Industrial Marketing Strategy (Wiley Series on Marketing Management)
AID, July-October Paper and Plastics Education Research Foundation. Research grant for the design and development of Wholesaling: Structure, Strategy, and Management course at University of North Florida, Unpublished Report. Marketing channels, 8th edition, with Robert W. Palmatier , Louis W. Marketing Channels, 6th edition with Louis W. Marketing Channels, 5th edition with Louis W. Marketing Channels, 4th edition, with Louis W. Prentice-Hall, Management in Marketing Channels, with Louis W. Stern and James Brown. Prentice-Hall Marketing Channels, 3rd edition, with Louis W.
Marketing Channels, 2nd edition, with Louis W. Marketing Channels, with Louis W. John Wiley and Sons, Baker, ed. Encyclopedia of Marketing. London, England: Routledge Reference, , pp. Stern in James F. Robeson and William C. Capacino eds. New York: Free Press, , pp. New York: McGraw-Hill, , pp. Reid and Plank, ; Webster, ; Wilkinson, , for thoughtful discussions of the evolution of industrial marketing scholarship. The early momentum in industrial marketing research had appeared to stall for a short period between the mids and mids.
Indeed, by the early s E. Raymond Corey3 Professor of Marketing at Harvard Business School for over forty years, and one of the founders of the Harvard Business School Press in was lamenting the paucity of scholarship on industrial marketing. Corey introduced a text on cases and concepts in industrial marketing and taught what is regarded as the first university course dedicated to industrial marketing in at the Harvard Business School Vargo and Lusch, Contributions from numerous researchers cf.
Robinson, Faris, and Wind, ; Heinritz, ; Webster and Wind, ; Sheth, ; and Choffray and Lilien, laid the foundations of the field and raised its profile in areas such as organizational buying behaviour and industrial marketing. This resulted in hundreds of papers being published by scholars being drawn to the emerging area of industrial marketing Johnston and Lewin, The mid-life crises had been averted. It is to these topics that we now briefly turn.
In so doing, we issue a caveat concerning the period in which our discussion is framed. A second caveat refers to the extent to which industrial marketing scholars can fairly lay claim to these topics, given that they are also in some cases distinct fields in their own right e. Nevertheless, we have endeavoured to restrict our discussion where possible to recognised industrial marketing scholars. Although admittedly much of the content in such classes was probably devoted to the issue of retail sales to the public, we might assume that some pioneers were already thinking about the marketing practices that occur within the supply chain.
It is not surprising that early studies in industrial marketing emphasised selling given that much of the early momentum in marketing scholarship take place against a backdrop of financial hardship in the early- to mid-part of the 20th century.
The sales era is one regarded as companies promoting hard-selling techniques, and the customer frequently taking a secondary role to profit Friedman, This coincided with the Great Depression, which ultimately forced companies to pay more attention to the needs of customers. Particularly notable during this period is the efforts of Justus G. Frederick and his text Modern Salesmanagement, in which he emphasises the importance of sales strategy, territory management and expounds the qualities of sales personnel in a comprehensive text for its time providing coverage of 34 sales-related topics.
This work was later advanced by Thomas who published on aspects of interpersonal purchase influence in organisations in the Journal of Consumer Research.
Industrial Marketing Strategy Summary
Fearon, for an insightful historical discussion of the evolution of the purchasing function. The first New Deal , witnessed the inception of the National Recovery Administration, which oversaw the policy decision to set maximum prices and wages, and attempts to control cutthroat competition. These necessitated businesses to manage their buying decisions and budgets more carefully. Against this backdrop, there was considerable optimism over the broader role that marketing could play during the Second World War and in a post-war world with the promotion of democratic forms of government cf.
This said, early contributions around product development can be found in industrial marketing scholarship. For example, in the first edition of the Journal of Marketing, Bernard Lester emphasised the importance of invention and new product creation. However, considerations of NPD and innovation in marketing and industrial marketing literature have been somewhat limited. Even as recently as the s, academics were bemoaning the paucity of research on innovation and new product adoption within industrial marketing Webster, , and marketing management in general Shaw, Despite some insightful contributions on NPD and innovation from industrial marketers Mansfield, ; von Hippel, ; Souder and Chakrabarti, ; Choffray and Lilien, , , such studies are relatively few in number.
