide the means for formulating and
considering different marketing strategy options, and for implementing those selected,
in the pursuit of market opportunities. Therefore, slack resources allow for flexibility in
marketing planning decision making. Bourgeois (1981) and Hambrick and D’Aveni
(1998) suggest that slack resources allow a company to compete more boldly, and they
can be a source of innovation (Cyert and March, 1963). The latter also suggest that
slack resources provide the means for experimenting with new strategies that are
costly and risky, such as entering new markets and launching new products. In
marketing planning they allow for experimentation with new ways of managing the
marketing mix, such as innovative advertising, enhanced after sales service, or
technical innovation in product benefits.
Evans (1991) has suggested different modes in which slack can be used, based on
two decision making dimensions. First, a temporal dimension, comprised of an ex ante
mode, preparing in advance of some future environmental change, and an ex post
mode, taking action after a change has occurred. Second, an intentional dimension,
comprised of an offensive mode, creating and seizing an initiative, and a defensive Management
mode, guarding against competitive moves and correcting mistakes. These processes
decision-making dimensions give four different flexibility modes, where the process
for using slack resources is different in each mode (Greenley and Oktemgil, 1998).

Ex ante/offensive mode
Slack allows for the formulation and holding of a range of strategy options for 947
proactively accessing opportunities that may arise (Bowman and Hurry, 1993; Fox and
Marcus, 1992). In marketing planning this means planning a range of competitively
aggressive marketing strategy options, to be implemented when market opportunities
arise.

Ex ante/defensive mode
This mode of flexibility is about guarding against potentially damaging consequences
that may arise in high risk situations, where slack is held as insurance against losses
(Ansoff, 1965; Eppink, 1978; Evans, 1991). In marketing planning entering a new
segment under hostile market conditions, for example, but planning changes to
strategy or tactics when market conditions change.

Ex post/offensive mode
If unpredicted opportunities arise then slack will allow for formulating strategy
options, to pursue these new opportunities offensively (Evans, 1991). As market
opportunities arise, this mode would mean implementing a marketing strategy and
tactics speedily compared to competitors, to gain early entry, or to gain more market
share than competitors.

Ex post/defensive mode
This mode of flexibility is about learning from mistakes, such as using slack to defend
against unpredicted competitive strategies (Evans, 1991). In marketing planning this
would be developing marketing strategy options to address an unpredicted change in a
competitor’s strategy.
These advantages of slack allow for the formulation of decision-making options,
giving flexibility in marketing planning decision making. Therefore, it is predicted that
a process for using slack resources is essential for achieving effective marketing
planning, for adapting to market opportunities. As a process for adapting to change,
there may be a direct effect on flexibility:
H10a. The greater the slack resources, the greater the flexibility of marketing
planning decision making, and successfully the greater the adaptation to
market opportunities (model 1).
However, as a means of achieving flexibility, slack resources may have more influence
on the impact of flexibility on state of adaptation, than directly on flexibility. They will
allow managers to consider more decision-making options for adapting to market
opportunities, as they provide the means for implementing a wider range of options.
They also provide the means for experimenting with different options to exploit
market opportunities and to be bold in decision making. This suggests a moderator
effect, giving the following competing hypothesis to H10a:
EJM H10b. The greater the slack resources, the greater the impact of the flexibility of
38,8 marketing planning decision making on adaptation to market opportunities
(model 2).

Conclusion
Two competing models were presented in this article, which propose key management
948 processes about how marketing planning decisions are made in a dynamic context.
The motives for this conceptualisation were to contribute to understanding by
advancing the traditional model of marketing planning, to stimulate academic and
practitioner debate about how marketing planning decisions are made, and to initiate
new directions in marketing planning research. The new models address the
inadequacies of the traditional model in several ways. First, they advance the
prescriptive logical-sequential model of marketing planning by incorporating
management processes about how decisions are made, as recommended by various
writers. The processes are behavioural in nature, but include aspects of corporate
culture, and they incorporate issues from several different literatures, which have not
been previously incorporated into marketing planning. This has developed the domain
of marketing planning, and has contributed to defining and developing its underlying
paradigm. Second, the new models contribute to understanding how companies can
address market change. The models are about understanding management processes
for exploiting dynamic market opportunities, and the proposed processes contribute to
understanding how companies can influence these market dynamics through their
marketing planning. Third, the models also help to reduce the gap between theory and
practice. As the focus is on behaviour and culture, it gives guidance to firms about how
to address marketing planning decision making. The conceptualisation also extends
Day’s (1994) proposal, as these marketing planning processes represent capabilities
that can become distinctive compared to those of competitors, and that can be difficult
for them to imitate. Fourth, the models also contribute to understanding the integrating
and coordinating role of marketing planning. In order to develop marketing planning
decision-making options to achieve flexibility, the involvement of other internal
operations will be necessary, such as finance, personnel and production, in order to
assess the commercial feasibility of each option. The management processes can be
vehicles for developing the internal social systems needed for integrating and
coordinating operations, through the involvement of managers from other operations
in marketing planning decision making.

Research directions
Clearly the first stage of empirical investigation would be the testing of the competing
models, by measuring managers’ perceptions of how these management processes
operate in their companies, with respect to marketing planning. Second, as these
perceptions are likely to vary among managers, a direction is to investigate differences
among managerial levels within the marketing function, and also among other
functional managers. Third, as the management processes are behavioural and
cultural in nature, their relative degrees of impact on state of adaptation are likely to
vary in different countries and economies. Therefore, a comparative study should be
insightful. Fourth, as there are no claims in this article that all influential management
processes have been included, other processes could be investigated as another
research direction. For example, at the corporate level, directions and constraints Management
dictated from a strategic plan; the effectiveness of corporate communications; and processes
internal social systems that determine the ways that managers interact together. At the
individual manager level, for example, the importance of incentives and rewards for
marketing planning decision making; perceived senior management support for risk
taking; and perceived commitment to marketing plans by senior managers.
While the above directions are based on managers’ perceptions of how these 949
management processes operate, a different research direction is to investigate the drive
and determination of managers for pursuing effective marketing planning. Much of the
drive and thrust to exploit market opportunities will be through the willingness of
managers to be proactive, aggressive, innovative, to learn, to use market orientation to
build competitive barriers, and to accumulate and then deploy slack resources.
However, managerial recognition that marketing planning is needed is a prerequisite.
Recognition that flexibility and its key management processes are more likely to be
effective in exploiting dynamic market opportunities is also needed, rather than
adopting inflexible and reactive marketing planning. Similarly, there will need to be
drive and determination to practise these management processes openly. Managerial
determination to sustain an achieved state of adaptation into the future is also
necessary. Indeed, as market opportunities and competitors’ strategies change, drive
and determination are needed to generate further decision-making options to address
the new market conditions. Therefore, a research direction would be to investigate the
above issues.

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Further reading
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of Marketing, Vol. 47, pp. 101-10.
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Pfeffer, J. (1993), “Barriers to the advancement of organizational science: paradigm development
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Seth, A. and Thomas, H. (1994), “Theories of the firm: implications for strategy research”, Journal
of Management Studies, Vol. 31, pp. 166-91.