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Management processes inmarketing planning
Gordon Greenley, Graham Hooley and John SaundersAston Business
School, Aston University, Birmingham, UK
Keywords Marketing planning, Management activities, Decision
making, Adaptability,Flexible organizations, Competitive
analysis
Abstract There has been concern in the literature about the
adequacy of the traditional model ofmarketing planning, which
focuses on what decisions should be made and not on how to
makethem. The aim of this article is a new conceptualisation that
proposes key management processesabout how marketing planning
decisions are made in a dynamic context. The motives for
thisconceptualisation are to contribute to understanding by
advancing the traditional model ofmarketing planning, to stimulate
academic and practitioner debate about how marketing
planningdecisions are made, and to initiate new directions in
marketing planning research. Two newcompeting models of marketing
planning are developed, which address key management processesabout
how marketing planning decisions are made in a dynamic context, and
research directionsare proposed.
IntroductionMarketing planning has been defined as all rational,
incremental and intuitiveprocesses that guide a firms marketing to
its future (Saunders et al., 1996). In theliterature the tradition
has been to prescribe marketing planning as a model
oflogical-sequential decision making, incorporating objectives,
strategies, tactics,implementation and control (Ferrell et al.,
1999; Jain, 1999; Lambin, 2000; McDonald,1996). However, there has
been concern in the literature about the adequacy of
thistraditional model, as it focuses on what marketing planning
decisions should be made,and not on how to make them. For example,
the traditional model fails to adequatelyconsider management
processes that are inherent within marketing planning (Dunnet al.,
1994; John and Martin, 1984; Martin, 1987; McDonald and Leppard,
1991), and itfails to address the organisational context of
marketing planning adequately (Greenleyand Oktemgil, 1996; McDonald
and Leppard, 1991; Piercy and Morgan, 1994; Speed,1994). The aim of
this article is a new conceptualisation that proposes key
managementprocesses about how marketing planning decisions are made
in a dynamic context.The motives for this conceptualisation are to
contribute to understanding byadvancing the traditional model of
marketing planning, to stimulate academic andpractitioner debate
about how marketing planning decisions are made, and to initiatenew
directions in marketing planning research.
In guiding a firms marketing to its future, marketing planning
decision making isused to pursue dynamic market opportunities. As
market opportunities change, firmswill need to adapt their plans in
order to pursue these developing opportunities.Adaptation is
achieved through the process of flexibility in marketing
planningdecision making, which is the extent to which managers are
willing to explorealternative and new decision-making options, with
respect to objectives, strategies,tactics, implementation and
control. In turn, the strategic management literature
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Managementprocesses
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Received May 2002Revised October 2002
European Journal of MarketingVol. 38 No. 8, 2004
pp. 933-955q Emerald Group Publishing Limited
0309-0566DOI 10.1108/03090560410539104
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suggests that flexibility is determined by other management
processes. However, theseprocesses have not been explicated in
either the strategic management or marketingplanning literatures.
Therefore, there is little understanding about how to
achieveflexibility in marketing planning decision making, and hence
adaptation to marketopportunities. For the conceptualisation
proposed in this article, six key managementprocesses are proposed.
First, proactive management, which is managerial eagernessto pursue
market opportunities. Second, competitive aggression, being
propensity tochallenge competitors intensely. Third, innovative
management, which is developingnovel ideas for change to pursue
market opportunities. Fourth, organisational learning,being
purposely gaining knowledge, insights and experience. Fifth, market
orientation,which is moulding corporate culture and managerial
behaviour with respect to marketintelligence. Sixth, deploying
slack resources, which are the means for achievingflexibility in
marketing planning.
Inadequacies of the traditional modelThere has been some
commentary about the inadequacy of the traditional model
ofmarketing planning.
Managerial behaviourThere are claims that the traditional
marketing planning model does not sufficientlyincorporate
management processes. Piercy and Morgan (1990, 1994) propose
thattraditional marketing planning should be extended to include
managerial behaviourand organisational dimensions, such as
corporate culture, information systems andcommunications. Greenley
and Bayus (1994) and Piercy and Morgan (1994) reportempirical
support for this proposal, and conclude that a fuller understanding
of suchdimensions is required. Managerial behaviour and
organisational structure inmarketing planning have been researched
by John and Martin (1984) and Martin(1987), while the role of
corporate culture in marketing planning has been researchedby Dunn
et al. (1994) and McDonald and Leppard (1991). These studies also
concludethat a fuller understanding of such dimensions is
required.
Prahalad (1995) has listed examples of the many changes that
industries haveexperienced over the last decade, such as
technological discontinuities, increasingglobal competition, and
changing customer expectations, which pose major challengesto
companies, with respect to their influence over their markets.
Prahalad (1995) claimsthat there has been little systematic study
of processes that firms use to influencemarkets, when addressing
such change. Similarly, Saunders et al. (1996) and Speed(1994) have
suggested that, although marketing planning should facilitate
addressingmarket turbulence, managers may have difficulty in
planning during turbulent marketconditions. Indeed, traditional
marketing planning theory does not include processesfor addressing
change and turbulence, and for enhancing market influence.
Gap between theory and practiceEvidence suggests that only about
one-fifth of companies practice marketing planning,as prescribed in
the traditional marketing planning model (Cosse and Swan,
1983;Greenley, 1987; Hooley et al., 1984; McDonald, 1982). Also,
some managers may nothave the capabilities to be effective planners
(Cespedes and Piercy, 1996; Greenley,1988). For example, Day (1994)
claims that many firms have failed to change their
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marketing to become market-driven. He proposes that a market
orientation is achievedand sustained through distinctive
capabilities, which are difficult for competitors toimitate. Such
gaps between theory and practice suggest inadequacy in the
traditionalmarketing planning literature.
