Version classiqueVersion mobile
OpenEdition Books

Changing Market Relationships in the Internet Age

 | 
Jean-Jacques Lambin

Chapter 3. Sub-orientations in market-driven management

Texte intégral

1The traditional marketing concept has always privileged the customer orientation neglecting the other market actors. In the global market, new market players are joining and traditional actors have new roles to play as a result of the globalisation and of the development of the Internet technology. In this more complex environment, being customer-oriented is not enough. Other orientations towards the other key market actors œ called here sub-orientations œ have to be adopted by the firm. The objective of this chapter is to review the content and the strategic role of each sub-orientation.

3.1. CUSTOMER ORIENTATION : WHO IS THE REAL CUSTOMER ?

  • 1 Sheth J., Mittal B. and Newman B.I (1999),. Customer Behaviour, Consumer Behaviour and Beyond, Fort (...)

2The customer is at the core of the market orientation concept but no distinction has been made so far between the different customer roles (see Figure 6). Any marketplace transaction requires at least three customer roles : (1) buying, that is selecting a product or service ; (2) paying for it, and (3) using or consuming it. Thus, a customer can be a buyer, a payer, or a user/consumer. Each of these roles may be carried out by the same person (for example the housewife) or an organisational unit (for example the purchase department) or by different persons or departments. As underlined by Sheth, Mittal, and Newman (1999, p. 6)1, the person who pays for the product or service is not always the one who is going to use it. Nor is the person who uses it always the person who purchases it. Any of the three customer roles (user, payer, or buyer) makes a person a customer. It is also clear that the values sought by each customer role can be different : the service value for the buyer, the price value for the payer and the performance value for the user/consumer.

Figure 6. The different customer roles

Figure 6. The different customer roles

Source : Lambin et al., (2007)

• Customer roles specialisation

3In any market, it is important, to know the possible ways in which customers divide their three roles (buyer, payer, user) among themselves in order to adapt the marketing efforts to the type of role specialisation. Four types of role specialisation can be identified.

  1. User is buyer and payer. Most consumer products purchased for personal use fall into this category, like clothing, watches, sporting goods, haircuts, and so on. A single person combines all three roles. This is the traditional domain of consumer analysis, even if the same concentration of roles can also be observed in business markets for small business owners.

  2. User is neither payer nor buyer. Here the user is different from both the payer and the buyer, a situation met in consumer markets for a whole range of products purchased by the housewife for her household or children’s use.

  3. User is buyer but is not payer. In some situations, the user may be the buyer but is not the payer for the product or service. All purchasing decisions made on expense accounts fall into this category. Also the user, who is nevertheless the buyer, does not pay the services offered within the framework of insurance coverage or social security programmes. The risk of over-consumption is often observed in this type of situations.

  4. User is payer but not buyer. In some cases, the user is payer but is not the buyer. For example, in the financial markets, stockbrokers act as agents for clients.

4When a single customer embodies all the roles, the firm will use a different strategy than when different people are user, payer, and buyer. Mastering this set of information about buying habits will contribute to a significant improvement in the firm’s marketing practice and thus increase the impact of the behavioral response.

• The changing consumer relationships

  • 2 Schuiling I. and Lambin J.J. (2003), Do Global Brands Benefit from a Unique Worldwide Image ? Symph (...)

5In B2C markets, understanding the changing behavior of mass market consumers and what motivates them goes to the heart of strategic marketing. In many affluent economies, demographics are changing. Populations are aging and the traditional family is losing its central role. Although factors as age, wealth, mobility, and family status can partly explain people’s needs and purchasing behaviour, one can learn much more by understanding the values that drive today’s consumers. The development of the Internet technology is also opening for the consumer new perspectives, viewed as completely unrealistic just few years ago. We shall review here the main emerging consumers’ drivers in the global market.2

  • Value for money. Consumers are not driven by price only. What they want is better value for their money. Other attributes than low price can have greater relevance and provide a basis for product differentiation.

  • Search for solutions. Consumers are not buying products or services. They are looking for “results”, generated by a combination of products and services, rather mere products, that can solve a consumer problem.

  • Preference for consumer-generated information. Consumers are bombarded with advertising messages they don’t trust. Being more sceptical and discerning, they prefer increasingly to use the Internet and user-generated media to research products and to decide which one to buy.

