The need for a strategic approach to marketing - Marketing Management

Companies traditionally follow a planning framework. However, this is sometimes short-term, ad hoc and based on intuition. The need is for a more strategic approach, but before we consider its implications, we should consider why it is required. The key reasons are:

The pace of change and environmental complexity

Kotler and Keller13 suggest that the pace of environmental change is not only increasingly rapid, but these changes are often discontinuous in nature. We shall be examining these environmental factors in strategic marketing, but let us consider a sample of environmental changes with which organizations have had to cope in recent years.

  • As we have noted, consumers and legislative bodies have become increasingly concerned about the natural environment and about the ecological and/or health risks associated with some products;
  • The last decade of the twentieth century witnessed the birth of a host of new products based on new technology. Developments in information technology, cryogenics and biotechnology are just some examples of these facilitating technologies;
  • Divorce rates, crime rates and (in some countries) birth rates have continued to surge ahead;
  • There have been substantial changes in patterns of world trade including the emergence of new trading relationships and regulations;

The worldwide economic ‘meltdown’ in 2008 and its aftermath took people by surprise.

Healthy and particularly organic foods have been amongst the fastest growing markets in the UK.

Once a minority market, appealing to relatively few health food ‘fanatics’, this sector now represents a huge and growing market. More and more consumers are looking for a healthier diet and avoiding products and brands which may harm their health. Research indicates that nearly 500 food products were launched under the ‘healthy’ label in the UK in 2009. In addition, sales of organic foods in the UK during 2009 topped £3 billion. ASDA’s ‘Healthy Choice’, the Aviva range from Novatis and Johnson & Johnson’s Benecol are all examples of brands that have flourished with the trend towards healthy eating. Changes in attitude towards health and healthy eating will continue to give rise to marketing opportunities and challenges for marketers in the future. The significance of this all of this environmental change is its increased magnitude and pace and this has added to the complexity facing organizations.

Increasing organization size and complexity

Strategic Approach to Marketing

A more strategic approach is required as organizations themselves have become increasingly large and complex. The need for strategic market planning has gone hand in hand with the move from functionally organized companies, with relatively narrow product lines, to large diversified companies producing many different products for disparate markets. In turn, this has meant that planning processes that were appropriate for the 1990s are no longer so. Increasingly complex organizations require sophisticated planning tools.

A significant feature of environmental change is its increased magnitude and pace. Technological, social/cultural and political and regulatory change are now rapid and this has added to the complexity facing organizations and the marketer in particular.

Unilever, one of the world’s largest companies, currently employ more than 170,000 people producing and marketing in over 150 countries worldwide. Their products and brands encompass personal care products, home products and food products. Thirteen of their brands turn over in excess of $1 billion and there are twenty different nationalities in the top tier of management. They spend an annual total of nearly $1billion on R&D and are involved in supporting a number of good causes throughout the world. Marketing planning in a company this large and diverse is complex and requires sophisticated systems and procedures to develop effective strategic marketing plans.

As we can see with Unilever, increasingly, the contemporary organization is often large and complex, encompassing potentially many product lines sold in diverse markets to different customer groups. The different parts of a business each need a strategic marketing plan reflecting different requirements of each product market.

An example of the strategic planning implications of increased organizational size and complexity is the concept of viewing the multi-product, multi-market, organization as a number of sub-units or ‘strategic business units’ (SBUs), which need to be viewed and managed as a portfolio of businesses that may each contribute, in different ways and to a different extent, to overall corporate objectives. Lynch14 has suggested that particularly in larger organizations the strategic business unit is very often the basic organizational unit for the development of strategic marketing plans. Certainly, organizing around SBUs is very prevalent in today’s multi-product/multi-market organization and this is now explored.

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