Marketing Strategy - From the Origin of the Concept to the Development of a Conceptual Framework

Marketing strategyFrom the origin of the concept to the

development of a conceptual framework

Eric H. ShawDepartment of Marketing, Florida Atlantic University, Boca Raton,

Florida, USA

Abstract

Purpose – The purpose of this paper is to organize the semantics jungle of marketing strategyapproaches, terms and concepts into a logically coherent framework using the history of marketingthought to inform current marketing research and practice.

Design/methodology/approach – The paper takes the form of an intensive literature reviewtracing the three streams of marketing strategy terms and concepts from their roots in the literaturesof early marketing management, managerial economics and corporate management to the present.

Findings – Along with marketing ideas, strategy concepts from managerial economics and fromcorporate management were absorbed directly into the corpus of strategic marketing thought. Thesethree streams of research have converged into the current state of marketing strategy – an eclecticmixture of both complementary and conflicting strategic approaches, terms and concepts. Bysystematically following the evolutionary development of major contributions to strategic marketingthought and by redefining terms and refining concepts the various approaches to strategy can beintegrated into a comprehensive conceptual framework for organizing and choosing among individualmarketing strategies.

Originality/value – The framework offers conceptual and practical value. It provides a researcherwith a consistent set of terms and concepts to build upon. The framework also provides a strategictoolkit for the marketing manager, based upon organizational and environmental conditions, to choosefrom among the feasible alternatives the most effective marketing strategy to achieve management’sgoal(s).

KeywordsHistory of marketing thought, Business strategy, Marketing strategy, Management strategy,Marketing management strategy, Strategic marketing, Segmentation, Targeting, Marketing mix

Paper type Research paper

Using an appropriate marketing strategy is a critical element for business success.Choosing an effective strategy requires knowledge of what various alternativemarketing strategies exist and understanding how they work under varyingenvironmental and organizational conditions. To find the answers, severalfundamental questions guide this research: when and where did the notion ofmarketing strategy originate? Who are the key scholars who developed the basicstrategic terms and concepts? What is the current state of marketing strategy? Whydid strategic terms and concepts become so inconsistent and contradictory? How can amarketing strategy be improved? The purpose of this article in addressing thesequestions is to use the history of marketing thought to inform current marketingresearch and practice. Developments in marketing thought are used to organize thevarious isolated strategic approaches into a logically coherent framework. Theconstruction of such a framework allows a manager, based on internal and external

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Journal of Historical Research inMarketingVol. 4 No. 1, 2012pp. 30-55q Emerald Group Publishing Limited1755-750XDOI 10.1108/17557501211195055

conditions, to choose the most effective strategy from among the feasible alternativesto attain marketing management’s goal(s).

The term strategy is derived from the ancient Greek word “strathghma”pronounced strategema (Liddell and Scott, 1871, p. 653) meaning “the act of a general,esp[ecially] a stratagem, [or] piece of generalship.” The word strategy was used by themilitary since ancient times, and practitioners have long employed the concept ofbusiness strategies – without using the term.

The generalizability of the strategy concept from the military to business was firstnoted by Xenophon of Athens (a contemporary of Plato), who was a mediocrephilosopher, but renowned historian, and legendary general. In a dialogue, Xenophon(1832, pp. 560-562) credits Socrates with observing that analogous to the general of anarmy, the businessman must also efficiently allocate resources and effectively organizeactivities, i.e. employ a stratagem, to achieve his goal – whether victory or profit.Without using the term strategy, probably the first recognized marketing stratagem toachieve profitability – “buy cheape, sell deare” – was criticized in Catholic England asearly as the thirteenth century (St Thomas of Aquinas, 1274), Protestant Europe in thesixteenth century (Luther, 1524), and Puritan America as early as the seventeenth(Keayne, 1653). Xenophon’s strategic analogy went largely unnoticed, however, untilthe middle of the twentieth century when the term marketing strategy made its historicdebut.

Compared to the practice of marketing, which goes back thousands of years ( Jonesand Shaw, 2002), the academic discipline of marketing emerged much more recently,starting around the turn of the twentieth century in the US (Bartels, 1988). Following(and citing) Frederick Winslow Taylor’s (1903, 1911) influential work on scientificmanagement, which discussed efficiently organizing manufacturing tasks for massproduction, Shaw (1914, 1916) described the problem of efficiently organizingmarketing functions for mass distribution.

There are some suggestions of incipient discussions of marketing strategy prior tothe 1950s; for example, Rosenberg’s (1978) The Roots of Marketing Strategy:A Collection of Pre-1950 Readings, which range from 1903 to 1946. Despite the title,however, neither the term nor the concept of marketing strategy appears in any of theforty readings. The problem is that like many authors, Rosenberg (1978, p. 2), equatesmarketing strategy with marketing management, which in turn is usually equatedwith marketing. These terms are not synonymous. Marketing covers an entirediscipline that contains both micro (e.g. marketing management, buyer behavior andconsumer psychology) and macro (e.g. industry, distribution channels and aggregatemarketing system) perspectives ( Jones and Shaw, 2002; Wilkie and Moore, 2002). Onemicro perspective is marketing management, which includes planning among severalother areas. Planning involves establishing goals and developing marketing strategy; astrategy being the chosen means to achieve the goal.

Similarly, the term strategy does not appear in Usui’s (2008) The Development ofMarketing Management: The Case of the USA c. 1910-1940, covering roughly thesame time period as Rosenberg, because strategy, per se, was not discussed by thepioneers of marketing thought. There are virtually no discussions using the termstrategy in the early marketing periodical literature and nearly none in the MarketingPrinciples texts, which generally were more macro in orientation (Bartels, 1988; Wilkieand Moore, 2002; Sheth et al., 1988; Shaw and Jones, 2005) than the now popular

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managerial approach. Perhaps, the closest the early marketing pioneers came to theconcept marketing strategy, was a definition of “marketing management,” originallyused as a synonym for sales management, by Lyon (1926, p. 3) as “the continuous taskof re-planning the marketing activities of a business to meet constantly changingconditions within and without the enterprise.” Probably the strongest evidence for thepost 1950s origins of the strategy concept in the marketing literature is found in thework of Bartels, one of marketing’s leading historians, who catalogued virtually everyUS marketing textbook to 1961. There is only a single reference to marketing strategyin the index of Bartels (1962) earlier work, which cites Lyon’s (1926) book Salesmen inMarketing Strategy; however, with the addition of a chapter on marketing managementin his later versions (Bartels, 1976, 1988) the term “marketing strategy” appears morefrequently. This later emergence of the term provides strong evidence that strategy isassociated with developments in marketing management that occurred in the 1960sand thereafter. Although the more common term that developed is marketing strategy,it is sometimes called marketing management strategy (Usui, 2008, p. 1).