Coordinating role of marketing planningZinkhan and Pereira
(1994) observe that although marketing planning is a sub-set
ofstrategic planning, which includes other business operations,
there is little integrationof marketing planning and other
operations. Ruekert and Walker (1987) say thatmarketing personnel
have an important coordinating role in linking demands fromoutside
the organisation with the operational departments that satisfy
these demands.They propose that such coordination and integration
are based on social systems,driven by common organisational
objectives, although managerial conflict can arise,owing to
differences among operational objectives. Although marketing
planning haspotential for providing such coordination and
integration, this role has not beenexplicated in the marketing
planning literature.
Modelling management processes in marketing planningIn order to
develop understanding, stimulate academic and practitioner debate
andinitiate new research directions, two competing models are
proposed (see Figures 1and 2). As market opportunities change,
firms will need to adapt their plans in order topursue these
developing opportunities. The central decisions are changing
marketingobjectives to exploit these dynamic opportunities, and
changing marketing strategiesand tactics to attain the chosen
objectives. Adaptation has been given severalperspectives in the
literature; a series of choices about how an organisation
couldrespond to perceived opportunities and threats (Bowman and
Hurry, 1993; Sharfmanand Dean, 1997); gradual and incremental
organisational change, rather than radicaland discontinuous change
(Jennings and Seaman, 1994); and surviving environmentconditions
(Chakravarthy, 1982). The latter differentiates between the process
of
Figure 1.Management processes in
marketing planning Model 1: direct effects
model
Managementprocesses
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adaptation to environment conditions as carried out by managers,
and the outcome ofthis process as a consequential state of
adaptation of the company. Threeconsequential states of adaptation
are proposed by Chakravarthy (1982): a neutralstate where a firm
can withstand most environmental change; a stable state where afirm
can only react to environmental change; and an unstable state,
where a firm isextremely susceptible to environmental change. The
neutral state is likely the mostdesirable, as there is more
managerial choice in decision making, and less detrimentalimpact
from environmental change. The outcome of adaptation is similar to
theconcepts of coalignment and strategic fit. While there are
several meanings of theseconcepts (Venkatraman, 1990), they are the
extent of efficient alignment of resourcesand capabilities with
opportunities and threats (Bourgeois, 1980; Powell,
1992;Venkatraman, 1990). The implication is that, rather than three
discrete states ofadaptation as proposed by Chakravarthy (1982),
there can be various states ofadaptation. In both the competing
models, state of adaptation to market opportunitiesis the dependent
variable, as a consequence of the adaptation of marketing
plans.
A key process for achieving adaptation is flexibility, which is
the extent to whichcompanies explore alternative and new options in
their decision making (Aaker andMascarenhas, 1984; Evans, 1991;
Feigenbaum and Karnani, 1991; Greenley andOktemgil, 1997; Sharfman
and Dean, 1997). With respect to marketing planning, it
iswillingness on the part of managers to generate different options
in marketingplanning decision making, for pursuing market
opportunities. It will involveconsidering alternative objectives,
and alternative marketing strategies and tactics forpursuing these
objectives. It will also involve considering different options
forimplementing strategies and tactics and for controlling this
implementation to achievethe chosen objectives. The consideration
of several decision-making options is morelikely to lead to
choosing the most effective for adapting to market
opportunities,compared to scant consideration of few options.
Consequently, in both the competingmodels, flexibility of marketing
planning decision-making has a direct effect on theresultant state
of adaptation to market opportunities.
The extent of flexibility and hence adaptation that a firm is
able to achieve isdetermined by other management processes (Aaker
and Mascarenhas, 1984;Chakravarthy, 1982, 1986; Evans, 1991;
Greenley and Oktemgil, 1997; Nutt, 1993).
Figure 2.Management processes inmarketing planning Model 2:
moderator effectsmodel
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Volberda (1996) proposes variety in managerial capabilities for
exploring new options,while Evans (1991) proposes preparedness for
change. However, these are only outlinesuggestions, and detailed
proposals of the management processes that are likely topromote
flexibility and adaptation have not been developed. Given the lack
of guidancein the literature, the theory developed in this article
argues that the key managementprocesses are proactive management,
competitive aggression, innovative management,organisational
learning, market orientation, and slack resources.
Proactivemanagement is included because it explains managerial
eagerness to pursue marketopportunities (Dutton, 1993; Mullens and
Cummings, 1999; Venkatraman, 1989).Competitive aggression is
included because it is propensity to challenge competitorsintensely
(Lumpkin and Dess, 1996; Venkatraman, 1989). Innovative management
isincluded because it uses novel ideas for changing the
organisation, to pursue marketopportunities (Amabile et al., 1996;
Damanpour, 1991; West and Farr, 1990).Organisational learning is
included because it is purposely gaining knowledge,insights and
experience about changing market opportunities (Huber, 1991; Lant
et al.,1992; Sinkula et al., 1997). Market orientation is included
because it provides a potentialbarrier for protecting marketing
planning from competitive imitation (Narver andSlater, 1990;
Peteraf, 1993; Rumelt, 1982, 1984). Slack resources are included
becausethey are the means for achieving flexibility and adaptation
in marketing planning(Greenley and Oktemgil, 1998; Sharfman and
Dean, 1997).