  • Concern for ethically and politically correct consumption. Consumers do not want to have guilty feelings from their purchases. Shopping with attitude, means buying brands having acceptable price-quality ratios, but also meeting ethical criteria like product greenness, social and political commitments.

  • Objective of self achievement. Education and economic prosperity have lifted the aspirations of consumers from materialistic to self achievement needs and to values like innovation, stimulation, change, surprise and not simply comfort and safety.

  • Search for local cultural identity. The prestige of global brands is fading away and one observes a come back of local brands, revealing a need for adaptation to local cultural identity.

  • Need of dialogue and relationships. People want to be listened to and be understood. They want personal connections and customised solutions. Ideally they want “one-to-one” relationships, as opposed to “many-to-many” relationships.

  • A feeling of power. Consumers behave in markets where supply is plentiful, brands proliferate and competition is intense. Moreover, they are represented by powerful and vocal consumerists, environmental, NGOs and human rights activists, who collectively make up “civil society”.

  • 3 Interview with Brigitte Cerfontaine from Procter &Gamble, Director of Advertising Development Europ (...)

6These changes in consumer values have a profound impact on the type of customer relationships the firm must develop. Power has shifted and consumers are in control. PAG has coined the term Consumer Republic to describe this new market geography, where “… consumers have certain rights and from them come our responsibilities”3.

  • 4 Veloutsou C. (2007), Identifying the Dimensions of the Product-Brand and Consumer Relationship, Jou (...)

7The Internet technology is providing the collaborative and interactive tools to meet the expectations of today’s consumers for more personalised relationships. Amazon.com is a good example (www.amazon.com). Capitalising on ongoing dialogues with their customers, Amazon knows each customer’s interests and preferences and can offer personalised recommendations. But Amazon is a pure-play electronic retailer. Adopting a similar relational approach in FMCG markets is not obvious (Veloutsou C., 2007)4. For consumers in FMCG markets, relationship marketing too often means more junk mail, more SMS, more unsolicited telephone calls, more targeted promotions, more Spams in their computers and less private life protection. The frontier between relationship marketing and marketing harassment is very thin indeed.

• The customer as a buying décision centre in B2B markets

  • 5 Webster F.E. and Wind Y. (1972), Organisational Buying Behaviour, Englewood Cliffs, NJ, Prentice-Ha (...)

8In an industrial firm, buying decisions, and especially the more important ones, are mostly taken by a group of people called the buying group or the buying decision centre. Webster and Wind (1972, p. 35)5 defines the buying centre as “…consisting of those individuals who interact for the specific purpose of accomplishing the buying task. These persons interact on the basis of their particular roles in the buying process”. The buying centre comprises individuals with different functions and therefore with different goals, needs, and behaviours. Hence many purchase decisions are conflicting, and they follow a complex process of internal negotiation.

9The composition of the buying centre varies with the importance of the decisions to be made. In the general case, the buying decision centre includes the following five roles, which can be occupied by one or several individuals :

  1. Purchasers have formal authority and responsibility for selecting alternative brands and suppliers and for determining the terms of purchase and negotiating contracts. The purchasing manager usually does this.

  2. Users are the persons who use the product : the production engineer or the workers. The users can formulate specific purchase requirements or refuse to work with some materials. Generally speaking, users are better placed for evaluating the performance of purchased goods and services.

  3. Influencers do not necessarily have buying authority but can influence the outcome of a decision by defining criteria that constrain the choices that can be considered. The R&D personnel, designers, engineering and consultants, and so on typically belong to this category.

  4. Deciders have formal authority and responsibility to determine the final selection of brands or vendors. There is generally an upper limit on the financial commitment that they can make, reserving larger decisions for other members of the organisation, for instance the board of directors.

  5. Filters are group members who control the flow of information into the group and who can exercise informal influence on the buying process.

10The composition of the buying centre will vary with the complexity and the degree of uncertainty of decisions in the firm.

11One can see that it is vital for the supplier to identify all those involved in the purchasing process, because it must identify the targets of its communication policy. It is equally important to understand how these participants interact among themselves and what their dominant motivation is.

• Generic needs of the B2B customer

12The notion of need in B2B markets goes beyond the conventional idea of rational choice based only on the quality-price criterion. As in the case of the individual consumer, need has a multidimensional structure. The generic needs of a B2B customer can be described with reference to at least five values :

  1. Technology : product specifications, state-of-the-art technology, up-to date and constant quality, just-in-time delivery.

