Chapter 1

THE NATURE OF STRATEGIC

MARKETING
Learning outcomes
After reading this chapter, you will be able to:
• Describe the approach of this textbook
• Distinguish between the different levels of
strategy and marketing
• Describe what strategic marketing is
• Explain the importance of strategic marketing in
creating shareholder value
• Broadly describe the process of strategic
marketing.
Class reflection …

There are many different views and

definitions of what strategy is or should be.

How would you define the concept strategy?

Mintzberg's 5Ps for strategy
• Plan – thought process before an action is
identified and executed
• Ploy – aim to obtain a competitive
advantage
• Pattern – non deliberate pattern in stream of
actions
• Position – mediating force between the
organisation and its environment
• Perspective – dominant view in particular
organisation.
Figure 1.1 How levels of marketing align with
levels of strategy in an organisation
Corporate-level strategy
Corporate strategy is about answering the
following questions:
• Which businesses are we in and which
businesses should we be in?
• What are our basic directions for the future?
• What is our culture and leadership style?
• What is our attitude to strategic change?
• What should it be?

It is supported by corporate strategic marketing

(corporate-level marketing).
Corporate-level strategy (cont.)
The purpose of corporate-level marketing is to:
• Create a favourable corporate identity and
reputation
• Create a strong corporate brand
• Create a competitive advantage in the
organisation’s chosen markets.

The key challenge is to ensure that corporate

identity aligns with corporate-level marketing
strategy.
Business-level strategy
Business strategy is about answering the
following questions:
• How do we compete successfully?
• What is our sustainable competitive
advantage?
• How can we innovate?
• Who are our customers?
• What value do we add? Where? Why? How?
Many of these issues should be reflected in the
business's statements of strategic direction, such
as the purpose, vision, or value statements.
Business-level strategy (cont.)

Business-level strategy is supported by

strategic marketing (typically expressed as a
strategic marketing plan) that explains the:
• segmentation
• targeting
• positioning strategies of a business or a
business unit.
Porter's model of generic business
strategies
Two important conclusions can be drawn from Porter’s
model:
1. Competitive advantage and an increase in profits can
arise from two possible positions:
• Cost leadership – producing at a production cost
significantly lower than competitors
• Differentiation – providing perceived benefits
(quality) that customers are willing to pay more for
2. The scope of an organisation can be:
• Narrow (focused on specific segments or products,
also known as niches)
• Broad (covering most of the market).
Table 1.2 Comparison between cost leadership
and differentiation marketing plan elements in
furniture retailers
Class reflection …

In your opinion, do you think it is possible

and appropriate for an organisation to
focus on more than one of Porter's
generic strategies at the same time?
Operational/tactical level
At the tactical and operational levels,
marketing supports the marketing strategy
through the marketing mix, expressed in
marketing plans.
The 4 Ps is an example of the elements of a
marketing mix:
• product
• price
• place
• promotion.
Marketing strategy

A marketing strategy “articulates the best uses

of the organisation’s resources and tactics to
achieve its marketing objectives. It states which
opportunities are to be pursued by an
organisation, indicates specific markets
towards which activities are to be targeted, and
identifies the type of competitive advantage to
be developed and exploited” (Dibb et al. 2006:
37).
Marketing perspective
When Theodore Levitt published his seminal
article, Marketing Myopia, in the Harvard Business
Review, his main thesis was that it is important for
marketers to look beyond the internal environment
of the organisation and the products that it sells to
what customers need.

He recognised the need to move away from the

production, product and selling concepts, towards
the marketing concept.
Table 1.3 The marketing concept
The marketing concept
The marketing concept is demonstrated in
organisations as market orientation, the
components of which are:
• Customer orientation
• Competitive orientation
• Inter-functional co-ordination
• Organisational culture
• Long-term profit focus.
Evolution of marketing

Value-based marketing

Relationship marketing

Brand marketing

Transactional approach
The difference between strategic and
operational marketing

• Strategic marketing is about supporting

strategy and identifying opportunities for
competitive advantage
• Operational marketing manages and
markets existing products and services from
day to day.
Table 1.4 A comparison between strategic
marketing and operational marketing
Marketing perspective

The biggest (and most neglected) role of

marketing is an internal one – making sure
that all individuals and departments in the
organisation see the brand through
customers' eyes, ensuring a market
orientated organisation.
Characteristics of strategic marketing
• Driven by vision, strategic objectives, and
corporate strategy
• Driven by customer needs and
heterogeneous markets
• Focus is on segments where you can
compete successfully
• It is everybody’s job – not just the
marketing department’s
• It is dynamic.
The strategic marketing process
• Market opportunity analysis
• customer analysis
• market demand analysis
• competitive analysis
• macro environmental analysis
• internal analysis
• Market segmentation
• Market targeting
• Positioning
• Marketing plans
• Marketing plan implementation
• Measuring and feedback.
Figure 1.4 The strategic marketing process

.
Marketing perspective

Pick n Pay’s astute analysis of the

competitive market has resulted in an
opportunity to establish a formal presence in
townships, tapping into a growing population
and available income, and a foothold in that
segment of the market.
Table 1.5 Outline of a strategic marketing plan
Class reflection …

In your opinion, do you think all

organisations should have a marketing
plan?
The role of the marketing function in
strategic marketing planning
• Understanding market dynamics
• Identifying potential markets, segments, and customers
• Quantifying and qualifying the needs of the defined
customer groups (segments) within the identified
markets
• Determining the value propositions to meet segment
needs
• Communicating the value propositions internally and
externally to employees and segments
• Playing an appropriate part in delivering value
propositions (usually marketing communications)
• Monitoring value actually delivered to segments
Group work

1. Consider the strategic marketing process

adopted by your organisation, or an
organisation of your choice, then create a
diagram illustrating the process
2. Compare your chosen organisation's
process to the process illustrated in Figure
1.4 and state any changes you think should
be made to your organisation's process.