In model 1 (Figure 1) it is proposed that all six management
processes have a directeffect on flexibility, consistent with the
literature cited earlier. In model 2 (Figure 2) it isproposed that
only two management processes have direct effects, while the
otherprocesses generate moderator effects, as a competing stance to
model 1 (Figure 1). Asproactive management means being eager to
pursue market opportunities, it is likely tolead to willingness to
explore options in decision making, giving flexibility.
Therefore,proactive management is a direct predictor of
flexibility. Similarly, as competitiveaggression is propensity to
challenge competitors, it is likely to lead to willingness
toexplore options in decision making as flexibility in order to
identify the most effectivechallenges. Therefore, competitive
aggression is a direct predictor of flexibility. Thesearguments are
further developed below. For a moderator effect the moderator
variableinteracts with a predictor variable to affect the form of
the association between apredictor variable and the dependent
variable (Jaccard et al., 1990; Sharma et al., 1981).In the
following sections arguments are presented that propose that
innovativemanagement, organisational learning, market orientation
and slack resources producemoderator effects, as they are processes
for using capabilities and resources that willpromote the
effectiveness of proactive management, competitive aggression
andflexibility in impacting on the state of adaptation. These
effects are shown in Figures 1and 2.
Proactive managementProactive management is smanagerial
eagerness to pursue market opportunities in theabsence of
environment threats or poor performance, in this context
marketopportunities, whereas reactive management occurs in response
to threats or poorperformance (Dutton, 1993; Jackson and Dutton,
1988; Miller and Friesen, 1978;Mullens and Cummings, 1999; Mullens
and Walker, 1996; Venkatraman, 1989). Acentral issue in the
strategic management literature is the extent to which change in
the
Managementprocesses
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external environment determines decision making and adaptation
to marketopportunities, rather than the proactiveness of managers
(Astley and Fombrun,1983; Astley and Van de Ven, 1983; Bourgeois,
1984; Grant, 1996). The environmentdeterminism perspective posits
that environment change determines organisations andtheir strategy
decision making (Aldrich, 1979; McKelvey and Aldrich, 1983), while
themanagerial choice perspective posits that companies are able
proactively to choosetheir strategies and manipulate their
environments (Child, 1972; Pfeffer and Salancik,1978;
Yasai-Ardekani, 1986). The two are not necessarily exclusive,
representing acontinuum of organisational adaptation between pure
environment determinism andunrestrained freedom of choice (Astley
and Van de Ven, 1983; Hrebiniak and Joyce,1985; Veliyath and
Srinivasan, 1995; Zammuto, 1988).
Mullens and Cummings (1999) propose four key disciplines of
proactivemanagement for adapting to change, which are pertinent to
market opportunitiesand marketing planning. First, uniform encoding
among managers of the changesituation, to yield a common
understanding of market opportunities. Second,consensus among
managers about the appropriate objectives and strategy options
topursue market opportunities. Third, motivation to implement the
agreed strategyoptions, which will involve various individual and
organisational incentives. Fourth,organisational ability to
implement the chosen strategy options, by marshallingimplementation
capabilities and resources. Similarly, Dutton and Duncan
(1987)propose that the momentum in companies for adapting to change
is created frommanagers perceptions of their understanding of
change, and their beliefs about thefirms capabilities for adapting;
the extent to which change is diagnosed as urgent andfeasible; and
the extent of resources for adapting to change.
Therefore, proactive management that is disciplined and
systematic in the abovefashion is predicted to result in careful
consideration of environment change andmarket opportunities, and
greater flexibility of marketing planning decision making,through
eagerness to formulate alternative objectives and strategies for
pursuingmarket opportunities. It is therefore predicted that
proactive management is anessential process for achieving effective
marketing planning for adapting to marketopportunities, overcoming
environment determinism, achieving managerial choice,and moving
towards a neutral state of adaptation. As it is argued that
proactivemanagement is an integral part of marketing planning
decision making, it is predictedto have a direct effect on
flexibility:
H1. The greater the proactive management, the greater the
flexibility ofmarketing planning decision making, and successively
the greater theadaptation to market opportunities (models 1 and
2).
Despite the above, overcoming environment determinism may be
problematic. Thereare several problems in addressing environment
change. First, managers may simplifytheir perceptions of the
environment and may undermine the challenges posed byexternal
uncertainty (Amit and Schoemaker, 1993; Senge, 1990). Second,
internalmanagerial conflict may follow environment turbulence, as
managers often developconflicting solutions for addressing
turbulence (Wiersema and Bantel, 1992). Third, alack of accord
among managers about their ability to manipulate and exploit change
intheir environments can be problematic (Bourgeois, 1984; Hrebiniak
and Joyce, 1985;Whittington, 1988). Fourth, more managerial
attention will likely be given to recent
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experiences, rather than forecasting future events (Lant et al.,
1992). Fifth, recentsuccess in exploiting change may bias managers
toward an illusion of control,resulting in unrealistically high
objectives (Langer, 1975). Sixth, managers maymistakenly believe
that successful outcomes arising through chance are a result
oftheir capabilities (Fischhoff and Beyth, 1975). In some companies
there may be limitedrecognition of the necessity to address these
problems of environment determinism.Even where there is
recognition, overcoming them may not be straightforward.However,
proactive management that is systematic and disciplined should
yieldcareful consideration of environment change and market
opportunities, and greaterflexibility in considering alternative
objectives and strategies in marketing planningdecision making.
Therefore, proactive management is likely more effective
inovercoming environment determinism problems than reactive
management, and inachieving adaptation to market opportunities:
H2. The greater the application of proactive management to
overcomingenvironment determinism, the greater the flexibility of
marketing planningdecision making, and successively the greater the
adaptation to marketopportunities (models 1 and 2).
