THEORIES IN MARKETING STRATEGY
In general, there are three aspects to the strategy of firms, regardless of the level of the strategy: content, formulation process, and implementation. Strategy content (what the strategy is) refers to the specific relationships, offerings, timing, and pattern of resource deployment planned by a business in its quest for competitive advantage (e.g., generic strategy of cost leadership versus differentiation; push versus pull strategy). Strategy formulation process (how the strategy is arrived at) refers to the activities that a business engages in for determining the strategy content (e.g., market opportunity analysis, competitor analysis, ...view middle of the document...
The nature of the relationships among these industry stakeholders influences the actions that a firm can initiate in pursuit of competitive advantage
➢ The firm has an internal environment that comprises its unique sets of skills and resources; collective beliefs about the market, competition, and industry (e.g., shared mental models; and culture.
Corporate strategy, business strategy, and functional strategies such as marketing strategy interact to shape the competitive advantage of individual businesses in a firm's portfolio. It is the confluence of these strategies that determines the extent to which a particular business is able to achieve and sustain a competitive advantage. This competitive advantage, in turn, affects the market-based performance and financial performance of the businesses. A number of competing and complementary theories in industrial organization economics, business policy and strategy, and marketing provide valuable insights into the determinants of performance at different levels. For instance:
➢ The structure-conduct-performance model (Bain 1956) attempts to explain "why some industries, on average, are more profitable than others."
➢ The efficiency perspective (Demsetz 1973) provides insights into "why some firms in an industry are more profitable than others."
➢ The works of Porter (1980,1985) provide insights into "how the structural characteristics of an industry and the competitive strategy pursued by a business jointly determine the performance of a business.”
➢ The resource-based view of the firm (Barney 1991; Rumelt 1984; Wernerfelt 1984) attempts to explain superior firn/business performance in terms of firm-specific skills and resources that are rare, valuable, nonimitable, and characterized by absence of equivalent substitutes.
➢ Matrix approaches to portfolio analysis and planning, such as the Boston Consulting Group (BCG) growth-share matrix and the market attractivenessbusiness competitive position matrix, provide insights into "why some businesses in a multibusiness firm's portfolio are more profitable than others."
➢ The work of Peters and Waterman (1982) is representative of research that attempts to shed insights into content, process, and implementation factors that affect long-term performance of firms at a more general level regardless of the industry in which they operate.
Important Theories in Marketing Strategy
GAME THEORY: Game-theoretic models assume that firms are (hyper)rational utility maximizers, where rationality implies that they strive to achieve the most preferred of outcomes subject to the constraint that their rivals also behave in a similar fashion (Zagare 1984). While there may be uncertainty regarding the expectations and actions of its rivals, a rational firm is expected to overcome uncertainty by forming competitive conjectures, subjective probability estimates of rivals' expectations and behavior. In effect,...