The Manager’s Guide to Competitive Marketing Strategies (2nd edition)

Citation

Hova´nyi, G. (2001), "The Manager’s Guide to Competitive Marketing Strategies (2nd edition)", European Journal of Marketing, Vol. 35 No. 1/2, pp. 212-218. https://doi.org/10.1108/ejm.2001.35.1_2.212.2

Let me begin with a case that reflects the spirit of marketing: the publication of a second edition of Norton Paley’s book testifies at the same time the managers’ need for a marketing guide in strategic planning as well as the fact that the author’s work successfully meets this demand in the market. The success is guaranteed mainly by the all‐embracing view of problems related to marketing strategies; by the equilibrium of concepts and techniques to choose and carry out the right strategy; and last but not least by the incerted and concise case studies, examples taken from everyday business life to cast light on the real problems and influencing factors of competitive strategies – and to prove also the efficiency of the recommended marketing and managerial techniques. All this is supported by the expertise and routine of the author who has already written four books on marketing strategy, one on price strategy and one on marketing for non‐marketing executives.

The first part of the book deals with the classical military strategies and the adaptation of these to marketing strategies. The merit of this part of the book is the enumeration of characteristic conditions where the different strategies can be realized with success. However, this is combined with one small feeling of want: in our globalized world many businesses are forced to use defensive strategies (e.g. in conditions of global financial “tide‐races”) which received less attention from the author.

The next part of the book is dedicated to the external and internal analyses needed to establish a sound marketing strategy. The strong parts of the external analysis are the segmentation of the market, the characteristics of consumer behaviour and the pitfalls to avoid when analysing demand; the measuring of competitors’ strong and weak points with the aid of a detailed checklist; the technique of the analysis of the industry (which is based on Michael Porter’s well‐known model); and the use of the PEST technique for the analysis of the environment, completed with cultural and legal factors, which are more and more important in day‐to‐day competition. The problems of industrial buyers are overshadowed in this part of the book and I missed also the problem of “fighting” and “matching” competition mainly from the point of view of follower firms (either in R&D, in technology or in their market position) as well as the presentation of the new requirement: that all functional units of the firm must take part in the “full analysis process” of competitors, taking into account all their resources, their whole operation and also their revealed strategic goals. The internal analysis has also many strong points: the appraisal of the different forms of organization, the relation of quality and consumer satisfaction, the presentation of the BCG experience curves to find out the right price strategy, the presentation of judgmental methods for sales forecasting, the pros and cons of the use of the BCG, GE and AD. Little matrices to analyse the firm’s portfolio (this problem is overcome by a detailed checklist), and the characteristics of different techniques (ROI, cash flow, break‐even, etc.) for a financial analysis. When reading this part of the book one can make allusions also to some new concepts, e.g. the “targeted quality” concept directed to exact market segments or niches even in a globalized world; the idea of marketing only “services” to customers but with products as hardware elements; the decision making in a portfolio analysis which is based not on linear cost and revenue advantages but on the criteria for product or market compensations; and the financial analysis taking into account also the maximum of bearable risks and the minimum of required flexibility, etc.

The analytical part is followed by the presentation of the principles and main problems of a marketing intelligence system (MIS) and the tasks and tools of marketing research. Here the difference between MIS and marketing research is stressed. The role, structure, relation and use of the World Wide Web (WWW) and the databased management systems are outlined as well as the detailed functions of a competitor intelligence system (the latter based on Michael Porter’s ideas). This is followed by some technical questions: the generation of primary data and the effective research on the WWW. The train of thought is closed by problems of the marketing mix and the image of the product. To complement all this a presentation of the basic characteristics of today’s widely offered systems (SAP, Oracle, etc.) would have been useful, including the co‐operation requirements of the firm’s functional units when establishing and running a MIS system. Also the marketing research practices recommended in the case of industrial goods could have received more attention: these will need more and more specific research techniques in conditions of the spreading network systems in production and the always keener competition of demand and supply on our shrinking globe.

The next problem area is that of strategic marketing planning. The tasks and different characteristics of long‐ and short‐term planning are well outlined. The importance to answer accurately the question of “what is the business we are in?” is stressed. This is followed by the problem of business portfolio, where the recommended solution is based mainly on Ansoff’s strategies for diversification. However, these concepts and techniques raise some further questions: in strategic marketing planning not only the already mentioned risk and flexibility factors play an important role, but also the timing (the point of time and time span of planning, the need of rolling the plan to have always the optimal time horizon, maybe the continuous planning process to react immediately to the challenges of the environment, etc.)!Ansoff’s matrix is for growth strategies; what should be the right strategy if the market or the market share is shrinking, or if the product becomes outdated? What are the pitfalls in planning strategic alliances or multi‐level network systems? How far does the “learning organization” concept influence the strategic planning process at corporate level? This could be completed with some even more specific problems of marketing strategy, e.g. what are the long‐term achievements of marketing and business strategy if a firm removes its less competitive products and technologies to less developed regions or countries (this was BAT’s strategy in Eastern Europe)?

