The New Global Marketing Reality
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The New Global Marketing Reality Richard Brookes and Roger Palmer
Richard Brookes and Roger Palmer 2004 Softcover reprint of the hardcover 1st edition 2004 978-1-4039-0520-8 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-50979-9 ISBN 978-0-230-50857-6 (ebook) DOI 10.1057/9780230508576 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Editing and origination by Curran Publishing Services, Norwich 10 9 8 7 6 5 4 3 2 1 13 12 11 10 09 08 07 06 05 04
CONTENTS List of figures List of tables Acknowledgements ix x xi Introduction 1 The Changing Nature of Marketing 1 Why Another Book on Marketing, Then? 3 Out Target Audience 4 How This Book was Put Together 5 Did You Feel the Earth Move? 8 Our Central Message 11 The Structure of the Book 13 Chapter 1 Understanding Business Today 19 Chapter Objectives 19 The Pressure of Pressure 19 Uncovering Practical Theory 21 A Model of Contemporary Marketing Practices 28 The Dynamic Nature of Relationships 34 Chapter 2 Explanations of Marketing: Evolving, Changing or Competing? 45 Chapter Objectives 45 The Evolution of Marketing 45 No New Customers 50 The Momentum for Relationship Marketing 51 A Synthesis of Relationship Marketing 54 The Nordic School of Services 54 The IMP Tradition 55 The Anglo-Australian Approach 57 Mid-Range Perspectives 60 Relationship Marketing in Practice 62 Researching Relationship Marketing 65 Relationship and Managerial Dimensions 66 Chapter 3 The New Business Reality 71 Chapter Objectives 71 v
vi Contents The Pressures to Grow 71 How the Goths Got to the Gates of the General Motors Empire 73 Chapter 4 Growth and Value 99 Chapter Objectives 99 The Attraction of External Growth Strategies 100 The Hard Lesson of M&As 101 The Lesson of DaimlerChrysler 103 Honda: A Better Bet, and Sloan s Fourth Wave? 105 The Pressure to Deliver Value 106 Strategy and the Art of Creating Value 108 The New Marketing Reality 120 Creating Value in the Knowledge Economy 122 What Do Customers Now Want? 124 Chapter 5 Finding and Creating Advantage 129 Chapter Introduction 129 The Strategy Debate 129 Structure, Conduct, Performance 130 Resources 131 Emergent Strategy and Game Theory 134 Marketing Advantage 137 The Consumer Franchise 137 The Customer Franchise 140 Network Efficiency 145 The Interaction of Power and Advantage 148 Chapter 6 Organizational Transformation 155 Objectives 155 Creating the Future 155 The View From the Top 158 Inflection Points 160 Did Compaq Miss an Inflection Point? 161 Compaq s Strategy Comes Unstuck 162 Now, it s Hewlett-Packard s Time 164 Information Technologies 166 IT and Early Predictions of an Organizational Tranformation 167 Now, the Digital Revolution and the Internet as an Inflection Point 168
Contents vii Organizing for the Internet 172 What Became of IBM? 173 The Impacts of IT-Enabled Interactivity on Marketing Practices 176 Does the Internet Really Change Everything? 178 Chapter 7 Contemporary Marketing and the Five Changes Challenge 183 Objectives 183 All Companies Face Change 184 Change 1: Financial Accountability, Loyalty and Customer Value Management 185 Change 2: Increasing Emphasis on Service Aspects of All Products 192 Change 3: Organizational Transformation 197 Change 4: Retailer Power and Systemic Relationships 200 Change 5: Interactive Media and Mass Customization 204 Integrating the Five Changes 207 Chapter 8 Pluralism in Marketing Practice 211 Chapter Introduction 211 Challenging the Paradigm 211 The Role of Research 213 The Contemporary Marketing Practice Study 214 Contemporary Marketing Practice Findings 218 International Comparisons 221 Pluralistic Marketing Practice 223 Marketing Practice and Business Sector 228 Buyer and Seller Interaction 230 Managerial Implications 233 Chapter 9 The Future of Marketing 237 Objectives 237 IT and Predictions of Organizational Transformation 238 The Internet, IT-Enabled Interactivity and Organizational Transformation 239 Differing Views on the Extent of IT Impacts on Marketing Practices 241 The Internet and B2B Relationships 242 IT-Enabled Interactivity and CRM 244 Internal Relationship Marketing 246
viii Contents IT and Internal Relationship Marketing 248 Managing Change Processes 249 The CMP Study of Managers Perceptions of the Roles of IT 253 Has the Internet Really Changed Everything? 258 Managerial Implications 258 Internal Relationship Management and Change Management 261 References 263 Index 285
