Question

Topic: Student Questions

Marketing Versus Strategic Direction

Posted by Anonymous on 2/18/2006 at 12:47 PM ET 250 Points
Dear all; I have recently been given a question and am currently struggling to get my head around it. The topic in question is whether or not most companies are just competing on marketing with little regard to the strategic direction of the firm. I understand the basics of marketing and strategic direction but am struggling to find the links between the two, or any examples which could be used to illustrate this. Any help would be much appreciated and rewarded.
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  • Posted by wnelson on 2/18/2006 at 1:45 PM Accepted
    Tom,

    If I understand your question properly, the hypothesis is that companies only compete via marketing actions, which I would list as any of the 4 P's - price, position, promotions, and product.

    Let me define marketing first: Marketing takes place in two parts: Marketing Strategy and Marketing Plan. The strategy part consists of analysis of the customers and needs, competitors, and the firm's core competencies. Based on this are developed overall guidelines for the 4 P's. Price is set according to value proposition. Position is set versus competitors and other products and services. Promotions are developed with appropriate messages using language and image to emotionally affect customers to buy and using media to which the customers regularly subscribe. Product is defined using the firm's core competencies to meet customer needs better than the competition and with unique selling points.

    The marketing plan consists of the who-what-when details to execute the strategy as well as with established metrics, goals, and regular reviews to make sure the plan is coincident with the marketing strategy.

    Strategic direction, to me, means the firm's overall strategy. This strategy includes the marketing strategy, to be sure, but also includes manufacturing or service delivery strategy, R&D strategy, financial strategy, and human resource strategy.

    So one interpretation of your query is that companies compete without a complete strategy in place - missing one or more of the functional strategies listed above.

    Another way to look at this is that the strategic direction in question only involves the marketing strategy. In other words, firms race out to market with a product or service idea without regards to customers and needs, competition, core competencies and position. They define the product, set price, and execute promotions based on gut feel.

    If you look at businesses in the US, the SBA states that 99.7 of all employers are small businesses. Many, if not most small businesses do not have marketing strategies or overall strategic direction. They fit the latter scenario where the launched a business based on a gut feel and then react to the orders coming their way. Given the more stringent definition of strategic direction, this premise of "most companies are just competing on marketing with little regards to strategic direction" is even easier to accept.

    I hope this helps.

    Wayde
  • Posted by bobhogg on 2/19/2006 at 5:35 AM Member
    Tom...

    Wayde has identified the issues exactly!

    Let me just add that one of the major problems in many organisations right now is that they think marketing is just the 4 P's (or worse, in some cases, they think it's just "promotion") and they don't see the contribution that a marketing approach could (and should) make to strategy formulation.

    A real marketing approach identifies what's going on in the relevant marketplace, anticipates what customers wants are (by understanding their buying habits and processes) and understands what the organisation's capabilities are, and that is the basis for setting the organisation's strategic direction.

    It's just sad that not enough organisations have woken up to this reality yet!

    Good luck,
    Bob
  • Posted on 2/19/2006 at 7:25 PM Member
    Wayde and Bob have given you some really good input.

    What I'd add is that for many/most businesses, setting the strategic direction for the company is a marketing function. That's because the company exists to serve its customers (at a profit, of course), and identifying the right target audience and understanding what makes customers tick are at the core of good marketing.

    When you start with a product and then try to force-fit it to some ill-defined market, you're pushing water uphill. Much better to identify a target audience, find out what the unmet needs are, and then fulfill that need in a way that makes both you and the customer winners.
  • Posted on 2/20/2006 at 1:19 PM Author
    Thanks for all your comments so far, they have all been really useful. Just wondering whether anybody has any examples of firms which could highlight the differences between the two approaches?
    Tom
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