The marketing plan chapter deals with planning guidelines, taking one by one the “starting points” (namely customers, consumers, competitors, products, marketing opportunities and objectives) and – after demonstrating the application of strategies and tactics – outlines a scheduled marketing plan and presents a technique to evaluate the plan. All this is based on the well‐known concept of “4Ps”. This concept of the author could be complemented partly by some new “Ps” (e.g. by product line, procurement, personnel, partners, post‐sale services and passing time, following the 10P concept), partly by the co‐operation of the firm’s marketing organisation with other functional units when preparing and making the marketing plan final.

The merit of the book’s next chapter is the clear presentation of the strategy application of market dimensions and of horizontal, vertical and lateral diversifications. These are the basic elements of specific competitive strategies. On this basis, successful product and service strategies can be developed – and to this the author indicates the main problem areas and presents the techniques for positioning and repositioning, product and product life‐cycle planning, choosing and fitting together the right elements of a marketing mix, etc. This part of the book could be complemented with the concept of “parameter equilibrium” of products (but conceding the important role of a “pushing parameter” on the market) and the useful new technique of positioning, where the horizontal axe is always the price axe and, as a consequence, the different systems of co‐ordinates can be easily integrated – suggesting ideas also to the firm’s R&D people how to realize the parameter equilibrium of a new product in the broad field of competitive products.

The next three chapters deal with the other three traditional elements of the marketing mix: the pricing, promotion and distribution strategies. Of the different types of pricing strategies 11 are named: the skim, penetration, psychological, follow, cost‐plus, slide‐down, segment, flexible, preemptive, phase‐out and loss‐leader pricing strategy. This very detailed grouping is complemented not only with definitions of the different types but also with the typical conditions of firms and environments needed for the success of a given strategy. It would be interesting to adapt these pricing strategies to conditions of network systems, where the individual organizations have to think in common consequences of their price policies, covering the costs of their isolated R&D, procurement, logistical, manufacturing, servicing, etc. activities. This should be a new “network pricing” concept. The promotion strategy has to be based on preferences of potential buyers: these give the directives to chose the advertising objectives, the media and the advertising copy. All this has to fit into the development of an advertising campaign consisting of 16 characteristic steps – and the chapter gives full details of an “ideal” campaign. A separate list of activities helps to make the “advertising investment” more productive. This is followed by the enumeration of sales promotion techniques, presenting also the advantages and disadvantages of the different techniques. This very concise part of the book could be supplemented by the efficiency of the different media, taking into account not only the characteristics of products but also the customers’ rapidly changing use of new information and distribution channels. (The role of the Internet received an undeserved small part in this chapter …) The presentation of the distribution strategies starts with the main characteristics of the different systems (i.e. exclusive, selective and intensive distribution); this is followed by criteria for selecting the right distributor. Two new viewpoints can be added also to that topic: the fitting together of the partner companies’ culture and value systems as well as the “compatibility” of the partners’ information, decision and interest systems.

The last part of the book deals with problems of the global marketing perspective and those of strategic teams. The global perspective on today’s market is demonstrated by the example of Sony Corp. – a trustworthy example. This is complemented by a comparison of entry strategies for global markets, namely exporting, licensing, joint venture, wholly owned subsidiary and management contract entries. Alas such “new” phenomena as M+A, strategic alliances, the entry strategy of SMEs (e.g. as satellite companies) are not analysed in detail, and the problem of changing the firm’s trajectory, the risks and needed sacrifices in R&D, technology, human and financial resources, etc. needed for change are not mentioned. The roles and responsibilities of strategy teams, including the identification of opportunities is correct, but the problem of threats (what will be more and more important in a global market also for the strategy teams of the future) is missing.

We find in the Appendix a carefully planned checklist for developing competitive marketing strategies.

Summing up

I can stress that Norton Paley’s book is a basic aid for managers who want to be acquainted with the tasks, elements and structures of competitive marketing strategies. Managers engaged in strategic marketing planning can acquire an integrated perspective on the topic and can find many new ideas and techniques in the different chapters. Over 60 short case studies give a statuesque background to all these concepts and recommended techniques. Norton Paley’s writing is also an excellent starting point for managers to think about some new symptoms on the global scene: especially the role of IT and the future requirements of e‐business; the new relations of marketing and the firm’s other functional units when the borders of functions will become more and more “aerial”; the changing role of SMEs in conditions of an always accelerated concentration of “big businesses”; and last but not least the new role of managerial concepts and techniques to answer the unexpected challenges of world‐wide competition.