Hoyt and Percival White , in their research on scientific marketing management. It was, however, arguably not until the s and 60s, with pioneering companies such as General Electric Business Week, June 24, that marketing management became more prominent in the corporate planning and strategy process Biggadike, Although, curiously, much of this marketing strategy literature was being developed by non-marketers Wind and Robertson, Unfortunately, the influence that marketing and marketers enjoyed in the broader strategy literature has been in decline since this period cf.
Day, ; Wind and Robertson, This situation is perhaps best summed up by Ames who, in examining trappings vs. This said, however, the nature of exchange and relationships between organizations and social actors is long-standing, and has been a subject of interest in the broader social sciences literature for some time Bagozzi, ; Levine and White, ; Tadajewski, Indeed, interest in various facets of dyadic relational exchange can be traced across all areas of the social sciences in sociology Lombard, ; Riley, , psychology Roe, ; Husband, , organizational behaviour Aldrich and Whetten, , and even human resources Kirchner and Dunnette, , where the main headway in research was being made outside of the marketing field.
Previous marketing scholarship focused on the level of individual firms or entire channels of distribution Achrol et al. This trend continued to be reversed from the s onwards with growing interest in the concept of relationship marketing and relational exchange in mainstream marketing Dwyer et al.
Indeed, work in the 70s by Bonoma, Zaltman and Johnston provided early perhaps the first conceptual dyadic and network models of buying behaviour. What then can we take from the foregoing discussion in terms of identifying and understanding the ebbs and flows of industrial marketing discourse? Although the focus of scholarly research in marketing has and continues to be from a perspective of consumer marketing, much to the lament of some industrial marketers, Webster predicted that industrial marketing would grow as a discipline due to the distinctive nature of the topic, a prediction that seems to have been vindicated.
The field has not been without its detractors, however; Fern and Brown maintained that industrial marketing did not warrant a separate specialist sub-field of study. The present special issue also has a role to play in theory development and reflection on industrial marketing scholarship.
So, having taken stock of prior theoretical developments in industrial marketing research, what are the larger ebbs and flow that are revealed?
Almost a century of scholarship has passed in industrial marketing and its foundations have been established. The industrial marketing literature has the custom of producing research that has relevance for its constituent audience practicing managers and not merely for internal consumption for other scholars. Industrial marketing research is characterised by contrasts, with studies using a wide range of methodological approaches and research traditions i. Although the representation of industrial marketing themed papers in leading journals e. Journal of Marketing tends to be rather limited, those papers that are published often receive very high citation figures.
Indeed, the Journal of Marketing paper by Shelby Hunt a contributor to this special issue and Robert Morgan is one of the most highly cited marketing papers outside of the marketing discipline. With the Industrial Marketing and Purchasing annual conference, and the Institute for the Study of Business Markets, as well as its scholarly journals chiefly IMM , industrial marketing has created a highly engaged community of scholars. Ebbs: As well as these flows, industrial marketing scholarship faces a number of challenges. LaPlaca and Katrichis, For example, although outlets such as the Journal of Consumer Research first published in ; a similar period to IMM , were introduced with the stated editorial remit to explore all aspects of consumers and consumerism including buyers in a conventional business-to-business sense; see Thomas, , a strong bias towards research in consumer behaviour has remained evident.
Reflecting on these ebbs and flows in industrial marketing management research, we may ask the question - how is theory commonly used in industrial marketing research? Only limited success has been achieved in developing mid-range theory In addition, a widely accepted General Theory of marketing has yet to be formulated and adopted by the marketing research community. Nevertheless, there is a wealth of general theoretical models that marketing researches use, both implicitly and explicitly, to guide their research. General theories are intentionally both broad and integrative and removed from any specific social setting e.
This means that they are broad enough to be used to explain a larger number of phenomena, while at the same time their integrative nature means that their use serves to unify less general theories Brodie, Saren and Pels, The explicit use of general theories provides an invaluable indication as to how and why theoretical unity may be attained in some situations. In addition, general theories may also explain key problems in attaining this unity. General theories differ from the common mid-range theories typically used to explain industrial marketing and network phenomena.
Mid-range theories are closer to the social data and seek to provide a theoretical bridge between empirical findings and general theory Merton, For example, the mid-range theory, dissonance theory, is neither a collection of empirical observations made of a certain culture at a certain time i. In industrial marketing management we have the example of social exchange theory which views social change and stability as a process of negotiated exchanges between parties: Blau, as a commonly used mid-range theory.
