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The purpose of this paper is to present taxonomy of marketing strategy concepts and integrative frameworks that differentiate and integrate its formulation and implementation processes. The paper is conceptual based on a review of academic literature on marketing strategy chronicled in major marketing journals January 1990-April 2006. The author presents selected references classified by key marketing strategy topics for further pursuit by interested readers. Also, the paper reflects experience and views based on practices chronicled in corporate case studies and trade journals. The literature casts marketing strategy formulation and implementation in the context of strategic planning and marketing strategy process models. The focus of the strategic planning model is on achieving corporate financial objectives through the implementation of product, pricing, promotion, and place (distribution) programs. The focus of the marketing strategy process model is on the formulation of segmentation, targeting, differentiation, and positioning strategies to create, communicate, and deliver the value to the customer resulting in gaining customer satisfaction and loyalty; i.e. marketing objectives.

Professor Göran Svensson

The marketing literature is replete with normative and positive theoretical and empirical research-based papers and articles dealing with various aspects and elements inherent in the processes of marketing strategy formulation and implementation. Albeit robust in concept, unlike consumer behaviour, personal selling, and advertising, marketing strategy did not rise to the status of a sub-discipline of marketing! Surprising at first glance, but clear when subjected to scrutiny!

First, there is no family tree that reflect clear genealogy of marketing strategy, its heritage and relationships with one of its parent disciplines, strategy, and brother and sister strategies of the firm; i.e. corporate strategy; growth strategy; other functional area strategies such as production/operation, finance, and human resource strategies; competitive strategy; e-strategy; and global strategy!

Second, the concept of marketing strategy lacks clarity in the sense that in one breath the literature counts segmentation, targeting, differentiation, and positioning as marketing strategies and in the same breath recounts the marketing mix elements/4 Ps, i.e. product, pricing, promotion and place (distribution), as strategies. Such account of marketing strategy fails to differentiate between marketing strategy and marketing management. Marketing strategies are segmentation, targeting, differentiation, and positioning. Marketing management is a marketing mix program designed for marketing strategy implementation! Adding insult to injury, the role of branding in marketing strategy formulation and implementation is almost confounded. Is it one of the marketing strategies? Is it product/branding, a subsidiary tactic of the product element of the marketing mix? Is it stand-alone strategy that mediates marketing strategies into a marketing mix/management implementation program?

Fourth, the literature casts marketing strategy in the context of either corporate/business strategic planning or marketing process models. The focus of the strategic planning model variety is on achieving corporate financial objectives through designing and implementing product, pricing, promotion, and place (distribution) programs. The focus of the marketing process model variety is on the formulation of segmentation, targeting, differentiation, and positioning strategies designed to create, communicate, and deliver value to the customer to ensure their satisfaction and gain their loyalty, i.e. achieve marketing objectives. Neither of the models alone captures the multidimensionality of marketing strategy formulation and implementation from a customer, company, and competitor vantage point.

In this paper we attempt to remedy these shortcomings. The paper is organized in two major sections and six sub-sections:

Taxonomy of marketing strategy

At first we present taxonomy of marketing strategy formulation and implementation followed by an integrative framework setting the foundation for marketing strategy in the context of other strategies of the firm:

- Marketing strategy formulation processes.

- Marketing strategy implementation processes.

- Marketing strategy formulation and implementation processes.

- Marketing strategy in the context of other strategies of the firm.

Alternative frameworks for integrating marketing strategy formulation and implementation

At first, we cast the design and implementation of a marketing-oriented, customer-focused marketing strategy into a framework that incorporate the strategic, structural, and management/operations antecedents to creating customer value. In the second, we cast marketing strategy formulation and implementation into a managerially-oriented, company-focused strategic planning framework. The framework incorporates dependent/marketing management, independent/marketing strategy, and mediating/firm orientation, branding, and organizational structure variables.

Marketing process model. Creating a positive customer experience;

- antecedents;

- processes; and

- outcomes.