It should also be noted that strategy in management, marketing’s sister discipline,followed a parallel development. Like marketing, management also emerged as abusiness discipline at the turn of the twentieth century with the development ofTaylor’s Scientific Management. Also paralleling marketing, aside from a few isolatedmentions of the term strategy prior to the 1960s (e.g. Simon, 1947; Drucker, 1954;March and Simon, 1958), the concept was initially fleshed out in Chandler’s (1962) workon Strategy and Structure, and some basic strategies were developed by Ansoff (1965)in Corporate Strategy. Like Bartels in marketing, Chandler (1969, p. 237) inmanagement noted:

It has only been in the past 15 years [mid-1950s] that strategy has found its way [from themilitary] into business literature. It was not until the 1970s and 1980s, however, that theterminology evolved from “business policy” (Learned et al., 1965) to “business policy andstrategy” (Cannon, 1968; Schendel and Hatten, 1972) to “business strategy” then “corporatestrategy” or “strategic management” (Schendel and Hofer, 1979).

With few exceptions, the earliest academic approaches to history of marketing strategythinking are found in the 1950s literature of both managerial economics (e.g. Dean,1951; Forrester, 1959) and marketing management (Alderson chapter in Alexanderet al., 1953; Smith, 1956; Borden, 1957). These strategic concepts were absorbed into theemerging marketing management school of thought in the late 1950s and early 1960s(e.g. Kelley and Lazer, 1958; McCarthy, 1960; Davis, 1961). Subsequently, corporatestrategy concepts developed in the mid-1960s (e.g. Ansoff, 1965; Learned et al., 1965),were also incorporated piecemeal into the marketing management textbooks of the late1960s (e.g. Kotler, 1967; McCarthy, 1960). As more recent strategic concepts andapproaches were introduced in the 1970s (e.g. Henderson, 1970, 1973) and 1980s(Porter, 1980, 1985, 1990), they too were added bit by bit to the marketing textbooks ofthe times (e.g. in updated editions of Kotler and McCarthy). This has produced asemantic jungle of strategy terms, obscuring and almost obliterating the developmentof improved strategic concepts, resulting in multiple conflicting approaches tomarketing management strategy. Thus, the present state of marketing strategyknowledge is inconsistent at best and incoherent at worst.

The current work seeks to organize the numerous isolated approaches to marketingstrategy into a single logically coherent framework. Systematically organizing

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strategic approaches, terms and concepts is possible because the meaning of marketingstrategy offers one of the few bright spots of consistency in the literature. FollowingWroe Alderson’s (1937, 1957) work on segmentation and differentiation, AlfredOxenfeldt (1958, p. 267) defined marketing strategy in two parts: “(1) definition oftarget markets and (2) the composition of a marketing mix.” Oxenfeldt worked withAlderson’s consulting firm and was heavily influenced by him. These two parts of amarketing strategy are fundamental because customer targets represent the demandside of the market (see Robinson, 1933) on one hand, and the marketing mix representsthe supply side of the market (see Chamberlin, 1933) on the other. Over the decades,subsequent marketing thinkers have continually embraced this two-part definition(McCarthy, 1960; Kotler, 1967; Enis, 1974; Lazer and Culley, 1983; Cravens, 1987;Czepiel, 1992; Kerin and Peterson, 1993; Boone and Kurtz, 1998; Kotler and Keller, 2009,etc.), and there are no apparent challenges or disagreements with it in the marketingliterature.

Despite general concurrence over the definition of marketing strategy, there is littleagreement about specific strategic terms or concepts. Terms used synonymously bysome researchers have different definitions in the work of others, and occasionally inthe same author’s own work at a later date; not infrequently, terms are used without aclearly expressed meaning. Difficulties arise over the meaning of even the most basicmarketing strategies. For example, Dickson and Ginter (1987, p. 1) write:

Despite the pervasive use of the terms “market segmentation” and “product differentiation”there [is] considerable misunderstanding about their meaning and use. [Further, these twostrategies have not] been consistently described and well understood [and] a review of 16contemporary marketing textbooks reveals considerable confusion (Dickson and Ginter,1987, p. 1).

And segmentation and differentiation represent two of the oldest and most centralstrategies in the marketing literature.

In addition to the semantics jungle, another problem is that the sources of earlymarketing strategy concepts are seldom referenced in the marketing literature makingit difficult to follow the evolution of strategy concepts from their origin to the present.And yet, because complexity arises over time from simplicity (Simon, 1968), it isnecessary to trace the history of strategy concepts from their beginning to understandhow we arrived at the present state of disarray and attempt to bring order out of thechaos.

Along with the idiosyncratic usage of terms, and the sketchy origin anddevelopment of many strategic concepts, a more fundamental problem is the lack of anunderlying framework for marketing strategy. While there have been severalalternative approaches to describe various marketing strategies, some approaches areborrowed whole and unchanged from corporate management strategy – withoutregard to how well the concepts might fit into marketing strategy. For example, of twopopular approaches to corporate strategy, by Ansoff and Porter, one or the other isfound in almost all marketing management and marketing strategy textbooks, butseldom are both discussed in the same book. One of the earliest approaches tocorporate strategy was Ansoff’s (1957, 1965) “growth strategies,” which is found inmany marketing management textbooks (e.g. McCarthy, 1978; Lazer and Culley, 1983;Kerin and Peterson, 2004). Another corporate strategy approach was Porter’s (1980,

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1985, 1990) “generic strategies,” also found in many marketing management texts (e.g.Cravens, 1987; Czepiel, 1992; Boone and Kurtz, 1998).

Kotler and Keller (2003) is one of the few marketing writers to describe both Ansoffand Porter’s approaches to corporate strategy; however, he treats growth (Ansoff, 1965;Porter, 1985) and generic (Kotler and Keller, 2003) strategies independently and makesno attempt at reconciling the incongruities between them. No doubt useful indeveloping corporate strategy for which they were originally intended, and whichencompasses a broader perspective than marketing strategies, both the growth andgeneric approaches to corporate strategy create some inconsistencies when applieddirectly to marketing strategy. Not only have these strategic approaches been treatedindependently without attempting to relate them to each other in the marketingliterature, but neither has been integrated with early strategic marketing thought,discussed shortly.

The organization of this project is to sort through the early marketing and latercorporate strategy literature to:

. find the original sources of marketing strategy concepts;

. sort-out inconsistent strategy terminology; and

. redefine and reorganize strategic terms and concepts into an integratedconceptual framework for managing marketing strategy.

In effect, this would provide a toolkit of feasible strategies from which a marketingmanager could choose the strategy deemed most effective to achieve a desired goal.