Of relevance to industrial marketing researchers, Hult reviewed thirty-one organization theories that could provide mid-range theoretical support for the study of marketing organization, which lends further support to the importance and interest in the growth of industrial marketing as a discipline. It is fitting given the remit of the special issue that many of the authors have played an important role in advancing the topic of marketing industrial and general over many years. The papers in this collection will help provide guidance and shape thinking for both students and scholars alike through the corpus of industrial marketing research as we embark on a second century of industrial marketing marketing scholarship.
We sought contributions that would help to build stronger theoretical linkages between the industrial marketing literature and the common issues it identifies in industrial marketing practice, and general theory. There are two types of contributions to this special issue.
On the one hand, we have a number of invited papers from leading thinkers in the field of industrial marketing research. On the other hand, we have a number of competitive papers that were selected from those submitted to our call for papers. All papers were subject to review. These papers fell into four broad themes; i general theoretical approaches to industrial marketing research, ii the choice and use of mid-range theory, iii methodology in industrial marketing research, and iv clarifying concepts in industrial marketing research.
We present each of these themes in turn. We have three invited and three competitive papers addressing this topic. Our first paper, invited from one of the most well known and respected theoreticians in marketing Shelby Hunt, explores the relationship between a number of key theoretical and research perspectives. They combine the general advancements of Darwinism in social science with the recent Darwinian-inspired theorizing on business relationships. A significant implication of their review is that investigations into the evolution of business relationships should account not only for the mechanism of selection but also for the mechanisms of variation and retention, in order to take proper account of the Darwinian explanatory paradigm.
They put forward suggestions on how central Darwinian mechanisms could be warranted and conceptualized in a theory explaining the evolution of business relationships. The fourth paper, a competitive paper by Michael Ehert entitled Emergence of business markets — A critical realist foundation for open-system-theories of business markets, focuses on the use of critical realism as a basis for industrial marketing research.
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Ehert argues that while the epicentre of value creation has been shifting from the vertically integrated firm to the network of connected businesses, marketing research is short of explanations for the emergence of business markets. He maintains that critical realism and Archers morphogenetic model in particular provides an ontological foundation for theories of business markets, by disentangling agents, structures and relationships as distinctive forces that stimulate and shape the rise of business markets.
The article presents a critical realist ontology of business markets, an agenda for the research of business markets and managerial implications. Based on an extensive metatheoretical review, the study shows that these approaches are based on incompatible theoretical assumptions and cannot be integrated into a general relationship marketing theory. By constructing an articulated theory map, the paper provides a positioning space and analysis of five approaches to business marketing: CRM, behaviorally driven relationship marketing, channel relationships, market as networks and actor relationships, and focal networks and strategic nets.
The paper then suggests pursuing the development of two middle-range theories: market-based business marketing and network-based business marketing. These developments are used to offer an articulated research agenda for advancing business marketing theory and a discussion on the possibility of a general theory of marketing. Our final paper in this theme comes from the editors of this special issue. The paper by Linda Peters, Andrew Pressey, Markus Vanharanta and Wesley Johnston entitled Constructivism and critical realism as alternative approaches to the study of business networks: Convergences and divergences in theory and in research practice examines the implications for understanding the practices of researching business networks that result from the ontological paradigm choices that researchers make.
Drawing on data from an in-depth investigation of a construction project undertaken in the UK, they apply these research traditions to a managerial phenomenon, specifically the practice of novation in temporary organisational networks.
In so doing they examine what we may realistically learn from each approach and ask what are the implications for the practice of research. However, due to the quest for explanatory simplicity, mid-range theories are often implicitly dependent upon general theories. This can provide mid-range theories with the required ontological positioning and a more in-depth grounding. As a result, mid-range industrial marketing theories are often theoretically indebted to general theories in a way that is difficult to indicate by referencing alone. This also means that mid-range theoretical conceptualizations cannot afford to lose track of the overall progress made at the level of general theory, as omitting the general level of theorizing can also lead to mid-range theories losing their deeper coherence.
Overly simplistic mid-range theories may hence fail to do justice to the complex ontological and epistemological nature of industrial marketing interactions and the process orientation of much industrial networks research. Problematically, mid-range and empiricist research in industrial marketing has made relatively limited progress in attaining theoretical unity in our understanding of buyer-seller relationships and industrial networks. For example, it is clear that blind empiricism cannot guide our knowledge towards a more unified theoretical understanding e.
Bierstedt, , Freese, a, b. At what level of abstraction ought these propositions to be aimed? In addition, it is not clear how might insight into various middle-level constructs eventually meld into a unified theory? We therefore asked, in our call for papers, for work that examined how the choice and use of mid-range theories might better reflect the underlying ontological and epistemological assumptions of a general theoretical perspective. We have one invited and two competitive papers addressing these issues.
