Marketing in network environments:

1. Marketing in network environments: Exploiting network resources and developing network capabilities Teck Yong Eng 17 March 2010

2. Networks and marketing • Networking – prevalent in both business and consumer marketing • Business networks – connected exchange relationships, interdependent without hierarchical control • Network organisations – flexible and responsive in the networked economy Put simply: “Networks are constructed when individuals, whether organisations or humans interact”

3. Significance of networks Marketing: • Customer focus • Market intelligence • Integrator of market information • Organisation-wide practice (culture)

4. Theoretical underpinnings • Market orientation • Network perspectives (structure, governance, mechanisms) • Strategic orientation

5. My views of marketing • Customers are also irrational • Demand is created • Strategy is largely controllable • Optimum mindset can be detrimental • Marketing is strategic

6. An Overview of my Research In the context of business markets: • Customer portfolios in a network context • Cross-relational impact of strategy in networks • Cross-functional orientation in supply chain management • Coordination mechanisms of network organisation

7. Customer portfolios in a network context • Customer portfolio concept • Analytical tools integrating structural advantages and resource capabilities • Impact on firm performance and value creation opportunity • Networks influence on control and dependence

8. Cross-relational impact of strategy in networks • Different levels of relationships: primary versus secondary, network management of exchange, dyad, portfolio and industry relationships • Network capabilities, managing relationships to enhance access to key resources • Sources of competitive advantage lie outside firm boundaries and span networks

9. Cross-functional orientation in supply chain management • Working across organisational functions • Intra and inter-firm networks • Mutual trust, knowledge sharing, participative culture, cooperative behaviour, open communication • Impact on supply chain responsiveness and firm performance

10. Network organisation • Network drivers for value creation and innovation • Open systems, virtual channels, multi-user engagement, extended customizability • Enabled by the Internet and technology • Multiple sources of competitive advantage

11. Cumulative insights • Dynamic nature of networks • Re-conceptualising the environment • Multiple units for analysis • Intangible resources

12. Dynamic strategies • Inconsistent with static strategy models (e.g., popular Porter’s models of competitive advantage in marketing textbooks) • Networks, supply chains and ICT create new opportunities • Behavioural variables need to be considered (norms, culture) • Explicit consideration of consumer demand in business marketing

13. Enacted environments • Business environments are not entirely uncontrollable • Enacted by interaction • Multiple connected and/or interconnected participants (actors) • Collective actions (e.g., alliances, partnerships, community programmes) • Technology as an enabler

14. Multi-Level Analysis • Global pressures – interconnected world economies and markets • Limitations of strategic-business-units (SBUs) and firm-level analyses • Network orientation rather than firm-level concepts • Limitations of analytical techniques for multi-level and cross-relational analyses

15. Relational Assets • Personal relations to mobilise resources • Social capital, trust • Social competence • Relationship management, strength of relationships • Indirectly connected relations – dissimilar networks

16. Managerial Implications • Structural hierarchies are buffers • Organisational structures inhibit change • Agility and responsiveness • Less opportunity for efficiency gains (parity) and information asymmetry • Coordinating collective network capabilities is crucial for long term success

17. Research Implications • Complexity of networks poses methodological challenges • Marketing concepts can draw insights from organisational and network theories • Demand for dynamic models • Potential insights from boundary conditions (e.g., technology-enabled applications)

18. Current economic outlook • Anaemic growth prospects • Big cuts in public spending • Possible increase in value-added tax • Decreased in business investment • Exports have been slow to take off

19. Exploiting business networks • Network competition is different • Capabilities reside in networks • Selective and judicious allocation of resources • Value creating networks (enacted) • Integrate and leverage technological capabilities

20. Strategic implications • What relationships represent (potential) nexus of core competence? • What network resources render sustainable competitive advantage? • What aspects of business do you grow?

21. Strategic options • Identify value creating networks in existing markets • Innovate and invest in ideas and future technologies • Specialised capabilities in networks

22. On-going research • Network capability development • Capability perspective on enhancing innovation • Social responsibility – network effects • Value creation in logistics and distribution

23. THANK YOU Further information: Teck Eng teng@bournemouth.ac.uk