  2. Finance : price competitiveness, transfer costs, installation and maintenance costs, payment terms, delivery reliability.

  3. Assistance : after-sales service helps with installation and operation, technical assistance and servicing.

  4. Information : communication, qualified sales personnel, priority access to new products, training, business intelligence.

  5. Strategy : reciprocal relations, compatibility of organisational forms, component branding or company reputation.

13Cross classifying these five generic needs with the five members of the buying decision centre will help identifying the values each member of the decision centre tends to privilege : price and delivery for the purchaser ; state of the art technology for the influencer ; assistance in use and performance for the user, etc.

14We note that the determinants of well-being for the B2B customer are of a very different nature from those governing the well-being of the individual consumer. The structure of motivations of the B2B customer is both more complex and simpler. It is more complex because it involves an organisation and different individuals operating in the organisation ; it is simpler because the motivations are more objective and thus easier to identify.

15However, despite the real differences that exist between the two areas, the basic ideas of the customer orientation concept have the same relevance in B2B markets as they have in B2C markets : to adjust supply to the overall need of the customer. If this principle is not implemented, the penalty in B2B markets is probably paid more rapidly because of the customer’s professionalism and the fact that needs are more clearly defined.

• The B2B customer-supplier relationship management

  • 6 Manning B. and Thorne C., (2003), Demand Driven, New York, McGraw-Hill.

16In B2B markets, customers are more or less willing and able to control the customer-supplier relationship or to be actively involved in their relationship with their suppliers. One can identify three major categories of B2B customers, each varying in their degree of control and willingness to co-operate over their customer experience (Manning and Thorne, 2003)6.

  • The collaborative customer. These customers are able and willing to share in the control of the relationship with their suppliers. Shared control involves an exchange of information on the wants and desires of the customer along with the basic offerings by the supplier. This is the ideal type of customer orientation for one-to-one marketing to work. Many SMEs will fall in this category.

  • The activist customer. In some circumstances, customers seek a high level of control of the business customer experience. In many industrial markets, this is the most common relationship. Manufacturers that act as customers set the specifications, delivery requirements and costs parameters, and their suppliers meet these terms. This behaviour will be observed more often among large firms.

  • The passive customer. A passive customer is primarily one who has a low level of involvement with his customer experience. Passive customers do not tend to be particularly loyal and they show low willingness to become more knowledgeable or to participate in the development of new products or solutions.

17This typology of customers suggests that customer management relationships

18(CRM) cannot be of general application.

• Three misconceptions in customer orientation

  • 7 Day G.S. (1999), The Market Driven Organisation, New York, The Free press. Note that Day assimilate (...)

19Customer orientation is at the core of the market orientation concept. In implementing the customer orientation concept, Day (1999)7 draws our attention to three common misconceptions or misinterpretations of the customer orientation concept : (a) being compelled by customers, (b) feeling superior to customers, (c) becoming oblivious to customers. Being customer-driven implies maintaining a difficult balance between a customer focus and the concern for superior profitability.

1. Becoming compelled by customers

20Some firms, overreacting to a myopic product orientation, are inclined to do whatever customers want through unrestricted line extensions and promotions, believing that every customer is worth pursuing. As a result, one observes a proliferation of weakly differentiated brands, too many line extensions and variants with minor differences, clogging supermarket shelves and confusing consumers. For example, the toothpaste brand Colgate has 33 variants and Crest 23. Understanding customers - not necessarily following them blindly - is the key point.

21What is missing in consumer-compelled companies is the discipline needed to set priorities for which market to serve with which benefits and features, instead of trying to be all things to everyone. Remember, the objective is not to meet customers’ needs at any cost, but at a profit for the firm. The profit objective will always have priority over the objective customers’ needs satisfaction. Meeting unprofitable consumers’ needs is the task of the State or of not-for-profit or relationship organisations.

2. Feeling superior to customers

22Other firms make the opposite mistake and consider that customers are unable to envision breakthrough products or services, because customers tend to respond most positively to what is familiar and comfortable (a rear mirror view) and research methods are incapable of sorting out customers contradictory requirements, in particular because customers in a survey aren’t choosing with their own money.

  • 8 Day G.S. (1999), op.cit., p. 34.
  • 9 Pellemans P. (1998), op.cit.