Early marketing strategy conceptsBefore marketing strategy developed as an off-shoot of marketing management in the1970s, even before marketing management emerged as a school of thought in the 1960sto replace the traditional approaches to marketing (Bartels, 1988; Sheth et al., 1988;Shaw and Jones, 2005), a few isolated concepts were developed in the 1950s literaturethat form the core of modern marketing strategy. These seminal concepts include:Borden’s (1957, 1964) expression of the “marketing mix,” Smith’s (1956) development of“product differentiation” and “market segmentation” as alternative marketingstrategies, Dean’s (1951) conception of “skimming” and “penetration” as alternativepricing (that he extended to the whole marketing mix) strategies, and Forrester’s (1959)description of the “product life cycle (PLC).”

Borden’s “marketing mix”In his classic Harvard Business Review (HBR) article of the marketing mix, Borden(1964) credits James Culliton in 1948 with describing the marketing executive as a“decider” and a “mixer of ingredients.” This led Borden, in the early 1950s, to theinsight that what this mixer of ingredients was deciding upon was a “marketing mix.”McCarthy (1960, p. 52) acknowledges Frey (1956), The Effective Marketing Mix, withproducing the first marketing mix checklist, consisting of more than a dozen items.Subsequently, in an obscure unpublished working paper, Borden (1957) produced amarketing mix checklist with 12 sections containing more than two-dozen subsections.With dozens of items, the marketing mix might well have remained an obscureconcept, but instead took off when McCarthy (1960) reduced Frey and Borden’s

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laundry lists to the now common “4 Ps” mnemonic: product, price, promotion and place(making the notion simple enough for professors to remember).

With McCarthy’s (1960) simplification and popularization of the marketing mix,virtually every subsequent marketing management textbook has been organizedaround the four Ps. Not surprisingly, as the variables most easily controlled bymarketing managers, the majority of strategies discussed in the following sectionsinvolve either adding or subtracting various ingredients to the marketing mix.

Smith’s “differentiation and segmentation strategies”In one of the earliest uses of the term “marketing strategy,” in a very influential Journalof Marketing article, Smith (1956) described two basic marketing strategies: “productdifferentiation” and “market segmentation.” Although there are no references in hisarticle, Smith was clearly following Alderson’s prior use of the terms “productdifferentiation” and “market segmentation” (see Alderson, 1937, article and subsequentchapter in Alexander et al., 1940). Smith worked with Alderson as an associate in theconsulting firm of Alderson and Sessions, from June 1952 until its demise in 1958, andlike most marketing academics, was strongly influenced by Alderson’s thinking.Indeed, it is reported that Alderson “gave his notes on segmentation to Wendell Smithto write up [. . .] to become [Smith’s] award winning article” (Wooliscroft et al., 2005,p. 18).

In product differentiation, according to Smith (1956, p. 5), a firm tries “bending thewill of demand to the will of supply.” That is, distinguishing or differentiating someaspect(s) of its marketing mix from those of competitors, in a mass market or largesegment, where customer preferences are relatively homogeneous (or heterogeneity isignored, Hunt, 2011, p. 80), in an attempt to shift its aggregate demand curve to the left(greater quantity sold for a given price) and make it more inelastic (less amenable tosubstitutes). With segmentation, a firm recognizes that it faces multiple demandcurves, because customer preferences are heterogeneous, and focuses on serving one ormore specific target segments within the overall market. A comparison of these twoapproaches is illustrated in Figure 1.

Ultimately, as Oxenfeldt (1958) observed, strategies in marketing must emphasizeeither targeting customer segments (the demand side of the market) or differentiatingthe marketing mix (the supply side of the market).

Figure 1.Differentiation and

segmentation

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Smith’s use of product differentiation followed Chamberlin’s (1933) “monopolisticcompetition.” Chamberlin’s work in competitive theory also provided the basis forAlderson’s (1937, 1957) “competition for differential advantage,” Clark’s (1940)“workable competition” and (Clark, 1961) “dynamic competition,” Porter’s (1985)“sustainable competitive advantage,” and Hunt and Morgan’s (1995) “Comparative[later resource] advantage theory of competition.”

The idea of a product differentiation strategy is to position one firm’s brand asdifferent from competition in the minds of its customers, when supply and demand arerelatively homogeneous (or the firm chooses to ignore heterogeneity). Productdifferences are used in a broad sense, according to Chamberlin (1933, p. 71), and refer“to an alteration in the quality of the product itself –technical changes, a new design orbetter materials; it may mean a new package or container, it may mean more prompt orcourteous service, a different way of doing business, or perhaps a different location.”Thus differentiation can be “real,” i.e. based on physical product characteristics orlower price, or “perceived,” i.e. based on a prestige image, a familiar jingle or arecognizable logo (Alderson, 1965). Because any one or any combination of marketingmix elements can be used to differentiate a brand, it is probably more accurate tochange the terminology from “product” to “marketing mix differentiation,” or simply“differentiation.”

The term market segmentation was introduced into marketing by Alderson (1937)in an article that was later expanded into a book chapter (Alexander et al., 1940),because of his recognition of heterogeneity in supply and demand. Segmentation wasbased on the work of Robinson (1933, p. 187) who conceptualized the division ofmarkets into “sub-markets [. . .] with the highest price being charged in the least elasticmarket, and the lowest price in the most elastic market.” It was not until Smith’s (1956)work, however, that the segmentation concept was fully developed and popularized inthe marketing literature. Market segmentation may be defined as subdividing aheterogeneous market into more homogeneous subgroups based on some commoncustomer characteristics, such as age, location, time of purchase or purchase frequency.Segmentation strategy has been expanded into several forms, such as niche,multi-segment and across-the-board targeting strategies (Alderson, 1957; Kotler, 1980;McCarthy, 1978). In distinguishing between these alternative strategies, Smith (1956, p.5) described a product differentiation strategy as attempting “to secure a layer of themarket cake, whereas market segmentation strives to secure one or morewedge-shaped pieces.”

This treatment of differentiation and segmentation is broadly consistent with tworecent discussions of marketing’s intellectual heritage that also purport to provide“a better understanding” (Hunt, 2011) and “clarification [. . .] over the fundamentalmarketing concepts: “product differentiation and market segmentation” (Pirog andSmith, 2011). For the present discussion, segmentation and differentiation offer thefirm “alternative” marketing strategies. Aiming to serve a small subset of customersespecially well, a segmentation strategy represents a rifle approach aiming a distinctmarketing mix at each targeted segment (from niche to across-the-board) that the firmserves (Perreault et al., 2006). Alternatively, aiming to satisfy most customersreasonably well, in a differentiation strategy the firm designs a mix that stands outfrom competition and uses a shotgun approach pointed at the mass market (or largecustomer segment).

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Dean’s “skimming and penetration strategies”Some of the earliest types of marketing strategy were proposed by Joel Dean. In a 1950article, and then in his classic textbook, Managerial Economics, there is a section titled:“Policies for pioneer pricing.” Dean (1951, p. 419) writes:

The strategic decision in pricing is the choice between: (1) a policy of initial high prices thatskim the cream of demand; and (2) a policy of low prices from the outset serving as an activeagent for market penetration.