Strategic marketing planning model;

- the role of firm orientation;

- an apologetic for tiers I and II marketing strategy;

- strategy must drive the structure; and

- marketing strategy metrics.

Throughout the paper we advance a number of propositions that constitute taxonomy of the concepts of marketing strategy formulation and implementation. The taxonomy and frameworks presented are based on deductive reasoning and collective evidence gathered from the literature. Selected references of the literature reviewed, classified by marketing topics are listed at the end of the paper for readers interested in further pursuing the subject. We hope that the propositions and frameworks constitute guidelines useful in the process of marketing strategy formulations and implementation by practitioners. Also, we hope that in the process of developing the taxonomy and frameworks, we improved the range of concepts and quality of frameworks; thus rendering more sound bases for the conduct of academic research.

Taxonomy of marketing strategy

In this section we present taxonomy and integrative frameworks setting the foundation for marketing strategy formulation and implementation in the context of other strategies of the firm. At first, we set forth taxonomy and related frameworks for marketing strategy formulation and implementation. Later we present an integrative framework of marketing strategy in context of other strategies of the firm.

Marketing strategy formulation processes - the mediating role of targeting

Marketing strategy is defined for our purposes as the total sum of the integration of segmentation, targeting, differentiation, and positioning strategies designed to create, communicate, and deliver an offer to a target market . The process of marketing strategy formulation is shown in Figure 1 [Figure omitted. See Article Image.]. The framework for marketing strategy formulation illustrates a disciplined process of strategy formulation built around the three pillars of the marketplace/space, i.e. customers, company, and competitors. It portrays marketing strategy formulation as an interactive and iterative process involving a number of steps that must be performed in sequence:

- understand customer behaviour;

- segment the market;

- select target segments;

- design the offer to fit target market needs;

- differentiate the offer; and

- position it in the customers mind.

The framework implies a relationship that should be stated explicitly; i.e. targeting mediates the company to the customer . The mediating nature of targeting underscores the importance of importance of following the rigorous sequence of sub-processes referred to earlier.

Marketing strategy implementation processes - deploying the marketing mix to create, communicate, and deliver the value

Once marketing strategy is formulated, a process for its implementation must be set in force. The process of strategy implementation is what we traditionally label as marketing management. Marketing management is defined for our purposes as the marketing strategy implementation processes of creating the value (product/price), communicating the value (promotion), and delivering the value (channels). The process, mix, and program designed to create, communicate, and deliver the value are shown in Figure 2 [Figure omitted. See Article Image.].

In essence, the value is created by conceiving the product/service offer, brand naming it, and pricing it ; the value is communicated by promoting the offer; the value is delivered via marketing channels . Because of its significance as a necessary condition for effective strategy implementation, the theme of value creation, communication, and delivery will be pursued further in detail later in the second section of the paper.

Marketing strategy from formulation to implementation - the critical role of branding

The definitions presented in the first and second parts of this section set apart strategy formulation from its implementation. The integration of marketing strategy formulation and implementation processes is shown in Figure 3 [Figure omitted. See Article Image.]. The integrative framework underscores the need to classify marketing strategy formulation and implementation variables into dependent, independent, mediating, and moderating variables. Such classification enables us to develop better understanding of the role and function of some, if not all, the variables. Good examples are targeting that mediates the company's offer to its customers and branding that mediate differentiation and positioning.

Branding is defined for our purposes as naming the offer to gain an identity , evolve meaning, and project an image conducive to building brand equity . As shown in Figure 3 [Figure omitted. See Article Image.], not only does branding mediate strategy from formulation into an implementation program, but also, the role of branding spans naming the offer to differentiating the company's offer from its competitors' and positioning it in the customers' mind.

Marketing strategy in context of other strategies of the firm

Marketing strategy is not a stand alone endeavour. As shown in Figure 4 [Figure omitted. See Article Image.], marketing strategy is an integral component of functional area strategies of the firm, e.g. marketing, finance, and human resources, designed and implemented in unison with other strategies of the firm, i.e. corporate, growth, competitive, global, and e-business strategies .