23As put by Day (1999, p. 34)8, this criticism of traditional market research fails to recognise the difference between asking customers to identify a problem (a realistic objective) and expecting them to develop solutions (an unrealistic objective). Thus what matters is an “intimate understanding” of customers’ behaviour and problems. For instance, the accountant might state that a rapid numerical manipulation of data is a need but, before the invention of the computer, he could not have stated that he wanted a computer. Thus, to be customer-driven means seeing past the short-sighted and superficial inputs of customers, to gain a deep understanding of customers problems, latent needs, and changing requirements. As underlined above, a large variety of approaches exist to identify unarticulated needs, from observation to disciplines like anthropology and psychology (see Pellemans, 1998)9.

3. Becoming oblivious to the customer

24Some successful firms are so impressed by their success that they do not any longer view that the market is changing. This was the case of IBM in the 1980s and of Levi Strauss in the 1990s. These firms achieved prosperity because at one time they had a clear and widely shared concept of how to deliver superior customer value. In retrospect, the Levi Strauss Company in the 1990s exhibited the typical symptoms of a self-centred organisation. Having created the market, Levi Strauss management felt that it was benefiting from such brand awareness and brand leadership position that nothing could happen to itself.

3.2. DISTRIBUTOR’S SUB-ORIENTATION IN B2C MARKETS

25In consumer markets, being customer oriented is not enough. Designing products well adapted to consumers needs is not very useful if powerful distributors refuse to list the brand, preventing the firm to reach the targeted customers Today retailers - and in particular mass merchandisers - are irreplaceable actors actively and constructively participating in the globalisation process. In these markets, being consumer-driven is not enough. The firm must also become distributor-driven to avoid the risk of being de-listed and should design retailer-driven B2B marketing programme, based on an in-depth understanding of the generic needs of retailers.

• Generic needs of distributors

  • 10 Sheth J., Mittal B., and Newman B.I, (1999), op.cit.

26If retailers (or distributors) have to be viewed by manufacturers as customers in their own rights, the first step is to understand the needs of these intermediary customers. Sheth J. and others (199910), suggest the following set of generic needs for distributors.

  • Freedom to price their merchandise in line with their own goal and interests.

  • Freedom from pressure to implement supplier-designed promotions.

  • Adequate trade margins when selling at the manufacturer’s suggested price trade to cover costs operation and to generate a profit.

  • Protection from undue competition, like selling to too many other resellers ; selling the merchandise to off-price resellers ; engaging itself in direct selling to end-users.

  • Support from manufacturers in training, advertising, promotion, merchandising and information on new developments on the market.

  • Support given to the store positioning strategy of the distributor by providing an appropriate assortaient of products.

  • Efficient order fulfilment to minimise inventory-carrying costs and to avoid stock outs throughjoint management of inventory flows.

27Thus the manufacturer dealing with distributors should design a B2B marketing programme centred on these needs’ satisfaction.

• The emerging power of global retailers

28In B2C markets, and in particular in the FMCG markets, one observes a shift of power from manufacturers to retailers. Several factors explain this changing situation.

  • The high concentration rate of retailers, specifically in the fast moving consumer goods (FMCG) sector : in 12 European countries, the top three retailers account for 50 per cent of the market.

  • The adoption by retailers of sophisticated store brand strategies targeted to segments often neglected by manufacturers - the low end of the market - reaching market shares as high as 42 per cent in Switzerland, 30 per cent in Great Britain and higher than 15 per cent in six other European countries.

  • The pursue of fast internationalisation strategies by large mass merchandisers like the American Wal-Mart in the UK, the French Carrefour in Latin America and Japan, the Belgian Delhaize in Eastern Europe, USA, and Asia, the Swedish Ikea in the world and most recently in Russia and Malaysia, the Dutch Ahold, the British Tesco, etc.

  • The emergence of new breed of retailers, the hard discounters like (Lidl and Aldi), who in warehouse stores, charge very low prices on their own private brands while excluding suppliers’ brands from their shelves.

29The result has been to deeply transform consumer markets and to modify the balance of power between manufacturers and retailers. Today powerful brands like Coca Cola and Nestlé need large retailers more than retailers need them, even if the development of e-commerce creates new opportunities for manufacturers who can strike back and bypass traditional intermediaries.

