SCHOLAR PAPER
A marketing audit starts with a good understanding of the market, the competitive strategy and positioning of the company. Considering the best practice in strategic planning, the marketing head or the entrepreneur should analyse and then conclude if the existing strategic positioning is still adequate.
There are quite a lot of available guidelines online that you could use when doing the audit but be flexible about it. The idea is to look at the strategy first and then look at the tactical level and the allocated resources for the activities.
A good marketing specialist will easily identify the issues based on past experience and will recommend resolutions based on best practices.
Aim for coherence in positioning
The most common issue I encounter when analysing the market and then the strategic positioning is the lack of coherence in positioning. You will find a value proposition stated on the company website, you will then chat with the CEO and find out a different perspective and of-course talk to several other key persons in the company and you either hear other versions or they don’t particular know a lot about it. Moreover, some companies do not have a written competitive strategy so they rely entirely on the CEO for the vision and directions but fail to break it down into measurable marketing objectives and clear marketing communication.
In my experience, a lot of executives (managers and entrepreneur) when asked if they have a drafted Competitive Strategy Document made available to senior managers, do not often responded affirmative and do not have a written strategy document regularly revised but the senior management. I believe one cannot aim to create long-term growth for a company if does not understand the premises of business development. Long-term growth requires competitive strategies not just tactical proficiency.
Consider some of the critical literature
In order to review the competitive strategy, the Chief Marketing Officer should be aware and consider some of the critical literature on business strategy and business development. I do consider it important as this constitutes the foundation for most of the best practices in marketing and most of the management consulting and strategy firms are using them when reviewing a strategy, auditing the marketing performance or recommending a strategic positioning for large global companies.
“I consider myself a “social ecologist,” concerned with man’s man-made environment the way the natural ecologist studies the biological environment…’’ said Peter F. Drucker, the famous American economist and management theoretician. The social ecologist consisted in his methodology that was often used in teaching, consulting and his essays. This methodology and also the trends identified by Drucker are useful for determining the premises of strategic planning. [1] (Peter F. Drucker, 2004)
Identifying the upcoming trends
Identifying the upcoming trends is a distinct thing to predicting the future. The first lacks the precision of a prediction and concentrates on directions and patterns, considers Joseph A. Maciariello, a close collaborator of Peter F. Drucker. He adds, a social ecologist tries to understand the patterns in the trends and separates the atypical to the real changes. Hence, the work of a social ecologist is very much different to the work of the futurologist, whom tries to foreseen, postulating possible, probable, and preferable futures but without concrete proofs.
He believes the top management can harness the emergent trends and can use them to build a new future for their organisations and businesses thus achieving and competitive advantage. This is considered to be a proactive attitude not a reactive one. [2] (Joseph A. Maciariello, 2016)
In his paper, ‘Identifying the future, The Daily Drucker’ (2004), Peter F. Drucker considers that the most important work for the management is to identify the changes that already happened. The true challenge in the society, economy and politics is to exploit the changes that already happened and to turn them into opportunities. It is important to identify the ‘future that already happened’ and to develop a methodology to identify and analyse these changes.
The seven windows of opportunity for innovation
Some of these methodologies are listed in his book from 1985, Innovation and Entrepreneurship, which shows how to look at society changes, demographic changes, changes in semantics and science & technology as opportunities to build the future. Maciariello explains that these methods consist in searching for seven windows of opportunity for innovation and chasing one or more as strategies for innovation.
The seven windows of opportunity for innovation are: 1. Unexpected success and failure 2. Incongruence, 3. The necessity for processes 4. A change in domain or market structure 5. Demography 6. Changes in perception and 7. New knowledge.
Stakeholder theory and strategic management
Let’s look at Alfred D. Chandler’s work, which was among the most influential in guiding early business policy scholarship. A business historian, Chandler defined strategy as “determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Chandler 1962: 16). This definition embraced the notion that a firm should establish goals, strategies to achieve them, and an implementation (allocation) plan, but it did not address the essential role Stakeholder theory and strategic management strategy plays in linking the firm to its environment. Shortly thereafter, H. Igor Ansoff discussed strategy in terms of product/market scope, growth vector, competitive advantage, and synergy (Ansoff 1965). With its emphasis on market factors, Ansoff’s definition is more oriented towards the external environment. Ansoff rejected the core of stakeholder theory by establishing a typology of objectives as “economic” or “social,” with the social objectives playing the less important role of constraining or modifying economic objectives.
Four components of strategy
Around the same time, Learned, Christensen, Andrews, and Guth defined strategy as “the pattern of objectives, purposes, or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be” (Learned, Christensen, Andrews, and Guth 1965: 17). They also identified four components of strategy: “(1) market opportunity, (2) corporate competences and resources, (3) personal values and aspirations, and (4) acknowledged obligations to segments of society other than stockholders” (21). This treatment of the strategy concept was well ahead of its time, in that it foreshadowed the importance of a resource-based perspective (Barney 1991), acknowledged external obligations beyond those owed to stockholders, and suggested the importance of values and purpose.