With skimming, a firm introduces a product with a high price and after milking theleast price sensitive segment, gradually reduces price, in a stepwise fashion, tappingeffective demand at each price level. Price skimming works because differentcustomers have differing social status needs, incomes and price sensitivities; and thosewith high income or low price sensitivity, for example, can be viewed as ahomogeneous segment within the overall heterogeneous market. Notice how Dean’sprice skimming strategy exploits Robinson’s (1933) emphasis on differing customersegments having differing elasticities of demand. By capturing consumer surplus(i.e. the excess of what customers are willing to pay above what they actually pay),price skimming generates greater revenue than a price penetration strategy, discussednext (see Figure 2).

The alternative introductory pricing strategy is to rapidly penetrate the market.With penetration pricing a firm continues its initial low price from introduction torapidly capture sales and market share, but with lower profit margins than skimming.Although revenues are lower, penetration provides a barrier to entry becausecompetitors are less attracted to a market with reduced profitability. Not limited to justthe price “P” of the marketing mix, Dean also considered the impact of varying degreesof promotional expenditures on these alternative pricing strategies. He recognized theadvantage of combining high promotional expenditures with low price to even morerapidly penetrate the market than using either marketing mix ingredient alone. Deanalso appreciated that fewer promotional dollars but greater targeting effort were

Figure 2.Price skimming andpenetration pricing

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necessary in skimming, which generates slower penetration but higher profit margins.We shall see that price skimming is often used in a niche segmentation strategy, whilea penetration pricing strategy can be extended to the entire marketing mix by addingproduct quality and distribution intensity to pricing and promotion.

Although Dean was an economist, his pioneer pricing strategies were transportedinto the earliest marketing management textbooks, including: Howard’s (1957)Marketing Management: Analysis and Decision, Kelly and Lazer’s (1958) ManagerialMarketing: Perspectives and Viewpoints, McCarthy’s (1960), Basic Marketing:A Managerial Approach, and Kotler’s (1967) Marketing Management: Analysis,Planning and Control. Skimming and penetration pricing strategies are still found inalmost all modern marketing management and marketing strategy textbooks, almostalways without attribution.

The life cycle of skimming and penetration pricing strategies, by one of marketing’smost influential authors, Philip Kotler in his Marketing Management textbooks from1967 to 2009, provides a useful illustration of the ebb and flow of these strategyconcepts over more than four decades. In his 1967 and 1972 editions Kotler summarizesDean’s version of pioneer pricing strategies in a couple of paragraphs. In his 1976edition Kotler juxtaposes high and low prices against high and low promotionexpenditures to create a two by two matrix named: “introductory marketing strategies”(Kotler, 1976, p. 235). Although the concepts remain the same (fast and slowpenetration versus fast and slow skimming), the terminology is refined in his 1980edition. The discussion remains unchanged through subsequent editions of Kotler’stextbooks until the 2000 edition where the matrix is eliminated and the discussionagain reduced to a few paragraphs of the newly termed “market-penetration pricing”and “market-skimming pricing” (Kotler, 2000, p. 458). By the 2003 edition, allreferences to “fast and slow” aspects are purged. This may be due to the difficulty offinding real world applications of “fast-skimming” and “slow-penetration,” becauseskimming is inherently gradual to skim the cream of each successive segment andpenetration is inherently rapid to forestall competition. Kotler and (now co-author)Keller’s two short paragraph discussions of penetration and skimming strategiesremain the same in the 2006 and 2009 editions. This example shows the difficulty inanchoring strategic terms and concepts without a well-grounded conceptualframework.

Forrester’s “product life cycle (PLC)”The PLC does not offer marketing strategies, per se; rather it provides an overarchingframework from which to choose among various strategic alternatives. One of theearliest discussions of the PLC in marketing is found in Alderson and Session’sconsulting newsletter: Cost and Profit Outlook (Alderson, 1951, p. 1). Here Aldersononly identifies three stages in his elongated “S” shaped sales curve: “establishment,expansion and stabilization.” At about the same time, Dean (1951, p. 422) mentionsproducts going through a five stage life cycle analogous to human development:“before birth, at birth, childhood, adulthood, or senescence.” Another five stage modelwas developed by Jones (1957), who includes introduction, growth, maturity,saturation and decline stages. Subsequently Wasson (1960, 1974) discussed stillanother five stage PLC model, which in addition to introduction and decline includes a

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“competitive turbulence” stage between growth and maturity (common with hightechnology products). Different terms but similar concepts.

Perhaps the earliest version of the PLC curve, using stages followed today, appearsin a Harvard Business Review (HBR) article by Forrester (1959). His work popularizedthe familiar elongated “S” shaped sales curve with the now common four stages:“introduction, growth, maturity and decline” (see Figure 3).

Forrester used the PLC to model the impact of advertising on sales using hiscomputer simulation “Industrial Dynamics.” Obviously, sales are impacted by all theingredients in the marketing mix. It is difficult to say who deserves priority of claim.Alderson and Dean produced three and five stage versions of the PLC. Wheninterviewed by Muhs (1985), Forrester said several PLC concepts were already in theliterature; whereas Conrad thought he had originated at least some of the ideas (Muhs,1985). Because Forrester’s version has survived in its original form to the present, thisversion is, somewhat arbitrarily, regarded as the archetype of the PLC.

The basic idea of the PLC is that sales, the dependant variable, follows an elongated“S” shaped curve that is a function of a number of customer variables (e.g. size ofmarket, rate of growth, rate of replacement) and competitor variables (e.g. number ofcompetitors, barriers to entry, marketing mix effort). All of these variables are capturedby time, which is a proxy for all independent variables.

Although, there are many variations (see Lazer and Shaw, 1986), the life cycle startswhen a new product is introduced into the market. Sales start out slowly as customersfirst become aware of the new product and then develop a desire for it. If a sufficientnumber of customers adopt the new product, the pioneer’s success attracts competition.

New competitors entering the market create the rapid growth stage of the PLCbecause increased competition creates greater product variation and lower prices,along with heavier advertising and more extensive distribution. The combinedindustry’s marketing mix efforts fuel positive word of mouth as customers feelcompelled to keep up with the Joneses. During the rapid growth stage, sales sooner orlater reach an inflection point where demand shifts from increasing at an accelerating

Figure 3.Product life cycle

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rate to increasing at a decelerating pace due to a shift in the ratio of new purchases toreplacement buying.