We group corporate, marketing/functional area, and growth strategies as key strategies for winning the marketing war . These strategies are translated into competitive strategies designed to win battles in market places and spaces . We classify global and e-business strategies as dimensional strategies that moderate/impact all other strategies of the firm . Global strategy is mediated to all other strategies primarily through market development growth strategy. E-business strategy is mediated to all other strategies of the firm through corporate strategy. While other strategies, such as marketing, may be designed to improve effectiveness of the firm, e-business strategy defined as the total sum of e-commerce, business intelligence, supply chain management, customer relationship management, and enterprise resource planning is designed to enhance firm efficiency.

Marketing strategy contributes to enhancing firm effectiveness through targeting. E-business strategy contributes to enhancing firm efficiency through reduction in transaction cost (e-commerce), enhancing business intelligence, improving supply chain and customer relationship management and enterprise resource planning. These contributions are shown in Figure 5 [Figure omitted. See Article Image.]. The significance of these strategy links lie in the performance synergy between effectiveness and efficiency that lead to productivity gains necessary to create customer value .

Firms that achieve sustainable competitive advantage capitalize on other weapons in the strategy arsenal including strategic synergy between marketing and other functional area and organizational strategies as shown in Figure 6 [Figure omitted. See Article Image.]. The thesis here is that additional productivity gains can be harvested from synergies between:

- marketing and production (outsourcing);

- marketing and human resource management (internal marketing);

- marketing and finance (marketing-financial engineering of margin and asset management); and

- marketing and organizational strategy (lease or buy, strategic alliances and partnerships involving co-marketing an/or co-branding).

In summary, there are strategy-structure-management/operations synergies inherent in the integration of the processes of their formulation and implementation. In the following section we trace the sources, elaborate on the terms and conditions, and enumerate the outcomes of capitalizing on these synergies.

Alternative frameworks for marketing strategy formulation and implementation

Earlier in this paper we indicated that the literature cast marketing strategy in the context of either marketing process models or corporate/business strategic planning models. Our contention was that while the focus of the strategic planning model variety is on achieving corporate financial objectives through designing and implementing product, pricing, promotion, and place (distribution) programs, the focus of the marketing process model variety is on the formulation of segmentation, targeting, differentiation, and positioning strategies designed to create, communicate, and deliver value to the customer to ensure their satisfaction and gain their loyalty, i.e. achieve marketing objectives. Since, neither of the models standing alone captures the multidimensionality of marketing strategy formulation and implementation from a customer, company, and competitor vantage, we decided to present both types of models accenting the view of the 3Cs of market places/space. In this section of the paper we start with the marketing process model of creating a positive customer experience .

The marketing process model of creating a positive customer experience - antecedents, processes and outcomes

Earlier we defined marketing strategy as total sum of the integration of segmentation, targeting, differentiation, and positioning strategies designed to create, communicate, and deliver an offer to a target market .

The value creation framework , presented in Figure 7 [Figure omitted. See Article Image.], shows the antecedents, processes, and outcomes of value creation. The framework captures strategy-structure-management synergies presented earlier as antecedents to value creation. It casts value creation in terms of the broader process of creating a positive customer experience, and specifies marketing outcomes required to generate desirable financial results. The following propositions set the terms and conditions for creating customer value: P1. The primary antecedent to value creation is productivity assessed in the traditional measures of effectiveness and efficiency . P2. Antecedents to productivity are strategy, structure, and management/operating systems of the firm . Sound strategy, structure, and management/operations in tandem enable productivity and subsequently value creation. P3. Value creation , a necessary but not sufficient variable , is the triggering mechanism in creating a positive customer experience. P3. A positive customer experience is assured only when creating the value leads to customer satisfaction and their loyalty is engendered . P4. Customer value, satisfaction and loyalty are necessary variables to generated desired marketing outcomes including market share and business share. The antecedents, processes, and outcomes of creating customer value are presented in detail in the remainder of this section. In the process of this presentation we advance propositions and frameworks that link marketing strategy formulation and implementation to performance marketing and financial performance outcomes.

