Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 6 UNDERSTANDING THE ORGANISATIONAL RESOURCE BASE
It is noticeable that the new focus on dynamic capabilities recognises the need for firms 
to understand market dynamics more explicitly than the original RBV perspective. From 
a marketing perspective, dynamic capabilities help firms to identify market opportunities 
and subsequently enter new businesses through the creation of new products and improved 
services (Teece et al., 1997; Helfat et al., 2007).
Teece et al. (1997) suggest that dynamic capabilities have both a coordinating/integrat-
ing role and a learning role. The coordination/integration role enables firms to integrate 
external activities. These activities are related to the capabilities of market-driven organisa-
tions that among others need to excel in understanding customer needs and requirements, 
customer linking and new product development processes (Day, 1994). A customer-linking 
capability enables the firm to gain the ‘inside track’ (Penrose, 1959) by establishing a rela-
tionship with customers that may enable joint problem-solving activities and the rapid 
assimilation of new and previously unexploited skills (Zander and Zander, 2005). Product 
development routines are known to require the integration of diverse skills and know-how 
from inside and outside the firm. This also suggests that, besides their customer-linking 
abilities with customers, firms must be able to enhance their knowledge creation process 
by being capable of developing networks and strategic alliances throughout the value chain 
(Eisenhardt and Martin, 2000).
Learning enables new opportunities to be identified and can stimulate experimentation 
and innovation (Bowman and Ambrosini, 2003). More specifically, learning is a core ele-
ment of dynamic capabilities since it is a ‘collective activity through which the organisation 
systematically generates and modifies its operating routines in pursuit of improved effective-
ness’ (Zollo and Winter, 2002).
It has been suggested by some researchers (such as Ahuja and Katila, 2004) that dynamic 
capabilities are idiosyncratic and highly dependent on the specific firm–market context. 
Others, however (such as Eisenhardt and Martin, 2000), seek commonalities across firms. 
The most recent conceptualisations of dynamic capabilities focus on ‘fit’ – both technical 
fit and evolutionary fit. Helfat et al. (2007) define technical fit as how effectively a capa-
bility performs its intended function (its quality) when normalised (divided) by its cost, 
and evolutionary fit as how well a dynamic capability enables an organisation to make a 
living by creating, extending or modifying its resource base. In this sense, evolutionary fit-
ness includes not only technical fitness but also understanding of competition and market 
conditions.
Evolutionary fit is central to marketing thinking, ensuring not only that the market offer-
ings are technically fit for purpose, but also that they match changing market requirements 
in the light of customer and competitor change.
Wang and Ahmed (2007) suggest that resources can usefully be considered at four levels. 
For our purposes, these are conflated to three main levels and types of resource. Figure 6.4 
shows these levels in a marketing context:
● 
At the base level are marketing assets – the resource endowments the organisation has 
built or acquired over time. Where these exhibit VRIN characteristics (that is, create 
value for customers, are rare or unique to the firm, are inimitable or difficult/expensive 
for other firms to imitate or acquire, and are non-substitutable or easily replaced), they 
can form the basis of a competitive advantage. Most assets, however, depreciate over 
time unless they are constantly renewed and refreshed.
● 
Capabilities, the second level of resources of the firm, are the processes that are used 
to deploy assets effectively in the marketplace. Wang and Ahmed (2007) differentiate 
between capabilities, which are used to undertake routine tasks, and core capabilities, 
which are strategically important to creating competitive advantage at a point in time. 
Core capabilities typically require the bundling together of other capabilities. For exam-
ple, Zara in the fashion industry has core capabilities in responsiveness to customers, 
which in turn requires capabilities such as advanced information systems, just-in-time 
production processes and stock-control processes. Core capabilities, therefore, integrate 

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CREATING AND EXPLOITING MARKETING ASSETS
assets and capabilities to enable the firm to move in its chosen strategic direction. Zara’s 
continuing success is based on being responsive to an inherently fast-paced market, with 
fast-moving customer tastes. Its retail stores get two deliveries of stock every week, and 
new products that are designed in Spain are on the shelves within three weeks: an incred-
ibly agile and customer/market-focused business model. It has been suggested, however, 
that core capabilities can become core rigidities for organisations if (or when) markets 
change, and they can lock firms into processes that may become less and less relevant 
( Leonard-Barton, 1992 ; Tallman, 2003 ).
● 
Dynamic capabilities are the third and highest level of firm resources. They are the capa-
bilities that create new assets and/or new capabilities in response to, or indeed to lead, 
change in the marketplace (see Ambrosini, Bowman and Collier, 2009 ).
We now go on to discuss marketing resources in more detail. First, we consider market-
ing assets, then we go on to discuss marketing capabilities, and finally we focus on dynamic 
marketing capabilities.
6.4 
Creating and exploiting marketing assets 
The term ‘marketing assets’ was first used in a series of articles in Marketing magazine by 
Hugh Davidson in 1983. Marketing assets are essentially resources – normally intangible – 
that can be used to advantage in the marketplace. Davidson also presented the following 
example of this. 
In the early 1980s, the brand share of Kellogg’s Corn Flakes, while still in the low twen-
ties percentage, was in long-term decline. The company had spare capacity but did not 
produce corn flakes for private-label store brands. Kellogg solved this problem by launching 
Crunchy Nut Corn Flakes, which used the Kellogg name and the corn flakes plant. It was 
priced at a heavy premium, but it gained 2–3 per cent market share, mainly incremental to