The excess capacity caused by a slowing growth rate accounts for Wasson’s (1974)competitive turbulence stage. As sales approach the market potential (i.e. mostcustomers who want the product already own it), sales growth slows to acquisitions forreplenishing stock and for newly formed households. In reaction, competitivemarketing mixes and market shares often stabilize as well and the product enters thematurity stage of the life cycle. Eventually the product starts losing its customer base,usually to another new product, and sales go into the decline stage, as only laggards(who eventually die out) remain in the market buying the old product. It should benoted that decline and divestment is not necessarily inevitable, as products reachmaturity they may be recycled into another growth phase. For more than a century, theGillette Company has been successful in forestalling maturity and decline bycontinuously recycling growth of its razor and blade life cycle by engineering new andimproved brand extensions (e.g. safety razor, blue blade, stainless steel blade,Technomatic, Atra, Trac II twin blade system, Sensor, Mach 3 three blade system,Fusion five blade system).

With Levitt’s (1965) classic HBR article: “Exploit the product life cycle,” the PLCentered the rapid growth stage of its own life cycle. Subsequently, numerous literaturereviews and meta-analyses have appeared summarizing the extant PLC literature andanalyzing its strengths and weaknesses (e.g. Buzzell, 1966; Dhalla and Yuspeh, 1976;Polli and Cook, 1969; Smallwood, 1973); with one of the most comprehensive analysesin a book by Wasson (1974) and a special section in the Journal of Marketing guestedited by Day (1981). The PLC has both supporters and critics.

The notion that successful products go through sequenced stages of a life cycle overtime is supported by the PLC’s heavily researched theoretical complement –the diffusion of innovation (Lazer and Shaw, 1986). Sales, the dependent variable in thePLC is mirrored by – the flip side of the coin – consumer acceptance (or purchase), thedependent variable in the diffusion of innovation literature (Rogers, 1962). The majorcriticism of the PLC as a theory is predicting the timing of transitions from one stage tothe next (Hunt, 2010). Transitional predictions need not detain us, however, because forpurposes of the present research the PLC is used in its role as a classification system,with each stage indicating several available strategies. Specifying a given stage iseasily determined empirically by plotting sales over time. Given that a product caneven loosely be identified with a particular stage of the PLC points the manager to achoice of several alternative marketing strategies, discussed shortly.

Forrester was an economist, but his concept of the PLC was reproduced in theearliest marketing management textbooks, including: Kelley and Lazer (1958),McCarthy (1960), and Kotler (1967). The PLC is still found in almost all modernmarketing management and strategy textbooks, but hardly any give a citation. Incontrast to the lack of citations for marketing strategy concepts, surprisingly, almostall corporate management strategies, other than SWOT, are well referenced in themarketing literature.

Corporate strategy conceptsThe strategic concepts discussed so far (the marketing mix, skimming and penetration,differentiation and segmentation, and the PLC), were created by economists and

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marketing scholars and gained popularity in early marketing management textbooks.The following strategic concepts, Andrews’ SWOT, Ansoff’s growth strategies,Porter’s generic strategies, and Henderson’s product portfolio model, were developedfor corporate management, not marketing management. Because marketing strategy isa major component of corporate strategy there is overlap, but these two areas are notisomorphic. Nevertheless, corporate strategy concepts have been shoehorned intactinto subsequent generations of marketing textbooks from the 1970s and 1980s to thepresent. It is largely shoehorning of borrowed concepts that has created the presentstate of isolated bits and pieces of marketing strategy rather than the development ofan overarching conceptual framework.

Andrews’ “SWOT analysis”Although widely used in marketing strategy, SWOT (also known as TOWS) Analysisoriginated in corporate strategy. The SWOT concept, if not the acronym, is the work ofKenneth R. Andrews who is credited with writing the text portion of the classic:Business Policy: Text and Cases (Learned et al., 1965). For Andrews, strategy emergesfrom aligning “environmental opportunity” with “corporate capability;” he writes:

In deciding what strategy should be [. . .] its principal subactivities include (1) identifyingopportunities and threats in the company’s environment [. . .] and (2) appraising thecompany’s strengths and weaknesses. The strategic alternative which results (is) a matchingof opportunity and corporate capability (Learned et al., 1965, p. 20).

Interestingly, this matching of external circumstances with internal conditions wasanticipated by Alderson (1957, p. 357) who also spoke of “matching opportunity witheffort” where Alderson’s (1957, pp. 361-364) “effort” was defined almost synonymouslywith Andrew’s “capability.” It is difficult to know if Andrews at Harvard wasinfluenced by marketing’s dominant thinker, Alderson at MIT at the time, and laterWharton, who was also one of America’s leading business consultants.

Even though Andrews does not identify any actual “strategic alternative whichresults” from SWOT analysis, like the PLC, these two approaches provide the criticalfactors to consider in determining the most effective strategic choice. The key internalfactors affecting strategy, from the marketing perspective, involve the availability andapplication of marketing mix resources (Alderson’s “effort”); and some of the crucialexternal factors include market size, potential, rate of growth, and competitors (as alsodescribed in the PLC). SWOT analysis, as will be shown, also provides the mainfoundational concepts for growth – share type product portfolio matrices.

Since marketing strategy, by definition (Oxenfeldt, 1958), involves choosing targetsegments and a marketing mix, many of the following approaches to corporatestrategy also emphasize one or the other of these fundamental marketing strategyconcepts. Next we examine the genesis of approaches to corporate strategy that havecome to dominate the marketing textbook literature, then reorienting them to fitmarketing strategy by breaking down and modifying the concepts where necessary,and finally modernizing the terminology and rebuilding the concepts into a frameworkfor marketing strategy.

Ansoff’s “growth strategies”The most well-known, and least often attributed, aspect of Igor Ansoff’s GrowthStrategies in the marketing literature is the term “product-market.” The product-market

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concept results from Ansoff juxtaposing new and existing products with new andexisting markets in a two by two matrix, as shown in Figure 4.

Ansoff’s (1957, p. 114) original HBR paper establishing the two by twoproduct-market matrix was preceded by an HBR article three months earlier withalmost identical concepts by Johnson and Jones (1957, p. 52). These authors developeda three by three matrix based on technological (product) newness and market newnessranging from existing products to new products. One of Ansoff’s cells used theidentical term “diversification” found in Johnson and Jones; while two of the cells usednearly identical terminology: “product extension” versus Ansoff’s “productdevelopment,” and “market extension” versus Ansoff’s “market development.”Although not cited (citations of earlier work were rare in business periodicals prior tothe 1950s), Ansoff (1957) would certainly have been familiar with the earlier article andhis work clearly refines and extends some of Johnson and Jones’s (1957) ideas. Usefulas the model may be for corporate strategy, there are several problems with Ansoff’s(1957, 1965) product-market matrix from a marketing perspective.

For marketing, there are two problematic and two useful cells in Ansoff’s matrix. Inthe case of an existing product and an existing market, Ansoff suggests a penetrationstrategy. However, there is no meaningful information provided about how to actuallyuse this strategy to penetrate the market. For example, Ansoff (1957, p. 114) says:

Market penetration is an effort to increase company sales without departing from an originalproduct-market strategy.