Competitive aggressionCompetitive aggression is defined as
propensity to directly and intensely challengecompetitors, with the
aim of outperforming them in the marketplace (Covin and Covin,1990;
Davidson, 1997; Lumpkin and Dess, 1996; Porter, 1985; Venkatraman,
1989). Forexample, pursuing ambitious market share objectives to
challenge competitors;entering a market segment dominated by a
competitor; outspending competitors oncommunications; imitating
competitors strengths; and aggressive price competition.Competitive
aggression also reflects managerial willingness in being
unconventionalin marketing planning, rather than relying on
conventional methods of competing(Fombrun and Ginsberg, 1990;
Lumpkin and Dess, 1996). Miller and Camp (1985) foundthat the most
successfully aggressive firms are those that pursue a wide breadth
ofmarkets and products. However, as some opportunities feature high
risk, such asmarket entry or a new product launch, it is suggested
that competitive aggression isparticularly important in such risky
situations, to gain an advantage over competitors(MacMillan, 1982;
Porter, 1985). Consequently, competitive aggression is
likelyaccompanied by high risk taking propensity (Covin and Slevin,
1989). Timing may beimportant for successful competitive
aggression, and fast followers timing may be aseffective as first
mover advantage timing (Lumpkin and Dess, 1996).
The realisation of this aggression propensity will be through
managers being eagerto be competitively confrontational in the
flexibility of their marketing planningdecision making, by setting
objectives that are threatening to competitors, and byselecting a
marketing strategy and tactics that are challenging and hostile
tocompetitors. This may involve formulating decision-making options
that shift thebalance of attention away from customers and more
toward competitors. This couldmean that marketing strategy options
are formulated that are more concerned withgaining market share
from competitors than attracting new customers into the market.If
aggressive marketing strategy options are unconventional and
address a breadth ofmarkets and products, then they are likely
risky. This suggests that careful attention isneeded in formulating
and choosing options, ensuring that potential opportunities
Managementprocesses
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equate to risk, although competitive aggression is likely
accompanied by high risktaking propensity.
Competitive aggression will also be realised through managerial
behaviour inimplementing marketing strategies and tactics, by
monitoring their progress inachieving the set objectives, and by
taking action to challenge any counter strategymoves by
competitors. However, to ensure that competitors are outperformed a
widerange of marketing planning decision-making options will need
to be considered, inorder to select the most effective way of
beating competitors current marketingstrategies, and to overcome
any counter strategy moves by them. Again this may meanselecting
options that are risky, but again competitive aggression is likely
associatedwith high risk taking propensity. Indeed, the general
principle in the flexibilityliterature is that planned offensive
moves against competitors will lead to a necessityto consider
several options in decision making, as a search is made for the
mosteffective competitive challenge (Bowman and Hurry, 1993; Evans,
1991). These optionscan be offensively formulated as competitive
aggression to force competitors to disturbtheir current marketing
plans, or offensive options can be formulated in response to
achange in a competitors marketing strategy. Competitive aggression
will also bereflected in the timing of the implementation of
marketing strategies and tactics. Assuggested earlier, although
first mover advantage timing may be the mostaggressive option, fast
follower timing may be a more appropriate option in somesituations,
as it will allow for learning about competitors strategies and
tactics. It istherefore predicted that competitive aggression is an
essential management process forachieving effective marketing
planning for adapting to market opportunities. As it isargued that
competitive aggression is an integral part of marketing planning
decisionmaking, it is predicted to have a direct effect on
flexibility:
H3. The greater the competitive aggression, the greater the
flexibility ofmarketing planning decision making, and successively
the greater theadaptation to market opportunities (models 1 and
2).
Innovative managementInnovation is the generation and
implementation of new and creative ideas, processes,products and
services, providing the means for changing an organisation
(Amabileet al., 1996; Daft, 1978; Damanpour, 1991; Damanpour and
Evan, 1984; Thompson,1986; Stata, 1989; West and Farr, 1990). Nutt
(1993) and Sharfman and Dean (1997)advocate that to achieve
flexibility and adaptation managers should make strategychoices
that are innovative, by differentiating from the competitive norm.
Amabile et al.(1996) and Van de Ven (1986) emphasise that
innovation is the successfulimplementation of creative and novel
ideas in an organisation. West and Farr (1990)emphasise that
innovation is restricted to intentional attempts to derive
anticipatedbenefits. With respect to processes, innovation involves
intentionally initiating creativeand novel ways for gaining
anticipated benefits, giving innovative management.
Innovative management will be needed to intentionally create new
and modifiedmarketing strategies and tactics in marketing planning
decision-making options, forexploiting and adapting to changing
market opportunities, and challengingcompetitors strategies. This
will involve generating novel ways of using themarketing mix to
achieve competitive advantage, and novel ways for positioning
inexisting or new market segments, relative to competitors
positioning. Innovative
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managerial processes can be for planning and implementing the
full range of themarketing mix, and for controlling implementation
to achieve marketing objectives.Novel ideas within this innovation
can be intrinsic within the elements of the mix, andalso novel
ideas for motivating staff to develop their capabilities.
