The Academy Of Business Strategy - The Future Of Strategic Marketing
A variety of factors, point to an increasingly important role for strategic marketing in future years
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First, the battle for market share is intensifying in many industries as a result of declining growth rates. Faced with insignificant growth, companies have no choice but to grasp for new weapons to increase their share, and strategic marketing can provide extra leverage in share battles.
Second, deregulation in many industries is mandating a move to strategic marketing. For example, take the case of the airline, distribution, banking and telecommunications industries. In the past, with territories protected and prices regulated, the need for strategic marketing was limited. With deregulation, it is an entirely different story. The prospect of Sears, Roebuck and Merrill Lynch as direct competitors would have been laughable as recently as 20 years ago. Thus, emphasis on strategic marketing is no longer a matter of choice if these companies are to perform well.
Third, many packaged goods companies are acquiring companies in hitherto non-marketing orientated industries and are attempting to gain market share through strategic marketing. For example apparel makers, with few exceptions, have traditionally depended on production excellence to gain competitive advantage. But when marketing orientated consumer products companies purchased apparel companies, the picture changed. Mergers and acquisitions have been rife during the march towards globalization. This has been fuelled by accelerating progress made with information and communications technology and by the need to compete within a new global market.
Fourth, shifts in the channel structure of many industries have posted new problems. Traditional channels of distribution have become scrambled, and manufacturers find themselves using a mixture of wholesalers, retailers, chains, buying groups, and even captive outlets. In some cases, distributors and manufacturers' representatives are playing more important roles. In others, buying groups, chains and cooperatives are becoming more significant. Because these groups bring greatly increased sophistication to the buying process, especially as the computer gives them access to more and better information, buying clout is being concentrated in fewer hands.
Fifth, competition from overseas companies operating within in the USA, UK, Europe and within emerging markets is intensifying. More and more countries around the world are developing the capacity to compete aggressively in world markets. Business people in both developed and developing countries are aware of world market trends and are confident that they can reach new markets. Eager to improve their economic conditions and their living standards, they are willing to learn, adapt and innovate. Thirty years ago, most American companies were confident that they could beat foreign competitors with relative ease. After all, they reasoned, we have the best technology, the best management skills, and the famous American "can do" attitude. Today competition from Europe, Japan, and elsewhere is seemingly insurmountable. To cope with worldwide competition, renewed emphasis on marketing strategy achieves significance.
Sixth, the fragmentation of markets -- the result of higher per capita incomes and more sophisticated consumers -- is another factor driving the increased importance of strategic marketing. In the United States, for example, the number of segments in the automobile market has increased by one-third. The competitive realities of fragmented markets require strategic marketing capability to identify untapped market segments and to develop and introduce products to meet their requirements.
Seventh, in the wake of easy availability of base technologies and shortening product life cycles, getting to market quickly is a prerequisite for success in the marketplace. Early entrants not only can command premium prices, but they also achieve volume break points in purchasing, manufacturing, and marketing earlier than followers, and thus, gain market share. In planning an early entry into the marketplace, strategic marketing achieves significance.
Eighth, the days are gone when companies could win market share by achieving cost and quality advantages in existing, well-defined markets. During the next 25 years, companies will need to conceive and create new and largely uncontested competitive market space. Corporate imagination and expeditionary policies are the keys that unlock new markets. Corporate imagination involves going beyond served markets; that is, thinking about needs and functionalities instead of conventional customer-product grids; overturning traditional price/performance assumptions; and leading customers rather than following them. Creating new markets is a risky business; however, through expeditionary policies, companies can minimize the risk not by being fast followers, but by the process of low-cost, fast-paced market incursions designed to reach the target market. To successfully develop corporate imagination and expeditionary policies, companies need strategic marketing.
Finally, demographic shifts in society have created a new customer environment that makes strategic marketing an imperative. In years past, the typical family consisted of a working father, a housewife mother, and two children. But censuses during the past 10 years have revealed that only 26 percent of households now fit that description. Mothers now tend to work full-time. There are an ever-increasing number of single-parent families. Traditional communities have broken up now that the global market encourages people to travel with work and to move their home. Smaller households now predominate: more than 55 percent of all households comprise only one or two persons. Also the amount of people over the age of 65 has increased substantially as people are living longer and tend to have more disposable income. These statistics have real strategic significance. The mass market has splintered, and companies cannot sell their products the way they used to. The largest number of households may fall into the two-wage-earner grouping, but that group includes everyone from manicurists to Wall Street brokers, a group whose lifestyles and incomes are too diverse to qualify as a mass market. We may see every market breaking into smaller and smaller units, with unique products being aimed at defined segments.
by: Dr. Paul Ulverston DBA MBA MA MSc BBA
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