In a similar vein Ansoff (1965, pp. 109-110) states:

Marketing penetration denotes a growth direction through the increase of market share forthe present product-market.

This begs the question: what should the strategist do to generate sales or market sharegrowth “without departing from an original product-market strategy”? Sales andmarket share are goals, but what are the specifics of a penetration strategy to attainthem? In answer to the question, Ansoff is silent, as are most subsequent marketing

Figure 4.Growth strategies

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writers. Aside from the strategy’s lack of specificity, there is a glaring inconsistencythat has apparently escaped notice in the marketing literature.

It will be recalled that Dean (1951) regarded a penetration strategy as introducing anew product into a new market (and he specified the strategy as employing low priceand high promotion to rapidly build sales and gain market share). This presents acontradiction in the use of the term “penetration,” because Ansoff’s strategy involvesan existing product in an existing market rather than a new product in a new market.As will be shown, a penetration strategy may be used with either new or existingproducts in either new or existing markets; and as Dean proposed, a penetrationstrategy involves the aggressive use of a combination of marketing mix elements.

Another problem with the matrix involves strategic level. Ansoff regarded adiversification strategy (i.e. new product and new market) as a major departure from afirm’s current operations that involved mergers and acquisitions. In this case,corporate diversification is a top-level business strategy that is seldom made by amarketing manager. On the other hand, if a diversification strategy is taken to meanthe introduction of a new product to a new customer segment, at the marketingmanagement level, then it is simply a form of segmentation strategy, discussed next.

There are two particularly useful components in Ansoff’s growth strategies.“Market development,” according to Ansoff’s (1957, p. 114), “is a strategy in which thecompany attempts to adapt its present product line to new [market segments].”Essentially, the firm expands its sales by adding new customer segments (irrespectiveof whether the product is old or new). The market development concept will be retainedin its expanded form, but following Smith (1956) renamed a “segment expansionstrategy.” Segment expansion may take several forms (Kotler, 1980; McCarthy, 1981),such as a multi-segment strategy (targeting several segments each with their ownmarketing mix), or an across-the-board segment strategy (aiming a different marketingmix at each customer segment in a market).

The other useful growth strategy is Ansoff’s “product development strategy,” inwhich new models, styles, or colors are added to the product line. Kerin and Peterson(1978, pp. 123-124) proposed replacing “product development” with their more relevantterm “offering development;” arguing that the former is limited to products and thelatter includes both products and services. Both development terms could standimprovement. The product development term is limited and the offering developmentterm is awkward. A more modern term without baggage, that also parallels a segmentexpansion strategy, is a “brand expansion strategy.”

One should also realize that both growth strategies “segment expansion” and“brand expansion,” build upon Smith’s (1956) original two marketing strategies:“segmentation” and “differentiation.’ As shown next, Smith’s strategic alternativesalso provide the conceptual underpinning for Porter’s generic strategies.

Porter’s “generic strategies”Starting with a two by one matrix, Porter’s (1980) work has undergone a series ofmodifications (Porter, 1985, 1990) to arrive at a two by two matrix that juxtaposes lowcost and uniqueness with industry-wide and narrow target segments (see Figure 5).

Porter’s matrix, like Ansoff’s, was developed for corporate strategy, hence it alsohas pros and cons for marketing strategy. One of the main weaknesses of Porter’sgeneric strategies from the marketing perspective is the concept of low cost leadership.

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Having a lower cost has two alternative implications: either higher profit margins orlower prices. Higher profit margin is the implication resulting from lower cost thatPorter (1985, p. 13) apparently had in mind:

If a firm can achieve and sustain overall cost leadership, then it will be an above-averageperformer in its industry provided it can command prices at or near the industry average.

Significant for corporate strategy because it produces greater profits, Porter’sadvantage of a lower cost provides almost no value for the marketing strategist. Anaverage price may avoid being a marketing weakness, but it certainly is not amarketing strength. It is only the second implication, when a low cost advantage istranslated into a price below competition that it becomes a strength the marketingstrategist finds valuable.

A lower price than competition is a strength because below market pricing is a formof differentiating one brand offering from another, as surely as a prestige product,unique service, trademark, logo, promotional jingle, distribution outlet, or any othermarketing mix element(s) that make one brand stand out from the pack in the minds ofpotential or actual customer segments. Thus, juxtaposing low cost (almost always usedsynonymously but mistakenly with low price by marketing students) versusdifferentiation (with non-price marketing mix ingredients) carries more baggage thanbenefit, since price is one element of the marketing mix, and any element can serve asthe basis for a differential or competitive advantage. Simply, it is illogical to excludeprice as a type of differential advantage. In Chamberlin’s (1933, p. 56) words:

Differentiation (occurs) if any significant basis exists for distinguishing the goods of oneseller from those of another.

As Porter (1985, p. 14), himself, notes:

In a differentiation strategy a firm seeks to be unique in its industry along some dimensionsthat are widely valued by buyers.

Low price is obviously a dimension widely valued by many buyers. Therefore, tocomplete the syllogism, low price is an element of a differentiation strategy.

Figure 5.Generic strategies

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There is another marketing issue with Porter’s matrix, the dichotomy between“industry wide” and “narrow target” strategies. An industry wide strategy, better knownin the marketing literature as a mass market strategy (i.e. a single marketing mix for allcustomers in the market) is most relevant for large firms with strong financial resourcesoffering a standardized commodity. Porter’s “narrow target segment,” commonly knownin marketing as a “niche strategy” (targeting a narrowly defined customer segment witha tailored marketing mix), is often a necessity for a smaller firm with strong marketingskills but limited financial capability. However, Porter’s matrix does not recognizeseveral alternative marketing strategies sandwiched between these two. In between amass market and a niche strategy, there are a variety of segment expansion strategies(e.g. multi-segment or across-the-board, as previously discussed). Thus, all variations ofPorter’s generic strategies, except cost leadership, may also be derived from Smith’s(1956) core marketing strategies: differentiation and segmentation.

BCG’s “growth-share portfolio matrix”Based on his work with experience curves (that also provides the rationale for Porter’slow cost leadership strategy), the growth-share matrix was originally created by BruceD. Henderson, CEO of the Boston Consulting Group (BCG) in 1968 (according to BCGhistory). Throughout the 1970s, Henderson expanded upon the concept in a series ofshort (one to three page) articles in the BCG newsletter titled Perspectives (Henderson,1970, 1972, 1973, 1976a, b). Tremendously popular among large multi-product firms,the BCG portfolio matrix was popularized in the marketing literature by Day (1977).

