The theoretical foundations of strategic marketing and marketing strategy: foundational premises, R-A theory, three fundamental strategies, and societal welfare

Abstract

The strategic marketing field of study has long suffered from an identity problem: the field has lacked clarity and consensus as to its theoretical foundations, its nature, and its scope. There have been two recent approaches that contribute to resolving the identity problem. First, Varadarajan’s (Journal of the Academy of Marketing Science, 38, 119–140, 2010) approach focuses on strategic marketing's (1) domain, (2) definition, (3) fundamental issues, and (4) foundational premises. Second, resource-advantage (R-A) theory's approach focuses on how R-A theory provides a theoretical grounding for eight forms of business and marketing strategy. This article evaluates how the two approaches relate to each other and shows how R-A theory (1) grounds extant business and marketing theories of strategy, (2) illuminates, informs, extends, and grounds the sixteen foundational premises of the strategic marketing field that Varadarajan (2010) proposes, (3) implies that there are three fundamental strategies, “superior value”, “lower cost”, and “synchronal”, and (4) shows how the three fundamental strategies promote societal welfare. Therefore, the two approaches, when considered jointly, complement each other and foster the development of the field of strategic marketing and the forms of marketing strategy.

Appendix: Varadarajan’s (2010) foundational premises of marketing strategy

• 1. A purpose of marketing strategy is to facilitate an organization to achieve and sustain a competitive advantage in the marketplace.

• 2. A purpose of marketing strategy is to create market-based relational assets and market-based intellectual assets for the organization.

• 3. A purpose of marketing strategy is to enable an organization to establish and nurture mutually beneficial exchange relationships with customers.

• 4. A purpose of marketing strategy is to modify/influence/shape the affect, cognition and behaviors of customers and consumers in ways that are conducive to their acquisition, possession and consumption of specific product offerings of an organization.

• 5. A purpose of marketing strategy is to identify and leverage new points of differentiation.

• 6. A purpose of marketing strategy is to enhance the salience of non-price criteria vis-à-vis or vice-versa in buyers’ choice decisions.

• 7. A business can enhance the importance of non-price criteria relative to price in the brand choice decision process of buyers by segmenting the market into homogenous subgroups, developing differentiated product offerings responsive to the needs of individual market segments, and distinctively positioning its offerings relative to competitors’ product offerings.

• 8. Differentiation implies heterogeneity in supply.

• 9. Heterogeneity in demand is not a necessary condition in order for a strategy of differentiation to be effective in the marketplace. Heterogeneity in demand can either be a pre-existing state of the marketplace, or a consequence of heterogeneity in supply and the marketing efforts of competing businesses designed to stimulate heterogeneity in demand.

• 10. The range of options available to a business for pursuing a strategy of differentiation encompasses all non-price criteria that buyers either currently factor into the brand choice decision process or can be influenced to factor into the brand choice decision process.

• 11. All else being equal, a business can enhance its financial performance through pursuit of a strategy of differentiation when the incremental cost of differentiation per unit…is lower than the price premium that a unit of a differentiated product will command in the marketplace relative to an undifferentiated product.

• 12. Holding all other factors constant, those dimensions of differentiation for which the incremental cost of differentiation is lower than the incremental price premium that such differentiation is likely to command in the market-place constitute feasible avenues for differentiation.

• 13. A sustainable competitive cost advantage (being the lowest cost producer) is a necessary condition in order for a business to be able to compete on the basis of price over the long-run.

• 14. Competitive cost advantage does not imply being the lowest priced offering in the marketplace, but possessing the ability to compete on price and constraining the ability of competitors from competing on the basis of price over the long-run.

• 15. In an industry, there will be more than one means… to achieving a desired end…Thus, different competitors in an industry will be able to achieve and sustain comparable levels of superior performance by pursuing different promotion strategies.

• 16. There will be differences in the marketing strategies (i.e., heterogeneity or diversity in marketing strategy) pursued by competitors in an industry. The marketing strategies pursued by no two competitors in an industry are likely to be identical. At the margin, there will be differences in the strategies pursued.