In 2000, Victor Keegan wrote in the Guardian that it was difficult to move without hearing the sound of crashing dot-com companies. The expression "dot-com" had become, in itself, a sassy suffix for coolness in business. Any company that didn't embrace the Web for selling (and purchasing), would be smothered by those that did. "So what went wrong?" asked Keegan. Nearly all the early claims of the Internet were, and still are, true. Yes, it is an all-embracing change that will transform the way we do business, the way we are educated, and the way we are entertained. What the preppy-preneurs forgot, however, was the importance of two rules of the old economy and one of the new. As well as the usual problems facing start-up companies, the first generation of dot-coms failed to understand the nature of the beast they had embraced: on the Internet the consumer, not the producer, is king.
Our research and analysis of the success of organizations like Dell shows that it is essential for marketers to understand the significance of the new marketing paradigms based on the interactionist model, for them to then elicit the tensions and dilemmas that result for their own business, and to then seek creative reconcilations for each dilemma. In this way, new innovative solutions and new ways of doing business will result from the extraordinary potentialities of the Internet in marketing.
Chapter 9:
Dilemmas of Strategic Marketing
OVERVIEW
So far we have mainly considered aspects of "operational marketing" that deal with the problems of the application of marketing tools across cultures in order to realize the detailed marketing aims of the organization and the evaluation of the effectiveness of these activities. Because marketing is a major factor in the profitability of companies, senior management must be able to coordinate all these marketing efforts with the other aspects of the business.
We must, therefore, now turn to "strategic marketing." This is the process of formulating marketing strategy, based on examining and analyzing the environment and organization, formulating strategic aims and the ways of reaching them. The effort and necessary resourcing in strategic marketing is often proportional to the intensity of competition in the market place.
Evidence from both THT's WebCue research tools and our clients identifies key areas of most concern. These are:
Falling prices and thus increasing price competition.
An overall rise in competition as more suppliers compete for customers across the globe and as markets become increasingly oligopolistic.
The increasing requirement to seek higher and higher levels of customer satisfaction through the role of the customer service function.
Many of these changes owe their origin to declining product (and service) differentiation and thus the race is accelerating towards new sources of competitive advantage. In the continuous stream of innovative products and solutions, the strategic marketer has to live with the consequences of short product life cycles, rapid loss of early advantage in the market, and the corresponding fall in prices to retain market share with the ever-falling gross margins that result. In the service sector, the key issues manifest as the rising emphasis of the quality of service rather than pricing.
Already, or in only a few more years, these changes will continue to result in:
fewer and larger players through consolidation of competition and mergers and acquisitions,
the changing requirements and value systems of customers, and, of course,
the globalization of markets and competition.
Strategic marketing has had to change - but must do so even more in the future. Already we have seen marketing shift from a (specific) separate function to being diffused throughout channels, product ranges, or technologies. Marketing as originally conceived is gone, but some new framework for marketing is essential through which organizations can survive in their increasingly hostile markets. In our language and conceptual thinking, strategic marketing faces a number of key dilemmas as a result of these transformations that we can now explore. Organizations that can continuously reconcile these dilemmas will survive in the future.
For convenience we can classify these dilemmas of strategic marketing as:
The top-down versus bottom-up dilemma.
The inside-out versus the outside-in dilemma.
The lateral tension between different alternative activities (such as sales and R&D).
THE TOP-DOWN VERSUS BOTTOM-UP DILEMMA
According to Al Ries and Jack Trout, notorious marketing gurus from the US, a lot of organizations follow a dead-end street. The authors of best sellers such as Positioning, The Battle for your Mind, Bottom-Up Marketing, and Marketing Warfare argue for an alternative to the path that the business in America has generally followed. Loaded with examples, everything must be turned "upside-down" (Ries and Trout, 1982, 1989, 1997). You no longer start simply with a strategy but with a tactic. It is not top-down but bottom-up that brings glory, and a broad product scale also leads to calamity. If you are focused, you can master the competition.
They make the point by representing a mirror for the overly traditional approach of top-down strategic marketing thinking. In their work one extreme approach needs to be abandoned and exchanged for another. But the more skeptical European spirit would probably be persuaded by a less extreme proposition. If we look closer, using the same lenses we use throughout this book, we can see that - once again - a series of dilemmas must be reconciled.
According to Ries and Trout's books, positioning theory in the human mind has a limited number of places available for the organization and its products to fill. This is very easy if the position is open, but very difficult if a competitor has already taken that place. General Motors, for example, never tried to take over the position of the Mercedes with the Cadillac. Repositioning of the competition, though, would be a possible approach.
Most writers take this new view that marketing is not a one-dimensional process of serving a customer. The nature of modern marketing is one of being more malignant, stronger, and richer in purpose than the competition. Marketing is war and the competitor is your enemy. The position and its ground must be conquered. How is that best done? By what Ries and Trout have called bottom-up marketing.
But just what is the value of a strategic plan if you cannot predict the movements of a competitor? Nevertheless, each day, piles of strategic marketing plans are written. They are rather like owning a surrealist painting, say one by Salvador Dali. You don't have a clue what it represents, but you'd miss it if you suddenly had a blank wall. We shouldn't start with internal matters such as strategic plans, missions, budgets, and aims. These limit the freedom of movement of the top marketer.
We quoted from the introduction to Bottom-Up Marketing in our parent book to this series. It is relevant enough to bear repetition here: "In almost every category, today's business arena has become warlike. We agree that this change in the environment has made the traditional "top-down" (only) approach to marketing obsolete. What good are long-term strategic plans when you cannot predict future competitive moves? How can you react to a competitor if your resources are tied up in a long-term plan?" But you do need to reconcile across this top-down, bottom-up dimension.