Innovation can alsobe new technology for gaining competitive
advantage, as in product technology forenhancing customer benefits,
and new technology for improving marketingcommunications,
distribution and customer service. This new technology may
alsoraise managerial confidence to deliver a more effective
marketing strategy, againenhancing their capabilities. However, as
emphasised by West and Farr (1990), suchinnovation needs to be
intentionally directed at achieving intentional outcomes, in
thiscase planned marketing objectives. Therefore, by being
innovative in their marketingplanning, companies will be able to
formulate and consider alternative options forflexible decision
making, moving towards a neutral state of adaptation. It is
thereforepredicted that innovative management is an essential
management process forachieving effective marketing planning for
adapting to market opportunities. Asinnovative management may be an
integral part of marketing planning decisionmaking, it may exert a
direct effect on flexibility:
H4a. The greater the innovative management, the greater the
flexibility ofmarketing planning decision making, and successively
the greater theadaptation to market opportunities (model 1).
However, processes for idea generation, innovative management
may have moreinfluence on the impact of proactive management and
competitive aggression onflexibility, than directly on flexibility.
Innovative management can provide creativeand novel ways to allow
managers to be proactive in pursuing market opportunities. Itcan
also provide creative and novel ways for challenging competitors.
This suggestsmoderating effects, giving the following competing
hypotheses to H4a:
H4b. The greater the innovative management, the greater the
impact of proactivemanagement on the flexibility of marketing
planning decision making(model 2).
H4c. The greater the innovative management, the greater the
impact ofcompetitive aggression on the flexibility of marketing
planningdecision making (model 2).
Grant (1996) has emphasised the role of managerial capabilities
in innovativemanagement. Capabilities for architectural innovation
are particularly important, thelatter being implementing creative
ideas across organisational boundaries (Abernathyand Clark, 1985;
Baden-Fuller and Stopford, 1994). Grant (1996) suggests
thatimagination, intuition and creativity are key capabilities for
architectural innovation,although creativity is seemingly the most
important. However, a creative idea will notbe realised unless
there are organisational conditions that foster
innovativemanagement and until the idea is implemented (Van de Ven,
1986). Severalorganisational conditions have been proposed for
fostering the creation of novel ideas,such as support of managers
in risk taking and evaluating new ideas; autonomy inday-to-day
work; resource availability for developing novel ideas; and control
of timepressure when developing new ideas (Amabile et al., 1996;
West, 1997; West andAnderson, 1996).
Managementprocesses
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Such conditions are applicable to marketing planning decision
making. Muchdecision making in the marketing mix is clearly
creative, such as creating brandimages, developing USPs, enhancing
customer care and creating advertisingmessages. In order to create
new ideas that will lead to flexibility and adaptation tomarket
opportunities, supportive organisational conditions will be needed.
As manyinnovative marketing mix decisions carry considerable risk
with respect to marketsuccess, there needs to be a common
understanding and acceptance of these riskswithin the management
hierarchy. As a considerable investment of resources is likelyto
pursue an innovative decision, such as new product development
(NPD) and productlaunch costs, then a common understanding is
needed in the management hierarchy ofthe potential benefits
compared to associated risks. There also needs to be companysupport
for the time pressures associated with innovative marketing mix
decisions,such as first-mover advantages for achieving competitive
advantage, break-evenperiods in NPD, and likely lagged effects in
advertising expenditure. In somecompanies there may be limited
recognition of the necessity to address theseconditions, but even
where there is, addressing them may not be straightforward.However,
by establishing conducive conditions for fostering innovative
management,companies can be more flexible in their marketing
planning decision making, movingtowards a neutral state of
adaptation:
H5. The more a company addresses organisational conditions for
creativity ininnovative management, the greater the flexibility of
marketing planningdecision making, and successively the greater the
adaptation to marketopportunities.
Organisational learningAlthough it has many definitions,
organisational learning is a process for purposelygaining
knowledge, insights and experience, that develops company
understanding ofconnections among managerial actions and the
environment, and that influences futuremanagerial behaviour (Fiol
and Lyles, 1985; Huber, 1991; Lant et al., 1992; Nevis et al.,1995;
Schein, 1996; Sinkula, 1994). In marketing planning, learning will
lead toincreased understanding of the dynamics of market
opportunities, and of managerscapabilities for making effective
marketing planning decisions. It is proposed that theoutcome of
learning, through this increased understanding, will be more
effectiveadaptation to environment change (Grant, 1996; Kilmann,
1996; Sinkula, 1994; Sinkulaet al., 1997). Thus learning promotes
firm heterogeneity through managerialcapabilities, resulting in
competitive advantage (Cohen and Levinthal, 1990;Mahoney, 1995;
Senge, 1990). In marketing planning this increased
understandingthrough learning should foster confidence among
managers to formulate and considerseveral decision making options
in their marketing planning, and to be bold in theirdecision
making, resulting in more flexibility. Sinkula et al. (1997) found
that learningresults in increased market information and
dissemination, and there is evidence thatlearning is associated
with high levels of market orientation. It is therefore
predictedthat organisational learning is an essential management
process for achieving effectivemarketing planning for adapting to
market opportunities. As organisational learningmay be an integral
part of marketing planning decision making, it may exert a
directeffect on flexibility:
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H6a. The greater the organisational learning, the greater the
flexibility ofmarketing planning decision making, and successfully
the greater theadaptation to market opportunities (model 1).
However, as a process of gathering information and changing
understanding,organisational learning may have more influence on
the impact of proactivemanagement and competitive aggression on
flexibility. By generating a greaterunderstanding of market
dynamics and of managers capabilities, it will give managersmore
confidence to be proactive. Similarly, it will provide more
understanding andconfidence to challenge competitors. This suggests
moderator effects, giving thefollowing competing hypotheses to
H6a:
H6b. The greater the organisational learning, the greater the
impact of proactivemanagement on the flexibility of marketing
planning decision making(model 2).
