Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 18 MARKETING IN THE TWENTY-FIRST CENTURY
A small detail that has been deliberately omitted thus far, however, is the publication date 
of the report. . . 1994! It is comforting to know that the strategic issues faced by modern 
businesses are not totally new challenges, but it is perhaps the new and novel formats and 
contexts through which they present themselves that make the potentially negative impacts 
no smaller or less problematic.
The broad trends listed have all continued, and in many ways accelerated in the 25-plus 
years since the report was published. The economic shocks and aftershocks of the recent 
global recession, coupled with increased concerns over climate change and sustainability, 
have served to drive companies to look increasingly at efficiency, and how costs can be 
reduced.
At the macro-level, changes can be grouped into economic, technological, social, legal 
and political issues. Just as water supply companies cannot change weather patterns, most 
macro-environmental factors are outside the control of individual firms. Few companies 
have the ability to influence political, economic, social and technological processes signifi-
cantly, but most need to try and understand and predict changes. Water companies need 
to predict both weather patterns (supply of water) and demand (water usage), so that they 
can then put strategies in place to meet that demand.
A once very well-known company that failed to grasp the significance of crucial change 
in its market was Encyclopaedia Britannica (EB). EB went from peak profits to severe 
difficulties in the 1990s, as it failed to anticipate and appreciate the impact of technology 
(specifically the CD-ROM) on its business. The business had been built through a highly 
motivated and successful salesforce selling encyclopaedias to middle-class families (often 
bought by parents for their children’s education) at around $1,500 each.
Then along came home computers, with CD-ROM players and encyclopaedias such 
as Encarta at around $50. The new entrants may not have had the depth of coverage of 
EB, but they were in a format children enjoyed using, offered the opportunities for multi-
media display (video and audio clips and animations), could be more easily updated and, 
perhaps most crucially, offered middle-class parents a justification for the purchase of 
often expensive home computer systems, which in many cases were used primarily for 
games purposes!
With the advent of the ‘information superhighway’, the World Wide Web/Internet and 
cloud storage, holding large amounts of data on individual PCs has, for many, become a 
thing of the past – posing potential problems (and of course opportunities) for marketers 
of CD-ROM-based encyclopaedias. In particular, the advent of open access, user-built 
encyclopaedias such as Wikipedia have significantly impacted on the CD-based products. 
Rapidly updated, and relying on users to submit, update and expand on the content, these 
are essentially free at the point of use (making their money out of advertising links), rapidly 
expanding in content and do not take up local storage space on hard disk or other media 
(see www.wikipedia.org). More recently, EB has made its encyclopaedia available online 
to subscribers (http://www.britannica.com/), recognising that a key advantage lies in its 
expert editorial staff. While Wikipedia relies on random contributors with minimal edito-
rial control to check for accuracy, EB trades on its expert contributors and the constant 
updating available online.
Similarly, Hoover and Electrolux suffered greatly from the overnight success of the 
Dyson bagless vacuum cleaner – both losing a great deal of market share to the innova-
tion. However, an often-forgotten nuance of this story is that both were offered (prior to 
Dyson going to market with his own product) the rights to the new and innovative bagless 
technology. The issue was not that Hoover and Electrolux did not see the innovation com-
ing, indeed they knew about it in advance, but rather they both had a vested interest in 
preserving the status quo.
It is also easy to underestimate the practical realities of rapid accelerations in the speed 
and disruptive impact of change. For example, consider the unfolding impact of Internet 
telephony. While it took 50 years for the telephone to gain widespread diffusion, it took less 
than a decade for the mobile phone to do the same. It is expected that Internet telephony will 

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THE CHANGING COMPETITIVE ARENA
reach critical mass in only a few years. Similarly, in the photography market, the disrup-
tive and pervasive impact of digital technology demanded rapid transformation in business 
models by existing players such as Kodak. The failure of Kodak to understand the speed of 
change and rapid decline in demand for traditional cameras and film led to major financial 
losses, extensive lay-offs and plant closures for the company.
No company can ever hope to predict every aspect of the macro-environment in which 
it operates, but organisations should aim to achieve profound understanding of their core 
markets (the micro level). There will always be surprises and shocks as new technological 
breakthroughs emerge, or political discontinuities occur. However, successful companies 
are able to identify what is important and respond to trends and changes more effectively 
than competitors. Shocks are less for those companies prepared to think the ‘unthinkable’ 
and to challenge the status quo in their strategising.
Importantly, disruptive changes have the potential to make deep changes in the structure 
of a market, which may disadvantage existing competitors but offer important opportuni-
ties to others.
18.1.2 Changes in markets
A number of trends can be seen in modern markets that are likely to continue into the future 
(see Figure 18.1).
First, customers are becoming increasingly demanding of the products and services they 
buy. Customers demand, and expect, reliable and durable products with quick, efficient 
service at reasonable prices. They also expect the products and services they buy to meet 
their needs. Different customers have different wants and needs, and hence companies have 
an opportunity to select segments where their offerings most closely align with those needs, 
and where they can focus activities to create competitive advantage. What is more, there is 
little long-term stability in customer demands. A relatively strong market position may be 
achieved through offering superior customer value, and yet without constant improvement 
value is likely to be eroded by competitive actions.
A second major trend, and one that has particularly differentiated the early part of the 
twenty-first century, is that customers are less prepared to pay a substantial premium for 
products or services that do not offer demonstrably greater value – possibly exacerbated 
by very challenging global economic conditions. While it is undeniable that well-developed 
and well-managed brands can generally command higher prices than unbranded products 
in many markets, the differentials commanded are now much less than they were, and 
customers increasingly question the extra value they get for the extra expense incurred.