Success and failure in marketing strategy making: Results of an empirical study across medical markets

This is the second in a trilogy of papers reporting on a five-year research project into marketing strategy making in medical markets. Following on from the weak marketing strategy observed in the first paper, this work explains the origins of marketing strategy process failure in terms of incongruence with market and organisational culture conditions. It concludes that any generic approach to marketing strategy making fails most companies, and that an organisationally tailored process is required. INTRODUCTION This is the second paper of a trilogy which seeks to contribute to the improvement of marketing strategy making in medical markets. For the purposes of this work, medical markets are defined as those markets in which the customer is a clinician or related professional or an associated organisation. It therefore includes pharmaceuticals, medical devices, diagnostics, medical equipment and other areas. This trilogy of papers arises from a five-year research project aimed specifically at this area and involving many leading companies in the sector. Although complementary and to some extent overlapping, the three papers attempt to answer three distinct questions, the relevance of which is emphasised by the maturation of the medical market: . How good is marketing strategy in medical markets? Paper one presented an assessment of marketing strategy quality in medical markets against a set of contextindependent quality criteria derived from the literature. Its conclusions were that marketing strategy in the sector was of variable quality and often very weak. . Why is marketing strategy in medical markets of variable quality? Paper two considers the underlying reasons for variability in the quality of marketing strategy in medical markets and develops and justifies a model to explain that variability. . How might marketing strategy in medical markets be improved? Paper three develops the empirical work into a management process by which to improve marketing strategy making in medical markets and to test the outputs of that process prior to incurring the costs and risks of implementation. Given the weaknesses of marketing strategy observed in medical markets, reported in the first paper, this work attempts to develop a model to explain the variability in quality of marketing strategy Brian Smith PhD PragMedic, 8 Canonsfield Road, Welwyn, Hertfordshire, AL6 0QH. Tel: +44 (0)1438 712 441; Fax: +44 (0)1438 712 442; e-mail: [email protected] Henry Stewart Publications 1469–7025 (2003) Vol. 3, 4 287–315 International Journal of Medical Marketing 287 in medical markets. In particular this work seeks to understand the nature of process failure in marketing strategy making in medical markets. Its findings arise from a five-year study into the sector carried out as a PhD under Cranfield School of Management in the UK. THE EFFECTIVENESS OF MARKETING STRATEGY MAKING PROCESSES A definition of marketing strategy ‘Marketing strategy’ has the dubious honour of being one of the most abused terms in the lexicon of practitioners. Most frequently, it is used to refer to the tactical disposition of promotional resources. This work, however, uses the term ‘marketing strategy’ in the sense agreed by Drucker and Mintzberg. Hence, marketing strategy is that sustained pattern of resource allocation decisions that pertain to customers and propositions. In this sense, marketing strategy is defined as having two necessary components: a definition of the target ‘market’, and a statement of the ‘product’ or ‘value proposition’ aimed at that target. This dual-component view of marketing strategy is sufficient to differentiate marketing strategy from strategies relating to other, non-marketing functions, such as research and development or manufacturing, and from other non-strategy aspects of marketing management, such as tactical actions. In the first paper of this trilogy, the extant literature was used to develop a context-independent set of properties by which the quality of marketing strategy might be measured. Using these properties as a benchmark, it was observed that the marketing strategy of many medical companies was weak, particularly in respect of target market definition, proposition tailoring, SWOT (strengths, weaknesses, opportunities and threats) alignment and strategy uniqueness. It was these findings that led to the investigation of why such process failure occurs and what factors influence the effectiveness of marketing-strategy-making processes. The hybrid nature of marketing strategy making processes Although marketing strategy making is often misleadingly referred to as ‘marketing planning’, the strategy process literature shows that rational planning is in fact only one component of a complex hybrid process by which organisations create marketing strategy. Much of the strategy process literature, in both strategic marketing planning and the broader strategic management field, reflects the singular perspectives of individual researchers on strategy development. This single-perspective literature argues for the consideration of strategy development as, for instance, a rational, planned process or an incremental process. An admirable summary of this work is contained in the work of Bailey et al.; the key dimensions of strategy development were identified as: . Command: strategy deriving mainly from a key individual or top management team. . Planning: strategy deriving mainly from a logical, sequential, deliberate set of procedures. . Incremental: strategy deriving mainly from ‘successive limited comparisons of alternative actions’. . Political: strategy deriving mainly from negotiated settlements between powerful sub-units of the organisation. . Cultural: strategy deriving mainly from the ‘taken for granted’ frames of reference shared in the organisation. . Enforced choice: strategies deriving mainly from the external forces and constraints acting on the organisation. These single-perspective schools of thought are also considered by Mintzberg, who perceived strategy process as essentially a hybrid process and rationalised the singleperspective views as not incorrect but International Journal of Medical Marketing Vol. 3, 4 287–315 Henry Stewart Publications 1469–7025 (2003) 288 Smith