H6c. The greater the organisational learning, the greater the
impact of competitiveaggression on the flexibility of marketing
planning decision making(model 2).
There are several impediments to learning. First, Day and
Nedungadi (1994) found thatmanagers tend to pay selective attention
to their environments and define reality innarrow terms (Kiesler
and Sproull, 1982). Consequently, managers have
inadequateperceptions of environmental change, and therefore less
scope for effective learning(Levinthal and March, 1993). Second,
even if there is an adequate environmentintelligence system, there
may be resistance in the company to change attitudes andbehaviour
(Osland and Yaprak, 1995; Schein, 1996). Therefore, managerial
resistanceto change may limit the benefits of learning. Third,
there may be managerial inertia tochange marketing plans,
particularly when they have been effective in achievingprevious
performance objectives. Therefore, benefits of learning will not be
fullyrealised (Kiesler and Sproull, 1982; Lant et al., 1992).
Fourth, there may be a tendency toignore the long run. Focusing on
short-term performance may lead to ignoring futuretrends, so that
learning is short-run focused and therefore limited (Levinthal
andMarch, 1993). Fifth, there may be a tendency to overlook
failures. Basing learning onpast successes gives a biased
understanding of reality, so that learning should also befrom
failures (Lant et al., 1992; Levinthal and March, 1993). Sixth,
there is evidence thatfunctional heterogeneity in the top
management team contributes to learning (Lantet al., 1992; Wiersema
and Bantel, 1992). A diversity of managerial backgrounds givesa
richness of perspectives when addressing decision making, giving
many learningopportunities. Therefore, a lack of diversity may be
an impediment to learning. In somecompanies there may be little
recognition of such impediments, but even where there
isrecognition, overcoming them may not be straightforward. However,
by addressingthese impediments, companies can be more flexible in
their marketing planningdecision making, moving towards a neutral
state of adaptation:
H7. The more a company addresses impediments to organisational
learning, thegreater the flexibility of marketing planning decision
making, andsuccessively the greater the adaptation to market
opportunities.
Managementprocesses
943
-
Market orientationMarket orientation is generating and
internally disseminating intelligence aboutcustomers and
competitors, and moulding corporate culture and managerial
behaviourwith respect to this intelligence (Hunt and Morgan, 1995;
Kohli and Jaworski, 1990;Narver and Slater, 1990). It is proposed
that an effective market orientation is difficultfor competitors to
imitate, as it is achieved through idiosyncratic management,
whichcan be difficult for competitors to both identify and copy,
creating a barrier to imitation(Day, 1994; Hunt and Morgan, 1995;
Lippman and Rumelt, 1982; Mahoney andPandian, 1992; Oktemgil et
al., 2000). The following characteristics of
idiosyncraticmanagement contribute to achieving inimitability.
TacitnessThis is accumulated skills-based capabilities,
resulting from experience and learningby doing, which is difficult
for competitors to imitate (Polanyi, 1967). These tacitcapabilities
make up idiosyncratic management. Understanding and
addressingcustomers and competitors requires tacit capabilities
that are based on experience andlearning by doing, for the
effective use of intelligence in marketing planning decisionmaking.
Tacit capabilities are also needed to achieve and sustain a
market-focus in thecorporate culture and managerial behaviour.
ComplexityThis results from using large numbers of interrelated
tacit capabilities, which createsidentification problems for
competitors (Peteraf, 1993; Lippman and Rumelt, 1982).Market
orientation covers a wide range of complex organisational
phenomena,requiring many organisation-wide skills. Such skills are
needed to establish a marketorientation, to achieve its
organisation-wide dissemination across many job functions,and to
sustain market-focused corporate culture and managerial
behaviour.
SpecificityThis is dedicating particular capabilities to
specific aspects of market orientation, suchas developing long-term
customer relationships. Dedicated capabilities are needed tobuild
an effective market orientation, and to mould corporate culture and
managerialbehaviour. It should be difficult for competitors to
identify and understand thesededicated capabilities.
Non-transferabilityShould a competitor identify the mix of
capabilities that led to a successful marketorientation, they would
then need to acquire them to achieve imitation. Transferring
amarket orientation to another company will likely be difficult,
featuring hightransaction costs, given that it is inherent within
corporate culture, the values andattitudes of managers, and their
behaviour (Chi, 1994; Peteraf, 1993). Indeed, theseissues are the
very essence of the unique human fabric of a company.
Non-tradabilityCapabilities may not, however, be tradable, as
managers and team-based skills may beless effective in a different
corporate culture. Therefore, they may have little externalvalue
(Chi, 1994; Dierickx and Cool, 1989; Nelson and Winter, 1982;
Peteraf, 1993). A
EJM38,8
944
-
market orientation is likely not tradable, as tacit market
orientation capabilities may beless effective in other corporate
cultures, and they may not be openly traded.
Therefore, market orientation features the characteristics of
idiosyncraticmanagement for achieving inimitability. In its dual
role of moulding corporateculture and managerial behaviour, market
orientation represents managementthinking and action as part of
marketing capabilities. Within this thinking andaction there is
much opportunity for developing idiosyncratic management, given
themultidimensional nature of managerial actions for achieving an
effective marketorientation, and the values to be created in
corporate culture. However, as this thinkingand action is central
to marketing planning, having a more effective market
orientationthan competitors can create a competitive advantage.