By the early 1980s, there were more than a dozen portfolio models, relatingenvironmental opportunities to organizational strengths (e.g. General Electric’s 3 £ 3market attractiveness – business strength matrix, Shell Chemical’s 3 £ 3 businessprospects – company capabilities directional policy matrix, Arthur D. Little’s 4 £ 5industry maturity – competitive position table). All portfolio models focus on somevariation – mostly in terminology – of a firm’s competitive strengths and marketgrowth opportunities (see Andrew’s SWOT). Either because it was the first mover, orthe least complicated, or it offered the most colorful terminology (e.g. cash cows anddogs), the BCG 2 £ 2 market growth – market share matrix dominates the productportfolio literature (see Figure 6).

Products in various cells of the growth-share matrix are directly related to stages inthe product life cycle. Question marks are introduced into the market with the potentialfor growth. If their sales growth actualizes their potential, question marks becomestars. With a slowing growth rate stars mature into cash cows; and as growth declines,cows turn into dogs. For question marks and stars, found in the early stages of thePLC, a number of introductory and growth strategies have previously been mentionedand are further discussed below.

In the maturity and decline stages of the PLC, three additional marketing mixstrategies emerge from portfolio models – maintenance, harvesting, and divesting.Although the concepts were being used by firms long before the terms were developed(Kotler, 1965), portfolio models rationalize these strategies and make them moreexplicit. In early to mid-maturity, when sales growth is slowing, the BCG suggests a“maintenance strategy” in which a firm holds or maintains its marketing mix effort atcurrent expenditure levels. In mid to late maturity, when sales growth begins turningnegative, a “harvesting strategy” (see Kotler’s, 1978, discussion) is recommended

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where the firm reduces its marketing mix expenditures anticipating a less thanproportional reduction in sales. As the market continues declining, at some point a“divesting strategy” becomes necessary. The marketing mix is reduced to zero and thebrand removed from the market.

Framework for marketing strategyHaving followed the literature and dissected marketing strategy terms, this sectionintegrates the concepts into a framework that identifies alternative marketingstrategies at different stages of the PLC and under various SWOT conditions. Theframework is shown in Figure 7.

Figure 7.Framework for marketingstrategy

Figure 6.Growth – share matrix

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Figure 7 shows the stage in the industry or market life cycle that a particularmarketing strategy becomes viable for a pioneer or followers, and ends when thestrategy is no longer a realistic alternative. The various marketing strategies in eachstage of the PLC are described below.

Market introduction strategiesAt introduction, the marketing strategist has two principle strategies to choose from:penetration or niche. A penetration strategy (Dean, 1951; Ansoff, 1965) emphasizes anaggressive marketing mix for a mass market or a large segment of the market. As theterm has been developed in this research, a penetration strategy is not limited to acurrent product in a current market (Ansoff) or just a low introductory price (Dean).A penetration strategy involves using the marketing mix aggressively. Althoughevery mix element need not be aggressive, a penetration strategy should include somecombination of a no-frills product, minimal service, low price, high promotionalexpenditures and intensive distribution effort. A penetration strategy, followingAndrew’s SWOT, is ideal for large firms with strong financial resources facing a largeand growing market, price sensitive customers with minimal brand awareness orpreference, many potential competitors and few barriers to entry. A penetrationstrategy will work from the introduction into the growth stage and perhaps as late asthe early maturity stage of the PLC. As an offering approaches maturity, however, highmarketing mix expenditures cannot be sustained as sales growth slows and marginalcosts rise more rapidly than marginal revenue.

Alternatively, a niche strategy (Kotler, 1980; Porter, 1980; McCarthy, 1981) focuseson a narrowly defined customer segment and is ideal for smaller firms with limitedresources. The niche strategy expands Porter’s “focus” (Porter, 1980) or “narrow targetsegment” (Porter, 1990) strategy and incorporates Dean’s (1951) price skimming butfrom the angle of a market segment’s price sensitivity. Although asegmentation-oriented strategy, the marketing mix aimed at a niche is largelydictated by company and market considerations. With the niche strategy (Alderson,1957; confusingly termed concentrated segmentation by Kotler, 1976) a firm targets anarrowly defined customer segment. The marketing mix typically involves a customtailored product offering, a high price, and given the small-sized customer base,promotional expenditures are focused and thereby relatively low, with selective orexclusive distribution coverage. This strategy works well in smaller segmentsrequiring higher profit margins to compensate for lack of sales volume, whencustomers are insensitive to price, can easily be made aware of the brand with minimalpromotional effort, and the firm can create some barriers to entry resulting in fewdirect competitors. The niche strategy can be highly profitable, even in very smallsegments, because it combines high price with low marketing mix expenditures(Kotler, 1980). This strategy has the added virtue of allowing pin-point timing. A nichestrategy does not require a lot of set-up and breakdown time, effort or money, allowinga firm to move in and out of the market quickly. Taking advantage of “windows ofopportunity” (Abell, 1978), a niche is therefore potentially profitable at virtually anystage of the life cycle from introduction to decline. For example, the General PencilCompany (GPC) founded in 1889, produced a high quality lead pencil (once thestandard bearer of the ubiquitous No. 2 pencil), but since pencils have become athrow-away, even single-use product, GPC was unable to compete with cheap imports

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on price. Facing a declining market, for a commodity type product, GPC found theirniche – artists and illustrators who required a harder more durable lead in their penciland were willing to pay a premium price for a higher quality product.

Market growth strategiesIn the early growth stage, the marketing manager may choose from two additionalstrategic alternatives: segment expansion (Smith, Ansoff) or brand expansion (Borden,Ansoff, Kerin and Peterson, 1978). In segment expansion, the strategist adds newtargets (each with their own marketing mixes) to the market segments already served.A classic example was Toyota’s Crown automobile entering the US market in 1956with a niche strategy – a single marketing mix targeted at a single segment –economy conscious sub-compact auto buyers. After gaining a toehold in the market, itused segment expansion to go beyond its niche, offering brands for multiple segments,including the sub-compact, compact, mid-size, large size and sports-car segments.Ultimately targeting across-the-board, it aimed a marketing mix at virtually all autoand small truck market segments, and even developed the separate Lexus brand totarget the luxury auto segment. Although also a form of segment expansion, it is usefulto separate geographics from other forms of segmentation, such as demographics,psycho-graphics, sociographics, and behavioral characteristics. In geographicexpansion, firms shift their sights from local, to regional, to national, tointernational, to global customer targets. This strategy is increasingly used whengrowth slows down as local (or domestic) markets approach maturity.

Similar to expanding segments, another strategic alternative in the growth stageinvolves brand expansion. This strategy adds new products or variations to the line,offering the customer segment more choice, or it provides additional services, such asdelivery or gift wrapping, to offer customers greater value.

During the late growth stage, sales are still growing rapidly, but hit an inflectionpoint where they shift from increasing at an accelerating rate to increasing at ade-accelerating rate. In markets growing very rapidly, this shift in the rate of growthoften produces a competitive turbulence (Wasson, 1974), in which an industryshake-out occurs, because of excess capacity. During this turbulence another strategyis often called for – a differentiation strategy. If not used in late growth, as firms jockeyfor advantage, then differentiation is often employed in the maturity stage, discussednext.