Antecedents

Antecedents are pre-existing conditions that constitute qualifications that make possible proceeding with further action. Therefore: P5. Strategy, structure, and management/operations are antecedents to productivity. P5.1. E-strategy enables efficiency of transactions and relationships through e-commerce, business intelligence, customer service management, relationship management, supply chain management, and enterprise resource planning. P5.2. Marketing strategy enables effectiveness through better segmentation, targeting, differentiation and positioning. The focal variable here is targeting. P6. Manufacturing/production/operations management, marketing management, human resource management, and financial management are key functional area implementation strategies that independently and interactively improve the effectiveness and efficiency of the firm. P6.1. Outsourcing results in cost reductions that render value and pricing synergy between productions/operations and marketing strategy. P6.2. Internal marketing reinforces measures of empowerment and mobilization of human resources that render synergy between human resource and marketing strategy. P6.3. Marketing engineering of margin and/or asset management, results in superior return on total assets. Combined with financial management it renders superior returns on owners investment; i.e. superior returns on strategic management. Functional area and management levels responsible for each component of the strategic profit model are shown in Figure 8 [Figure omitted. See Article Image.]. P7. Marketing strategy implementation is accomplished through the organization structure of the company and its allied marketing channels. Therefore, the organization structure is the media through which marketing strategy is implemented. P8. The organizational structure design enhances effectiveness and efficiency through outsourcing, leasing, co-marketing, and strategic alliances. In summary, strategy-structure-management synergies are necessary conditions that must pre-exist to realize productivity gains necessary to fund the process of value creation.

Processes

A process is defined as a procedure, progression, mean, or course of action to administer or manage. Providing positive customer experience is a core process in the course of setting marketing strategy and developing its implementation plan. Therefore: P9. Providing customer value is the corner stone of the marketing process of creating a positive customer experience. P10. Provision of customer value is a necessary but not sufficient condition to gain customer satisfaction. P11. Customer satisfaction is a necessary but not sufficient condition to engender customer loyalty. P12. Loyalty is a stage in the customer's life cycle, shown in Figure 9 [Figure omitted. See Article Image.]. Customer life cycle starts with awareness but it may or may not lead to exploration, commitment, loyalty and dissolution. P13. Transactions and relationships are both typologies and outcomes of the exchange. P13.1. Transactions are typical outcomes at the awareness and exploration stages of the customer life cycle. P13.2. Relationships are typical outcomes at the commitment and loyalty stages of the customer life cycle. Once created, the value must be communicated and delivered to move the customer along the continuum from transactions to relationships. As discussed earlier, value creation, communication, and delivery are accomplished by developing a marketing mix and integrating it into a marketing management implementation program (Figure 2 [Figure omitted. See Article Image.]). In essence, formulated marketing strategies, are implemented through elements of the marketing mix or 4Ps. Recognizing that all relationships start as transaction, not all transactions end up in relationships, acknowledging the fact that customers have a life cycle and the fact that not all buyer and sellers want to engage in relationships, we cast the relationship between marketing strategies and elements of the marketing mix in terms of the desired type of exchange, i.e. transaction selling or relationship marketing are shown in Figure 10 [Figure omitted. See Article Image.]: P15. Product/service, price, place/channel, and promotion constitutes the marketing mix of transaction sellers . P16. Positive customer experience, value, value-adding chain, and integrated marketing communication mix constitute the marketing mix for relationship marketers . Transactions and relationships are both typologies of exchange and marketing outcomes that mediate positive customer experiences into business and market share outcomes.