In the invited contribution Causal Social Mechanisms; from the what to the why, Katy Mason, Geoff Easton and Peter Lenney focus on what Merton called theories of the mid- range, specifically his theory of casual social mechanisms. They describe the birth and development of the Causal Social Mechanism movement and explore various possible ontologies in terms of their compatibility with the concept.
They suggest that the Causal Social Mechanisms approach is useful in helping theoreticians work across multiple ontologies and so offers significant opportunities for theory development. Their approach, based on the practice-turn, describes practices, translations, as well as mediations of change within the business network. This is suggested as an alternative to traditional business marketing perspective e.
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Case study based, they analyse the UK pharmaceutical distribution network between and Of particular interest are the network dynamics i. By analysing the UK pharmaceutical network as a case and by exploring the processes of interactions, translations, and mediations in this unstable network, the paper contributes to the growing body of literature on network dynamics and reinforces using a practice perspective within the INA.
The second competitive paper, The structuration of relational space: Implications for firm and regional competitiveness by John Nicholson, Dimitrios Tsagdis and Ross Brennan draws upon structuration theory and economic geography to explore spatial embeddedness in business relationships. They propose a conceptual framework built around the processes of proximation and distanciation, which they argue can be either competitively generative or competitively degenerative.
Instead, businesses in the s relied on formulas for planning as part of their company strategies. Because of the conglomeration wave of the s, many managers found themselves with diverse companies and they did not know how to allocate resources prudently to the multifarious units.
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Instead, they turned to consultants to provide advice based on various formulas for planning. The formulas, however, tended to stem from business theory and not from practice. Hence, they largely proved to be ineffectual. Consequently, strategic thinking grew in the s and s in response to the formulaic, theoretical approach to marketing theory in the s. Strategic thinking focuses on competitive advantage, consumer needs and wants, creativity, and flexibility. Competitive advantage refers to gaining a superior market position and therefore higher profits by offering better products, prices, promotions, convenience, or service than competing companies.
Industrial Marketing Strategy (Wiley Series on Marketing Management)
In a sense, competitive advantage includes all the other elements of strategic thinking—customer satisfaction, creativity, and flexibility—in that each of them can provide a company with a competitive advantage. Marketing strategy is the result of decision making by corporate executives, marketing managers, and other decision makers. In general, the formal organizational titles or jobs of decision makers, or the nature or purpose of the organization, are irrelevant to the formulation of marketing strategy.
When the decisions concern products or markets, the results—i. In a narrow sense, marketing strategy is a specified set of ways developed by marketers to achieve desired market ends. Jerome McCarthy and William D. Perreault Jr. In a marketing planning context, where marketing strategy tends to be developed, McCarthy and Perreault indicated that marketing strategy planning means finding attractive opportunities and planning ways to capitalize on such opportunities.
In a broad sense, marketing strategy is composed of objectives, strategies, and tactics. Objectives are ends sought. Strategies are means to attain ends, and tactics are specific actions—i. A marketing objective of increasing market share is linked to the marketing strategy of altering the product line in order to reach new market segments and to the marketing tactic of introducing a new brand name and various promotions for a targeted portion of the market. Marketing strategy is developed at different levels of an organization the hierarchical dimension , across core marketing functions the horizontal dimension , and for marketing execution and control functions the implementation dimension.
Strategy is usually developed in a hierarchical fashion from top to bottom; for example, there could be several layers of objectives where each objective is a function of a superstructure of superior objectives, and a determinant of subordinate objectives except for the highest and lowest levels of objectives. Higher-level decisions—the superstructure—act as constraints on the one hand, and guides or aids for decision making on the other. The organization levels could include the overall corporate level, strategic business units, product markets, target markets, and marketing units, depending on the complexity of the organization.
Any functional level of marketing, in turn, can have additional levels of marketing strategy decisions where refinement of the strategy might take place. For example, in the advertising component of the promotion function, the organization might develop marketing strategy consisting of advertising objectives, advertising strategies, advertising themes, advertising copy, and media schedules.
In addition, because of the growing customer emphasis of marketing, marketers have added new customer-oriented components to the marketing mix: customer sensitivity, customer convenience, and service. Contemporary approaches to marketing often fall into two general but not mutually exclusive categories: customer-oriented marketing strategies and competitor-oriented marketing strategies. Since many marketers believe that striving to satisfy customers can benefit both consumers and businesses, they contend that marketing strategy should focus on customers.