Market maturity strategiesIn maturity, sales growth slows, stabilizes and starts to decline. In early maturity, it iscommon to employ a maintenance strategy (BCG), where the firm maintains or holds astable marketing mix. This is common in oligopoly industries, where a small numberof firms hold a large share of the market. Satisfied with maintaining their market shareand milking profits, these firms prefer not to rock the boat. If firms can preserve arough equilibrium, a maintenance strategy could work until sales decline to meet costs.But maintenance is a rather passive strategy subject to a shake-up by an aggressivecompetitor.

If a firm wants to shuffle the deck, differentiation offers an aggressive butaffordable strategy in maturity (Smith, Porter). It involves a firm using one or moreelements of the marketing mix to enhance purchase value for its customers. For

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example, product quality could be improved, price lowered to offer greater economy,upscale advertising media employed to create more brand prestige or distributionoutlets added to provide greater customer convenience. Although aggressive,differentiation is far less forceful and far less expensive than a penetration strategy.Because it involves more marketing mix finesse and need not be expensive, adifferentiation strategy could work at virtually any stage of the life cycle, from growthinto decline.

As a firm moves further along the maturity curve, a harvesting strategy(Henderson, 1970; Kotler, 1978) becomes an option if not a necessity. Typically, as amarket shifts from early to late maturity, a maintenance strategy evolves into aharvesting strategy. In harvesting, marketing mix effort is reduced following thedeclining sales, and the brand remains a cash cow as long as the cost reductions aremore than (or at least) proportional to the declining sales.

Market decline strategiesAt some point the decline in sales approaches and then begins to exceed costs. And notjust accounting costs, there are hidden costs as well; as Kotler (1965, p. 109) observed:

No financial accounting can adequately convey all the hidden costs.

At some point, with declining sales and rising costs, a harvesting strategy becomesunprofitable and a divesting strategy necessary.

Although if a firm is one of the “last men standing” it may remain a “profitablesurvivor” (Kotler, 1997) in the market, if most of the competition has dropped out, ifthere are a sufficient number of laggards with purchasing power and a desire to buylingering in the market, and if the costs of serving these remaining customers stayslow. This is essentially an extreme harvesting strategy. Non-filter cigarettes or doubleedge razor blades provide examples of how a few competitors have survived in slowlydeclining markets. Eventually, as customers die out, marketing mix expendituresdecline to zero and the brand is removed from the market.

Summary and conclusionThis research has shown that the history can provide a powerful guide tounderstanding how simplicity evolves over time into complexity, in general, and howmarketing strategy terms and concepts could arrive at their current state of confusion,in particular. It also shows how the history of marketing thought can provide a usefulguide for current marketing practice.

The literature was examined to find the original sources of strategic concepts, tosort-out inconsistent terminology, to integrate isolated strategic approaches, and tocreate a broad spectrum framework that could serve as a strategic marketing toolkitfor understanding and applying marketing management strategies. As was shown,many strategic marketing approaches are interrelated. BCG type growth-shareportfolio matrices are built on SWOT Analysis. Strengths and weaknesses affect afirm’s market share, and opportunities and threats affect a market segment’s growth.SWOT Analysis, in turn, is built on the marketing mix as a basis for determiningstrengths and weaknesses; and customer segments provide a basis for determiningopportunities and threats. Dean’s penetration strategy is related to the marketing mix,while his skimming strategy is related to segmentation – the two element of marketing

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strategy discussed by Oxenfeldt. As well, both growth and generic strategies arelargely based on market segmentation and differentiation as discussed by Smith.Ansoff’s brand development and Porter’s differentiation strategies are based on themarketing mix; and Ansoff’s market development and Porter’s industry-wide andnarrow segment strategies are based on segmentation.

In the conceptual framework presented here, two structural approaches to strategyoffer guidance in choosing among strategic alternatives: the PLC (Jones, 1957;Forrester, 1959; Wasson, 1974) describing and classifying the stages sales passthrough over time, and SWOT Analysis (Learned et al., 1965) depicting how sales canbe increased by aligning conditions inside and outside the firm. Fundamentally, thereare two main sources of individual marketing strategies: customers and marketingmixes (Oxenfeldt, 1958). Alternative customer strategies involve either massmarketing, a single marketing mix for everyone, or targeting segments, with anindividual marketing mix for each segment (Smith, 1956). Alternative segmentationstrategies usually start with targeting a single segment, from a small niche (Kotler,1980; Porter, 1980) to a large single segment of the market (McCarthy, 1981). A singlesegment strategy will sometimes grow into expansion strategies targetingmultiple-segments and could ultimately involve targeting all segments in anacross-the-board strategy (Kotler, 1980; McCarthy, 1981). Alternative marketing mixstrategies include penetration (Dean, 1951; Ansoff, 1965), brand expansion (Ansoff,1965; Kerin and Peterson, 1978), differentiation (Smith, 1956; Porter, 1980; Kotler, 1980),maintenance (Henderson, 1976b), harvesting (Henderson, 1976b; Kotler, 1978) anddivesting (Kotler, 1965; Henderson, 1970).

The framework presented here is both conceptual and practical. This frameworkprovides a researcher a consistent and logically coherent set of marketing strategyterms and concepts to build upon. This framework, based on the stage of the life cycleand the alignment of organizational strengths with environmental opportunities,allows the marketing strategist to choose, from among the various segmentation andmarketing mix strategic alternatives, discussed above, the most effective strategy forachieving the marketing manager’s goal(s). Future research should focus on honingthese strategic concepts and developing additional strategies to incorporate into theframework.

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Further reading

Anderson, C.H. and Vincze, J.W. (2000), Strategic Marketing Management, Houghton Mifflin,Boston, MA.

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Robinson, S.J.Q., Hichens, R.E. and Wade, D.P. (1978), “The directional policy matrix – tool forstrategic planning”, Long Range Planning, Vol. 11 No. 3, pp. 8-15.

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Xenophon (1832), “Memoirs of Socrates”, The Whole Works of Xenophon, Jones & Co., London,translated by A. Cooper, E. Spelman, W. Smith, and S. Fielding, first published 415BCE.

About the authorEric H. Shaw is Professor of Marketing at Florida Atlantic University. He teaches PhD seminarsin the history of marketing thought and the development of marketing theory, which are also hismajor research interests. Other research areas include: marketing strategy, decision making,conceptualizing and measuring macromarketing system performance, and the study of generaland complex adaptive systems. Dr Shaw has published numerous articles, book chapters andmonographs, and he serves on a number of editorial review boards. Eric H. Shaw can becontacted at: [email protected]

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Marketing Strategy - From the Origin of the Concept to the Development of a Conceptual Framework

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