Aligning Marketing to Corporate Strategy

1. Aligning Marketing to Corporate Strategy (the academic perspective)

2. Strategic Marketing: the traditional view • …is all about: • getting and keeping competitive advantage? • matching distinctive abilities to specialised customer needs? • the interplay of environment, goals and strategies? • analysis and hard work? • inspiration, creativity and luck?

3. SMP process (Wilson and Gilligan) • Where are we now? • Where do we want to be? • How might we get there? • Which way is best? • How can we ensure arrival? • And what happens if things change?

4. Business purpose Industry analysis Company analysis Core strategy Competitive positioning Competitive advantage Market target Control Implementation Organisation Marketing mix Strategic marketing planning (HPN, p35)

5. Limitations of traditional view • Helps to generate discussion and new ideas • Ensures proper breadth of analysis • But fails to provide an unambiguous method of judging between possible strategies • And so may fail to convince sceptical audiences

6. Key challenges • Doyle (2008): most firms face same key challenges: • rapid market change • marketing, rather than production skills underpin sustainable competitive advantage • marketing performance is the main driver of shareholder value creation • But marketing has been losing influence in major firms….

7. “…because mainstream marketing is occupied with doing things and spending a budget on marketing mix variables, marketing has become a cost issue only, instead of a balance sheet issue as well” Grønroos (2003)

8. “…marketers are perceived to be “unaccountable” by the rest of the organisation; they are seen as unable to demonstrate a return on investment in the activities they have control over.” Baker and Holt (2004)

9. “Because the link between marketing strategy and shareholder value has not been made, boards have tended to look at two other more transparent strategies. One has been cost reduction – sometimes disguised by more appealing names such as reengineering, downsizing or right sizing. …The other common remedy has been acquisition” Doyle 2008, p19

10. Value-Based Marketing • Main sources: • Doyle, P (2008), Value-Based Marketing, 2e John Wiley • McDonald et al (2005), Marketing Due Diligence, Butterworth Heinemann • Reinterprets strategic marketing ideas in terms of maximising shareholder value • Potential alignment of marketing and finance theory

11. Value in business • Shareholder value has been created when market value of a firm exceeds book value • Market value mainly depends on management’s ability to seize profitable opportunities • availability of opportunities in the market • competence of business • Key is to maintain sustainable competitive advantage in a dynamic market

12. SV and Marketing • SVA is a tool for analysing performance, or evaluating options • SVA itself doesn’t produce winning strategies, but it does help to reveal them • SVA can lend greater force to marketing arguments • stronger theoretical basis • encourages profitable marketing investments • penalises arbitrary short-term cuts

13. Challenges to the SVA approach • What about other stakeholders? • What if it doesn’t work? • OK, but how do you actually manage?

14. What if it doesn’t work? "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms… Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity (myself especially) are in a state of shocked disbelief.” (Alan Greenspan, former Chairman of the US Federal Reserve, to a Congressional committee in October 2008)

15. How do you actuallymanage? • Ambler (2003): SV can’t be the exclusive focus • Good for choosing between possibilities • But concentrates on things that can be expressed as money… • …and can work against radical, breakthrough innovations… • …and can lead to a blinkered view of the future and its possibilities • So, selection of operational metrics is vital • (and some degree of fuzziness is advisable)

16. “The relationship paradigm has an opportunity to make marketing relevant for shareholders, top management, customers and the management of customers again. In the age of customer relationships, where marketing is a process encompassing most of the functions, processes and departments of a firm, the support of the entire organisation is imperative to success.” Grønroos (2003)

17. “Marketing is to invest in customers and customer portfolios to get wanted long-term cash flows from them. This is achieved through an exchange and fulfilment of promises, which facilitates the process of acquiring customers, and maintaining and enhancing relationships with these customers, and when necessary terminating these relationships, so that the financial and non-financial goals of all parties involved in the network of suppliers, customers and other stakeholders are met” Grønroos (2003)

18. Marketing is the management process that seeks to maximise returns to shareholders by developing relationships with valued customers and creating a competitive advantage Doyle (2008), p30

19. References • Ambler, T (2003), Marketing and the Bottom Line, FTPH • Baker, S and Holt, S (2004), Making marketers accountable: a failure of marketing education?, Marketing Intelligence and Planning, 22/5, 557-567 • Doyle, P (2008), Value-Based Marketing, 2e John Wiley • Grønroos. C (2003), Taking customer focus back into the boardroom: can relationship marketing do it?, Marketing Theory, 3/1, 171-173 • Hooley, G, Piercey N and Nicoulaud B (2008), Marketing Strategy and Competitive Positioning, 4e, FTPH • McDonald, M, Smith, B and Ward, K (2005), Marketing Due Diligence, Butterworth Heinemann • Wilson, R and Gilligan, P (2005), Strategic Marketing Management, 3e, CIM/Elsevier