Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 16 STRATEGY IMPLEMENTATION AND INTERNAL MARKETING
In an interesting example, in 2011 Google set out to build a value chain in mobile phones 
to challenge Apple’s business model, integrating software and hardware businesses. Google 
acquired Motorola’s mobile phone business for $12.5 billion – its largest ever acquisition. 
As creator of the fast-growing Android operating system, Google wanted to be able to 
make its own smartphones and tablet computers. Motorola’s 17,000 patents were also 
important – for example, getting Google into the consumer living room via Motorola’s 
TV set-top boxes. However, as a software company, Google now faced the challenge of 
running manufacturing plants, controlling inventory and managing relationships between 
carriers and retailers. The move also took Google into competition with existing Google 
partners already licensing its Android operating system. Google had earlier attempted to 
manufacture laptops running its Chrome software to rival Microsoft’s Windows, but the 
execution problems forced it to work instead with brand-name hardware manufacturers 
such as Acer and Samsung. With Motorola, the companies were separated by half a con-
tinent, a different legacy (Google is a software company and Motorola is an 80-year-old 
hardware operation) and very different corporate cultures. By 2012, Google was look-
ing to reduce Motorola staffing by 20 per cent to regain profitability in the business, and 
its intentions for the business had become unclear. Early in 2014, Google sold Motoro-
la’s mobile phone operations to Lenovo for $2.91 billion, getting the world’s dominant 
mobile operating systems company out of the business of making mobile phones. The 
implementation risks in the Google strategy had always been high, and they ended up at 
that point walking away (Fitzgerald, 2012; Berman, 2012). Google still, of course, sells 
phones under the Google brand, but they’re manufactured by another firm, even if Google 
does not formally say that anymore. So, we can see that implementation capabilities are a 
critical consideration in making strategic choices. Indeed, as of 2018, Google has changed 
course and gone back into making phone hardware, much like Apple does, using a contract 
manufacturer.
Much thinking and practice in strategic marketing is concerned with managing rela-
tionships: with the customer (see Chapter 13) and with partners in strategic alliances 
(see Chapter 15). However, a further aspect of relationship management and relation-
ship marketing is the relationship with the employees and managers, upon whose skills, 
commitment and performance the success of a marketing strategy unavoidably relies. 
This is the internal market inside the company. The thinking in an increasing num-
ber of companies is that building effective relationships with customers and alliance 
partners will depend in part (and possibly in large part) on the strengths and types of 
relationships built with employees and managers inside the organisation. The goal may 
be for all employees to become ‘brand ambassadors’. Brand owners such as Unilever, 
SABMiller, and BT are among those with established internal marketing excellence 
programmes to pursue this goal (Marketing Week, 2006). At Honda, for example, all 
new staff receive the Book of Everything containing the normal employee handbook 
information but also extensive explanation of the Honda brand philosophy – ‘spread-
ing “Honda-ness” and turning people into brand ambassadors’ (Croft, 2007). In some 
companies, the emphasis has turned from internal communications to internal branding 
to build employee understanding and buy-in to corporate brand values (Dowdy, 2001). 
For instance, faced with a drain of key employees to Google, Microsoft appointed a 
Chief Happiness Officer, to focus on retention of key people and to improve morale 
(Conlin and Greene, 2007).
While some of these approaches may seem extreme, employee buy-in becomes par-
ticularly significant in times of change and repositioning, as well as in recovery from 
the economic downturn and adjusting to more demanding customers whose priorities 
fundamentally changed in recession. For example, fast-food giant McDonald’s pursued 
a ‘balanced lifestyles’ positioning to counter links between its products and obesity 
(MacArthur, 2005). Cynics parodied the McDonald’s campaign for trying to suggest to 
employees that ‘It’s not a McJob, it’s a McCalling’ (Helm and Arndt, 2007). Nonetheless, 

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INTRODUCTION
with a stronger employee buy-in, clearer competitive positioning, competitive prices 
and new menus, as well as challenges to Starbucks as a coffee shop, McDonald’s per-
formed strongly through the economic downturn after 2008, although is doing less well 
in recovery.
Similarly, recovery of market position for Heinz’s UK division was based not simply 
on launching new products but also on reinvigorating employee and manager morale and 
engagement with the business: Monday morning product tasting sessions; monthly meet-
ings with all employees to obtain their views on issues; managers expected to work in the 
factories and watch how food is produced; and a Dragons’ Den-style programme for staff 
to pitch their ideas for new products (Waples, 2008).
Importantly, it should be noted that there are various indications that employees in 
companies worldwide show evidence of detachment from their work – they simply do not 
care very much about their job (Stern, 2008). Conversely, the characteristics of organi-
sations that display high levels of employee engagement are that they: have high ethi-
cal standards; show clear core values; have employees who respect management and are 
treated with respect; and have a management team that seeks the opinions of employees 
(MacLeod and Brady, 2007). For example, it has been suggested that one of the worst 
outcomes for Nike of the criticism it received for its use of Asian ‘sweatshops’ to produce 
its sports shoes was not the negative impact on brand image, but the negative impact on 
employee morale. It is therefore perhaps surprising that many organisations fail to meet 
these basic criteria and consequently suffer in their ability to deliver their strategies to the 
marketplace.
Further, it is worth recalling from the commentary in Chapter 15, concerning strategic 
relationships and the increasing dependence of companies on cross-boundary collaboration, 
that building and sustaining effective ties with allies is a major challenge. We saw that the 
field of strategic alliances and partnerships is full of failed relationships. The reliance on 
third parties brings significant political, reputational and logistical risks for a company 
(Beattie, 2005). Yet, as we have seen, networked organisations based on collaboration are 
core to the success of companies such as IBM and Procter & Gamble. While internal mar-
keting is normally framed in terms of winning the support of managers and employees 
inside the company for strategic change, increasingly that internal marketplace will extend 
to partner organisations, whose buy-in is also needed to make strategy implementation 
effective.
We have also emphasised the importance of competitive differentiation to build market 
position. Yet truly exploiting a company’s potential competitiveness and its capabilities in 
reality is often in the hands of what Evert Gummesson (1990) called the ‘part-time mar-
keters’ – that is, the people who actually run the business and provide the real scope for 
competitive differentiation. Indeed, in some situations, the employees of a company may 
be the most important resource that provides differentiation. Certainly, research has found 
internal marketing to be one of the top three determinants of a company’s financial perfor-
mance – companies with better integration of internal and external marketing report better 
financial results (Chang, 2005).
In a similar way, the growing emphasis on competing through superior service qual-
ity relies ultimately on the behaviour and effectiveness of the people who deliver the ser-
vice, rather than the people who design the strategy. For example, when the Hampton Inn 
hotel chain in the USA was ready to roll out 122 changes to its products and services, its 
new marketing campaign was ‘Make It Hampton’, but it was aimed at hotel managers 
and employees, not guests. Building internal brand enthusiasm and employee motivation 
involved creating a giant model of a hotel to showcase the improvements and allow employ-
ees to experience them, motivational conference calls, focus groups, targeted newsletters 
and training materials. The end of the first phase of ‘Make It Hampton’ saw a five per cent 
increase in market share, and a similar growth in the percentage of highly satisfied custom-
ers (Drake et al., 2005).

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