This thinking and action iscentral to all the logical sequential
stages of marketing planning (objectives through tocontrol), where
increased focus on customers and competitors is likely to result in
amore effective matching of strategies and tactics with market
opportunities. Indeed,given that market orientation is intrinsic
within the logical sequential stages ofmarketing planning, it
should contribute to protecting marketing planning fromcompetitive
imitation. This will allow for the consideration of more
decision-makingoptions, as their potential implementation can be
protected from competitive imitation.It is therefore predicted that
market orientation is an essential management process forachieving
effective marketing planning for adapting to market opportunities.
Asmarket orientation may be an integral part of marketing planning
decision making, itmay exert a direct effect on flexibility:
H8a. The greater the market orientation, the greater the
flexibility of marketingplanning decision making, and successively
the greater the adaptation tomarket opportunities (model 1).
However, as a process of moulding corporate culture and
managerial behaviour,market orientation may have more influence on
the impact of flexibility on state ofadaptation than directly on
flexibility. By providing protection from competitiveimitation of
their marketing planning decision making, market orientation
shouldfoster managerial confidence in decision making, and promote
bolder decisions foradapting to market opportunities, than with
little protection. This suggests amoderator effect, giving the
following competing hypothesis to H8a:
H8b. The greater the market orientation, the greater the impact
of the flexibility ofmarketing planning decision making on
adaptation to market opportunities(model 2).
However, for a market orientation to contribute effectively to
adaptation to marketopportunities, the literature implies that
several underlying organisational conditionsare needed. First,
there is an unstated assumption that values and expected
behavioursfor creating a market orientation will be successfully
incorporated into the corporateculture, and that there is a
mechanism for assessing this incorporation. In the Hunt andMorgan
(1995) theory there is an unstated assumption that this culture can
beincorporated into decision-making frameworks. In the Webster
(1992) theory there is anadditional unstated assumption that this
incorporation takes place from the corporatelevel down to the SBU
level, through the successful transfer of cultural values
andexpected behaviours. Implicit in achieving these conditions is
an assumption that
Managementprocesses
945
-
effective changes can be made to company communications and
managerial behaviour.Another condition for an effective market
orientation is continuous investment in itsdevelopment, giving the
assumption that managers have the inclination and resourcesto make
this investment. Finally, to sustain an effective market
orientation with time,there is an underlying assumption that
managers will have capabilities for finding newways for disguising
the make-up of their companys market orientation to avoidimitation.
In some companies there may be little recognition of the necessity
to addressthese conditions, but even if there is recognition,
addressing them may not bestraightforward. However, establishing
these facilitating conditions will enhance theeffectiveness of
market orientation, contributing to flexibility of marketing
planningdecision making, and moving towards a neutral state of
adaptation:
H9. The more a company addresses facilitating organisational
conditions forcreating a market orientation, the greater the
flexibility of marketingplanning decision making, and successively
the greater the adaptation tomarket opportunities.
Slack resourcesA proposition in the strategic management
literature is that companies should not fullydeploy their
resources, but should retain some spare or slack resources to
enablechange to strategies (Bourgeois, 1981; Chakravarthy, 1986;
Miller, 1994; Milliken andLant, 1991; Sharfman and Dean, 1997).
Cyert and March (1963) defined slack as:
. . . that cushion of actual or potential resources that allows
an organisation to successfullyadapt to change, by providing the
means for adapting strategies to the external environment.
Slack resources provide the means for adapting to the
environment and for pursuingopportunities in the future (Bourgeois,
1981; Dess and Origer, 1987; Greenley andOktemgil, 1998; Sharfman
et al., 1988; Yang et al., 1992), as they can be used in
adiscretionary manner, given that they are not committed to
necessary expenditure(Dimmick and Murray, 1978; Riahi-Belkaoui,
1998).
Slack consequently provides potential for flexibility in
strategy decision making(Bourgeois, 1981; Miller and Leiblein,
1996; Segars and Grover, 1994; Sharfman et al.,1988), allowing for
adaptation to new environment conditions. These general
principlesapply to marketing planning, as slack resources provide
the means for formulating andconsidering different marketing
strategy options, and for implementing those selected,in the
pursuit of market opportunities. Therefore, slack resources allow
for flexibility inmarketing planning decision making. Bourgeois
(1981) and Hambrick and DAveni(1998) suggest that slack resources
allow a company to compete more boldly, and theycan be a source of
innovation (Cyert and March, 1963). The latter also suggest
thatslack resources provide the means for experimenting with new
strategies that arecostly and risky, such as entering new markets
and launching new products. Inmarketing planning they allow for
experimentation with new ways of managing themarketing mix, such as
innovative advertising, enhanced after sales service, ortechnical
innovation in product benefits.
Evans (1991) has suggested different modes in which slack can be
used, based ontwo decision making dimensions. First, a temporal
dimension, comprised of an ex antemode, preparing in advance of
some future environmental change, and an ex postmode, taking action
after a change has occurred. Second, an intentional dimension,
EJM38,8
946
-
comprised of an offensive mode, creating and seizing an
initiative, and a defensivemode, guarding against competitive moves
and correcting mistakes. Thesedecision-making dimensions give four
different flexibility modes, where the processfor using slack
resources is different in each mode (Greenley and Oktemgil,
1998).
Ex ante/offensive modeSlack allows for the formulation and
holding of a range of strategy options forproactively accessing
opportunities that may arise (Bowman and Hurry, 1993; Fox
andMarcus, 1992). In marketing planning this means planning a range
of competitivelyaggressive marketing strategy options, to be
implemented when market opportunitiesarise.