Do things differently to meet different needs
Professor Michael E. Porter is a leading authority and the founder of the modern strategy field and one of the world’s most influential thinkers on management and competitiveness. According to Porter, a good strategy starts with defining the appropriate financial goals for the company in terms of profitability. Strategy is about creating an unique and sustainable competitive edge: “do things differently to meet different needs”.[3]
Porter was able to offer a sophisticated view of industry competition and bring some structure to the question of how a firm could outperform its rivals. Industry structure involved five forces, not two. Competitive positions could be thought of in terms of Cost, Differentiation, and Scope. Market signalling, switching costs, barriers to exit, cost versus differentiation, and broad versus focused strategies are his fundamental concepts explored in his book, Competitive Strategy. [4] (Porter, 1998)
Firms should aim to be profitable and unique, choosing a strategy position and stick to it on the long term: ’’My position is that being the lowest cost producer and being truly differentiated and commanding a price premium are rarely compatible. Successful strategies require choice or they can be easily imitated. Becoming “stuck in the middle”- the phrase I introduced – is a recipe for disaster.’’ (Porter, 1998)
Competitive advantage by considering the competition as enemies
Jack Trout is an American marketing strategist with over 20 years of experience. In his book Trout on Strategy. Capturing Mindshare. Conquering Markets, Trout is proposing on looking for the competitive advantage by considering the competition as enemies. Therefore you need to study the market, to understand and to manoeuvre the battlefield. This battlefield is in the consumer or prospect mind. Although he is focusing more on market positioning, he only sees the market as a sum of competitors and a battle of ‘capturing mindshare’, as he put it.[5]
“We do not have a written Strategy document, the strategy is set by the executive director/owner” and “We do not believe in a fixed competitive strategy, we want the flexibility of following the market dynamics,” are the usual excuses chosen by the executives.
Although these two answers might constitute a convenient excuse for some business executives that failed to draft and see the importance of a written Competitive Strategy document it also reveals the low management competences of the business executives. Failing to plan and to draft a Competitive Strategy Document means that these entrepreneurs have a limited understanding of their own market in which they operate and definitely do not understand the trends and market dynamics.
As it is often the case, the sectors are very complex and dynamic and a small business executive will most likely not have the time to identify all the changes and opportunities. Indeed, some managers considers having a competitive strategy is not being flexible enough and they rather prefer to look inwards their company to develop competences, resources and capabilities and be ready to change with the industry. Porter finds this wrong and due to a confusion between operational effectiveness, that indeed requires incorporating new ideas, and the competition strategy that needs to be on the long term. He also believes that understanding the industry and competition is very important. Some managers considers having a competitive strategy is not being flexible enough and they rather prefer to look inwards their company develop competences, resources and capabilities and be ready to change with the industry.
Porter finds this wrong and due to a confusion between operational effectiveness, that indeed requires incorporating new ideas, and the competition strategy that needs to be on the long term: ’’Continuous incorporation of new ideas is important to maintaining operational effectiveness. But this is surely not at all inconsistent with having a consistent strategic position. Concentrating only on resources/competencies and ignoring competitive position runs the risk of becoming inward looking. Resources or competencies are most valuable for a particular position or way of competing, not in and of themselves. ‘’ (Porter, 1998)
Pareto principle or the 80/20 rule
His views are still valid, in my opinion, and consistent with another well-known and valid economic theory, the Pareto principle. In a recent paper I corroborated this theories and postulated that ‘’(…) the Pareto principle or the 80/20 rule explains why consistent differentiation leads to a huge competitive advantage on long term. The Italian economist noticed that the 20% of people in Italy own 80% of lands; also he observed this rule in pretty much every domain from natural sciences to sports and economics. This is explained by a concept called ‘Accumulative advantage’ – what starts as a small advantage gets bigger over time. The differences between companies in the beginning on a new market were very thin but what seemed to be a slight advantage for a company (presumably the advantage was kept) developed over some time into a huge unbeatable advantage, dominating the industry.’’ (Bujorean, 2017)
[1] Peter F. Drucker (2004) The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done, according to https://www.goodreads.com/work/quotes/1033004, (accessed in 8.03.2018)
[2] Joseph A. Maciariello (2016) Peter Drucker Training Course for Managers, Litera, pages196-197
[3] Berenschot (July 2009) What’s on the agenda of the Dutch CEO in times of economic downturn? (accessed on 9.03.2018 https://berenschotstrategies.files.wordpress.com/2009/07/strategy-trends-2009.pdf)
[4] Michael E. Porter (1998) Competitive Strategy, Techniques for Analyzing Industries and Competitors, The Free Press, ebook (downloaded on 9.03.2018 http://www.vnseameo.org/ndbmai/CS.pdf)
[5] Jack Trout, Trout on Strategy. Capturing Mindshare. Conquering Markets (2004), United States of America, pp. 65-80