This strategy assumes that customers tend to make more purchases and remain loyal to specific brands when they are satisfied, rather than dissatisfied, with a company. Hence, customer-oriented marketing strategies try to help establish long-term relationships between customers and businesses. Competitor-oriented marketing strategy, on the other hand, focuses on outdoing competitors by strategically manipulating the marketing mix: product, price, place, and promotion.
Competitor-oriented strategies will lead companies to imitate competitor products, match prices, and offer similar promotions. This kind of marketing strategy parallels military strategy. For example, this approach to marketing strategy leads to price wars among competitors. Successful marketing strategies, however, usually incorporate elements from both of these orientations, because focusing on customer satisfaction alone will not help a company if its competitors already have high levels of customer satisfaction and because trying to outdo a competitor will not help a company if it provides inferior products and customer service.
Marketing strategies can be identified by the goals they attempt to accomplish in order to boost company profits. The three basic marketing strategies include price reduction for market share growth , product differentiation, and market segmentation. The market share strategy calls for reducing production costs in order to reduce consumer prices. Via this strategy, companies strive to manufacture products inexpensively and efficiently and thereby capture a greater share of the market. According to this strategy, companies avoid diverse products lines and marginally successful products and allocate minimal funds to product development and advertising.
The competitive advantage this strategy offers is the ability to provide products at a lower price than competing companies. Companies implementing this strategy cut their profit margins and rely on sales volume to generate profits. The price reduction strategy, however, has three drawbacks: finding markets without or with few low-cost retailers, losing flexibility because of limited product line and limited market, competing with other companies using the same strategy.
The product differentiation strategy involves distinguishing a company's products from its competitors' by modifying the image or the physical characteristics of the products. Unlike the market share strategy, product differentiation requires raising product prices to increase profit margins. Companies adopting this strategy hope that consumers will pay higher prices for superior products or products perceived as superior. As a result of this strategy, companies usually either achieve high profit margins and a low market share such as luxury car manufacturers or they achieve slightly higher profit margins and a moderate to large market share such as popular food brands such as Kraft and Heinz.
This strategy depends on the production of quality goods, brand loyalty, consumer preference for quality over cost, and ongoing product innovation. Nevertheless, product differentiation has a couple of disadvantages. First, competing companies often can easily imitate products thereby undercutting product differentiation efforts. Second, companies cannot raise their prices too high without losing customers, even if they provide better products.
Market segmentation refers to the process of breaking the entire market into a series of smaller markets based on common characteristics related to consumer behavior. Once the market is divided into smaller segments, companies can launch marketing programs to cater to the needs and preferences of the individual segments. Moreover, companies can choose to court all the segments of the market through "differentiated marketing," to concentrate on one or two of the smaller segments overlooked by other companies through concentrated marketing niche marketing , or to focus on very small markets or even individual customers through atomized marketing.
Market segmentation also can involve the other two strategies, because marketers can target various segments using a price reduction strategy or a product differentiation strategy. If a segment grows, however, large competitors can begin targeting it as well. Companies that focus on one or two segments also are vulnerable to changes in the segment's size and preferences. Hence, if the segment dwindles or its tastes no longer correspond to a company's offerings, a company's revenues can fall precipitously.
Furthermore, marketers also have developed specific strategies for specific kinds of marketing obstacles, which may serve as part of a general marketing strategy. Moreover, parts of general marketing strategies can be implemented for narrower ends. For example, in Marketing Strategy, Orville C. Walker, Harper W. Boyd Jr. Their marketing strategies included a plethora of specific marketing strategies for a host of situations: pioneer strategy, follower strategy, fortress strategy, flanker strategy, confrontation strategy, market expansion strategy, withdrawal strategy, frontal attack strategy, leapfrog attack strategy, encirclement strategy, guerrilla attack strategy, divestment strategy, global strategy, national strategy, exporting strategy, pricing strategy, channels strategy, and promotion strategy.
In addition, Joseph P. Guiltinan and Gordon W. Paul, authors of Marketing Management, outlined primary demand strategies and selective demand strategies. They also developed product-line marketing strategies, including strategies for substitutes line extension strategies and flanker strategies and strategies for complements leader strategies, bundling strategies, and systems strategies. The primary demand strategies included user strategies increasing the number of users and rate of use strategies increasing the purchase quantities.