Ex ante/defensive modeThis mode of flexibility is about guarding
against potentially damaging consequencesthat may arise in high
risk situations, where slack is held as insurance against
losses(Ansoff, 1965; Eppink, 1978; Evans, 1991). In marketing
planning entering a newsegment under hostile market conditions, for
example, but planning changes tostrategy or tactics when market
conditions change.
Ex post/offensive modeIf unpredicted opportunities arise then
slack will allow for formulating strategyoptions, to pursue these
new opportunities offensively (Evans, 1991). As marketopportunities
arise, this mode would mean implementing a marketing strategy
andtactics speedily compared to competitors, to gain early entry,
or to gain more marketshare than competitors.
Ex post/defensive modeThis mode of flexibility is about learning
from mistakes, such as using slack to defendagainst unpredicted
competitive strategies (Evans, 1991). In marketing planning
thiswould be developing marketing strategy options to address an
unpredicted change in acompetitors strategy.
These advantages of slack allow for the formulation of
decision-making options,giving flexibility in marketing planning
decision making. Therefore, it is predicted thata process for using
slack resources is essential for achieving effective
marketingplanning, for adapting to market opportunities. As a
process for adapting to change,there may be a direct effect on
flexibility:
H10a. The greater the slack resources, the greater the
flexibility of marketingplanning decision making, and successfully
the greater the adaptation tomarket opportunities (model 1).
However, as a means of achieving flexibility, slack resources
may have more influenceon the impact of flexibility on state of
adaptation, than directly on flexibility. They willallow managers
to consider more decision-making options for adapting to
marketopportunities, as they provide the means for implementing a
wider range of options.They also provide the means for
experimenting with different options to exploitmarket opportunities
and to be bold in decision making. This suggests a moderatoreffect,
giving the following competing hypothesis to H10a:
Managementprocesses
947
-
H10b. The greater the slack resources, the greater the impact of
the flexibility ofmarketing planning decision making on adaptation
to market opportunities(model 2).
ConclusionTwo competing models were presented in this article,
which propose key managementprocesses about how marketing planning
decisions are made in a dynamic context.The motives for this
conceptualisation were to contribute to understanding byadvancing
the traditional model of marketing planning, to stimulate academic
andpractitioner debate about how marketing planning decisions are
made, and to initiatenew directions in marketing planning research.
The new models address theinadequacies of the traditional model in
several ways. First, they advance theprescriptive
logical-sequential model of marketing planning by
incorporatingmanagement processes about how decisions are made, as
recommended by variouswriters. The processes are behavioural in
nature, but include aspects of corporateculture, and they
incorporate issues from several different literatures, which have
notbeen previously incorporated into marketing planning. This has
developed the domainof marketing planning, and has contributed to
defining and developing its underlyingparadigm. Second, the new
models contribute to understanding how companies canaddress market
change. The models are about understanding management processesfor
exploiting dynamic market opportunities, and the proposed processes
contribute tounderstanding how companies can influence these market
dynamics through theirmarketing planning. Third, the models also
help to reduce the gap between theory andpractice. As the focus is
on behaviour and culture, it gives guidance to firms about howto
address marketing planning decision making. The conceptualisation
also extendsDays (1994) proposal, as these marketing planning
processes represent capabilitiesthat can become distinctive
compared to those of competitors, and that can be difficultfor them
to imitate. Fourth, the models also contribute to understanding the
integratingand coordinating role of marketing planning. In order to
develop marketing planningdecision-making options to achieve
flexibility, the involvement of other internaloperations will be
necessary, such as finance, personnel and production, in order
toassess the commercial feasibility of each option. The management
processes can bevehicles for developing the internal social systems
needed for integrating andcoordinating operations, through the
involvement of managers from other operationsin marketing planning
decision making.
Research directionsClearly the first stage of empirical
investigation would be the testing of the competingmodels, by
measuring managers perceptions of how these management
processesoperate in their companies, with respect to marketing
planning. Second, as theseperceptions are likely to vary among
managers, a direction is to investigate differencesamong managerial
levels within the marketing function, and also among
otherfunctional managers. Third, as the management processes are
behavioural andcultural in nature, their relative degrees of impact
on state of adaptation are likely tovary in different countries and
economies. Therefore, a comparative study should beinsightful.
Fourth, as there are no claims in this article that all influential
managementprocesses have been included, other processes could be
investigated as another
EJM38,8
948
-
research direction. For example, at the corporate level,
directions and constraintsdictated from a strategic plan; the
effectiveness of corporate communications; andinternal social
systems that determine the ways that managers interact together. At
theindividual manager level, for example, the importance of
incentives and rewards formarketing planning decision making;
perceived senior management support for risktaking; and perceived
commitment to marketing plans by senior managers.
While the above directions are based on managers perceptions of
how thesemanagement processes operate, a different research
direction is to investigate the driveand determination of managers
for pursuing effective marketing planning. Much of thedrive and
thrust to exploit market opportunities will be through the
willingness ofmanagers to be proactive, aggressive, innovative, to
learn, to use market orientation tobuild competitive barriers, and
to accumulate and then deploy slack resources.However, managerial
recognition that marketing planning is needed is a
prerequisite.Recognition that flexibility and its key management
processes are more likely to beeffective in exploiting dynamic
market opportunities is also needed, rather thanadopting inflexible
and reactive marketing planning. Similarly, there will need to
bedrive and determination to practise these management processes
openly. Managerialdetermination to sustain an achieved state of
adaptation into the future is alsonecessary. Indeed, as market
opportunities and competitors strategies change, driveand
determination are needed to generate further decision-making
options to addressthe new market conditions. Therefore, a research
direction would be to investigate theabove issues.
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