Outcomes

An outcome is a result, end product, upshot, effect, and/or conclusion of sequence of events. The financial outcomes of positive customer experience, shown in Figure 11 [Figure omitted. See Article Image.], are effects or results of marketing strategy formulation and implementation processes. It is a truism that healthy financial results are the upshot of sound marketing strategy formulation and implementation. Management must follow the guidelines set in the sequence of antecedents and processes in order to achieve high performance results. Therefore: P14. Market share is the immediate marketing metric for transactions. P15. Business share is the immediate marketing metric for relationships. P16. Aggregate market share from transactions and relationships is the intermediate marketing metric. P17. Profitability, a financial performance measure, is the ultimate marketing metric of marketing strategy. P18. Business share and market share are metrics of the effectiveness of marketing strategy. P19. Profitability is a metric of the efficiency of marketing strategy. The above discussion clearly demonstrate that the focus of the marketing process model variety is on the customer, i.e. formulation of segmentation, targeting, differentiation, and positioning strategies designed to create, communicate, and deliver value to the customer to ensure their satisfaction and gain their loyalty, i.e. achieve marketing objectives.

Therefore, we capitalize on the above discussion of financial metrics to transition to the last section of this paper focusing on the strategic planning model variety for marketing strategy formulation and implementation.

A strategic planning framework for marketing strategy formulation and implementation

As discussed earlier, the focus of the strategic planning model variety is on achieving corporate financial objectives through designing and implementing product, pricing, promotion, and place (distribution) programs, i.e. marketing management. We define a strategic plan for the purposes of this paper as the sum total of a formulated strategy and tactical management program for its implementation. Strategic planning is, and rightly so, a company-centered process . The focal point of the process is on financial outcomes geared to various stages, components, and elements of the strategic plan. The integrative framework, shown in Figure 12 [Figure omitted. See Article Image.], is illustrative of the processes and subsequent outcomes.

The role of firm orientation

Marketing strategy emanates from firm orientation , the link that connects all strategies of the firm. We define firm orientation for the purpose of this paper as a multi-dimensional variable that reflects the firm's strategic, market, exchange, functional, knowledge, structural, and managerial orientations:

- Strategic orientation. A selection of a Market Driving or Market Driven strategic design/response system.

- Market place/space orientation. A selection of customer, competitor, or market orientation.

- Exchange orientation. A selection of transaction selling, relationship marketing, or stage of customer life cycle.

- Functional orientation. A selection of production, selling, marketing, financial, legal, or any other functional silo of the firm.

- Knowledge orientation. A selection of decision support system orientation such as business intelligence, management information systems, marketing information systems, or a learning organization with data warehousing, data mining, and knowledge management systems.

- Structural orientation. A selection of a base for organizational structure design such as functional, geographic, product, brand, market, channel, and customer.

- Managerial orientation. A selection of marketing management, market management, or relationship management focus.

An apologetic for tiers I and II marketing strategies

The literature casts the 4Ps as marketing mix strategies, a misnomer for what in actuality is marketing management tactics. The literature is unclear in that respect mixing strategic and tactical decisions and misinterpreting "important," decisions as strategic decisions. Simply put, strategic decisions are strategy-setting multi-functional decisions. Tactical decisions are "strategy," implementation tactics. Therefore, while all strategic decisions may be important, not all important decisions are strategic! Subsequently, marketing mix decisions may be important, but not strategic!

We developed taxonomy of tiers I and II marketing strategies, shown in Figure 12 [Figure omitted. See Article Image.], to account for segmentation, targeting, differentiation, and positioning as tier I strategies and product, pricing, place, and promotion as tier II strategies. The taxonomy enables reference to product, pricing, distribution, and promotion strategies without running the risk of mixing setting marketing strategy at the corporate level with setting product strategy at the product manager level. The taxonomy does not negate the above argument pertaining to the tactical nature of marketing management program, marketing mix, or the 4Ps decisions. As shown in Figure 12 [Figure omitted. See Article Image.], we maintain clear differentiation between marketing strategy formulation (tiers I and II) and its implementation without losing the connections in-between.

We find the taxonomy intellectually appealing as it casts branding as a strategy that mediates tier I segmentation, targeting, differentiation, and positioning strategies into product, pricing, and distribution strategies.