LIST OF FIGURES I.1 Elements of a simple business model 6 I.2 The new pluralism in contemporary marketing practices 12 I.3 The change model and pressures on marketing 13 I.4 The structure of the book 14 1.1 Model of contemporary marketing 29 1.2 The relationship continuum 35 1.3 The relationship spiral 37 1.4 The relationship triangle 41 2.1 The evolution of marketing 46 2.2 Global automotive industry rationalization over time 51 2.3 The six market model 58 3.1 Automobile company value propositions 74 4.1 Direction for strategic development 102 4.2 The drivers of value in a business 109 4.3 The value net 124 5.1 From strategy to implementation 136 5.2 Marketing advantage 137 5.3 Power within the supply chain 150 5.4 Power and advantage 151 5.5 Types of decision involvement units 152 6.1 The new computer industry 175 7.1 Integrating the five changes (telecommunications company) 185 7.2 Retail consolidation in Europe, market share of top three retailers 201 7.3 Forecast of European retailer concentration: expected share of the top five food retailers in Europe in 2005 203 8.1 Elements of a research strategy 214 8.2 The marketing domain hierarchy 217 8.3 Transactional and relational marketing correlations 220 8.4 Correlations between five marketing practices 224 8.5 Argentina: marketing practice and firm archetypes 228 8.6 The buyer seller interaction model 232 8.7 Marketing practice and the underpinning role of IT 235 ix
LIST OF TABLES 1.1 Constructs with transactional and relational definitions 32 1.2 Relationship characteristics 42 1.3 Typologies of marketing practice 43 2.1 Implications for marketing practice 52 2.2 Price of computing power and speed 53 2.3 Comparison of main components of major schools of relationship marketing versus transaction marketing 59 2.4 Relational exchange perspectives 62 2.5 Capital intensity and marketing practice 64 2.6 Types of marketing classified by managerial dimensions 68 2.7 Types of marketing classified by relational dimensions 69 4.1 Value 126 5.1 Sources of marketing advantage 149 5.2 Characteristics and examples of DIU types 153 6.1 Drivers of IT change 169 7.1 Key underlying characteristics of changing marketing practices 209 8.1 Classification schemes of marketing practice 217 8.2 Comparison of index values by marketing type 219 8.3 New Zealand and the UK: comparison of index values 221 8.4 Marketing practices: international comparison 223 8.5 New Zealand and the UK: cluster analysis 225 8.6 New Zealand, USA and Argentina: cluster analysis 226 8.7 Firm types profiled by cluster 230 8.8 International comparison: marketing practice by business sector 231 9.1 Marketing and IT: development phases 250 9.2 Use of IT in organizations: number of firms (%) 254 9.3 Suggested organizational issues 259 x
This book is dedicated to Robert Bilton (1941 2002). He was a colleague, a friend, and a mentor. R.W.B. To C.D.H. K.-J. A truly admirable person. R.A.P.
ACKNOWLEDGEMENTS The authors would like to acknowledge the work and invaluable contribution of their colleagues in the Contemporary Marketing Practice group (cmp.auckland.ac.nz). The group was founded at the University of Auckland in the mid-90s by Professor Rod Brodie, and is led by him and Professor Nicole Coviello, also at Auckland. In addition to the work being conducted at the Cranfield School of Management in the UK, international group members now include Professor Jaqueline Pels at the Universidad Torcuato Di Tella, Buenos Aires, Argentina, and Professor Wesley Johnston of the J Mack Robinson College of Business at Georgia State University, Atlanta, USA. The work of the group has generated wide interest, with many researchers using research protocols developed by the group to extend their own work and contribute to the growing body of knowledge on contemporary marketing practices. Colleagues include Dr Ing Adam Lindgreen of the TechnischeUniversiteit Eindhoven, Dr Mairead Brady of Trinity College, Dublin and Professor Peter Danaher and Vicki Little in the Marketing Department at the University of Auckland, and many others who we hope we do not offend by not mentioning personally. We are indebted to all our colleagues for their intellectual input, challenging ideas and suggestions. Their collegial approach makes it a pleasure to work with such an interesting and stimulating group of collaborators. At the same time as acknowledging their contribution, we also make clear our responsibility for interpreting the research in the context of this book, and for any mistakes and anomalies. Lastly, the authors have each spent time living and working at each other s homes during the course of this work, and would like to thank Susan Brookes, who also prepared the index, and Ginnie Palmer for their good natured tolerance of our sometimes obsessive preoccupation. Richard Brookes, Auckland Roger Palmer, Cranfield September 2003 xii