Strategy must drive the structure

As shown in Figure 12 [Figure omitted. See Article Image.], marketing strategy implementation is accomplished through the organization structure of the company. Organization structure is defined as the internal organization, e.g. sales force and external organizations, e.g. allied distributors and supply chain partners. Therefore:

P20. The organization structure must be redesigned or changed to fit a new strategy, not vice-versa.

P21. Inter- as well as intra-organizational management measures and coordination mechanisms must be instituted to ensure effective implementation of marketing strategy.

Marketing strategy metrics

As shown in Figure 12 [Figure omitted. See Article Image.], strategic planning model metrics are primarily financial performance measures that reflect marketing results such as market share and sales volume. The strategic profit model, shown in Figure 8 [Figure omitted. See Article Image.], integrates these financial performance measures and designate management level and function that should be their guardian.

P22. The key financial metric is return on owners investment or return on net worth, a metric relevant to top management responsible for corporate strategic direction.

P23. The key marketing metric is market share, a metric relevant to the chief marketing officer in charge of formulating marketing strategy.

P24. Financial-marketing metrics include return on total assets, margin management or return on sales and sales volume.

P24.1. Return on total assets is a metric relevant to the chief marketing officer or sales managers.

P24.2. Margin management or return on sales is a metric relevant to sales managers or the salespersons.

P24.3. Sales volume is a metric relevant to salespersons.

Integrating the strategic planning and the marketing strategy process models

Financial metrics reflect good/bad marketing performance. Therefore, we conclude with an "Integrative Framework for Marketing Strategy Formulation and Implementation," shown in Figure 13 [Figure omitted. See Article Image.]. The framework integrates the strategic planning and the marketing strategy process models. The framework highlights the mediating role of positive customer experience in achieving strategic plan financial goals.

Conclusion

In this paper we present taxonomy and integrative frameworks for marketing strategy formulation and implementation. We advance propositions that clearly differentiate, but interrelate, marketing strategy formulation and implementation processes and recast the strategic planning financial-oriented model and the marketing strategy process models into sets of related frameworks designed to demonstrate that:

- the road to healthy financial results must first be paved by sound marketing strategies;

- explicitly state and underscore the role of branding and organizational strategies in mediating formulated marketing strategy into actionable marketing programs, and;

- broaden the concept of firm orientation to reflect its role in mediating corporate strategy into a set of functional strategies including marketing.

We view marketing strategy formulation as an interactive and iterative two-tier process:

Segment the market, select target segments, design the offer to fit target market needs, brand naming the offer to differentiate it from the competitors' and position it in the customers' mind.

Set product/brand, pricing, distribution, and promotion strategies as a prelude to tactical strategy implementation decisions involving the 4Ps or the marketing mix.

We examined marketing strategy formulation and implementation in the context of two alternative models, marketing strategy process and strategic planning models. The focus of the marketing strategy process model is on the formulation of segmentation, targeting, differentiation, and positioning strategies to create, communicate, and deliver the value to the customer resulting in gaining customer satisfaction and loyalty; i.e. marketing objectives. The focus of the strategic planning model is on achieving corporate financial objectives through the implementation of product, pricing, promotion, and place (distribution) programs. Both frameworks underscore the mediating role of targeting and branding strategies. Targeting mediates the offer to the customer. Branding mediates differentiation of the offer from the competitors'. Branding mediates positioning of the offer in the customers' mind.

The presentation is tantamount to a meta-theory of marketing strategy formulation and implementation because the propositions advanced throughout the paper clarify concepts and explore alternative frameworks useful in understanding concept differences and relationships. The propositions and frameworks classify the concepts as sets of dependent and independent variables and highlight the role of mediating variables such as branding, firm orientation, and organizational structure in transitioning strategy from the formulation stage to the implementation stage.

The taxonomy and frameworks, albeit based on positive observations, are presented as normative theoretical propositions. It is hoped that this paper is a step in the right direction for academicians to design and implement research programs to test the validity of these propositions and for practitioners to guide their decision making in the process of marketing strategy formulation and implementation.