• Strategic objectives of global retailers

30Retailers’ marketing strategies tend also to become more sophisticated. They do not simply imitate existing products but develop new product concepts targeting well-defined market segments and which are then produced by international manufacturers specialising in private labels. For retailers, three objectives are pursued with private labels.

  • To reduce power of manufacturers by reducing their volume and their brand franchise and to eliminate small competitors.

  • To enhance category margins since private labels can deliver 5-10 margin points more than national brands.

  • To provide a differentiated product to build the retailer’s image.

  • 11 Lambin et al. (2007), op.cit. p. 328.

31This last objective is now gaining in importance among the most sophisticated and dynamic retailers. They are following different price/quality positioning strategies11 :

  • Same quality, cheaper. It is the most frequent strategy adopted for store brands : to propose a level of quality similar to that offered by the leading national brand, but at a price 15 to 20 per cent lower.

  • Lower quality, cheaper. This strategy is based on the invented brand names and on generic brands : to propose a lower level of quality in simplified packages at a price 30 to 40 per cent lower than the prices charged by national brands.

  • Better quality, same price. To propose a level of quality higher than national brands at the same price. Sainsbury in the UK adopts this positioning strategy for a certain number of product categories, by using brand names exclusively found in Sainsbury stores.

  • Better quality, higher price. A less frequent strategy, adopted by distributors targeting the high-end of the market with homemade or handicraft products.

32As a result of these aggressive private brands strategies, there is general pressure on prices. Within large supermarket chains, three types of brands are commonly observed within a same product category.

  • National brands and preferably the brand leader in the product category (the A brands) and which are supported by heavy advertising and promotional activities.

  • Own labels, store or umbrella brands (the B brands) created by the retailer to improve profitability and to build the store image.

  • First priées (the C brands) which are used as price-fighters to stop the hard-discounters by offering an alternative to customers.

33In this competitive struggle, the weakest manufacturers’ brands are the first to be eliminated from the supermarkets shelves.

• Stratégie options for manufacturers brands.

34In the global economy, and with the development of the Internet technology, the balance of power continuously evolves between these two key market actors, manufacturers and distributors, moving from a manufacturer-dominated business model to a retailer-dominated model. In this new context, the brand manufacturer has to decide which defence strategy to adopt. Four basic strategic options exist :

  • Pull strategy. To promote an innovative - preferably unique - product or well-differentiated brand through creative segmentation and media advertising support, thereby inducing distributors to list the brand in their assortment.

  • Direct marketing. To bypass retailers by adopting an online non-store marketing strategy where purchases are made from the home and delivered to the home.

  • Subcontracting operational marketing. To concentrate on R&D and manufacturing and to leave the operational marketing fonction to a well-diversified group of retailers.

  • Trade marketing. To view distributors as intermediate customers and to design a retailer-driven marketing programme.

  • 12 Kearney A.T. (2008), Growth Opportunities for Global Retailers, The A.T. Kearney 2007 Global Retail (...)

35As the wealthiest markets mature, global retailers are investing in developing countries, targeting countries new to modern retailing. A.T. Kearney has developed a Global Retail Development Index (A.T. Kearney 2008)12, ranking the top 30 emerging countries for retail development, using 25 macroeconomic and retail specific variables. On top of the ranking are countries like India, Russia, China, Vietnam and Ukraine (www.atkearney.com).

3.3. COMPETITORS’ SUB-ORIENTATION IN THE GLOBAL MARKET

36In the global market economy, being customer and distributor oriented is not enough. Knowing what customers want is not too helpful, if competitors are already providing the same product or service. To be successful, the firm must also be competitor-oriented and develop a sustainable competitive advantage over direct and indirect competitors. The attitude to be adopted towards competitors is central to any strategy. This attitude must be based on a refined analysis of competitors. One of the most important effects of globalisation and the Internet technology development is the interdependence it creates between markets. National markets cannot be viewed as separate entities any more, but rather as belonging to a regional or world reference market. What happens in one market directly influences others. This new competitive interdependence affects every company in their domestic market and in the international market and obliges them to re-evaluate their competitive advantage, taking as benchmark the strongest competitor in the enlarged reference market.

• What does it mean to be competitor-oriented ?

  • 13 Henderson B.D. (1983), The Anatomy of Competition, Journal of Marketing, 47, Spring, 7-11.

37A competitors’ orientation includes all activities involved in acquiring and disseminating information about competitors in the target market and requires an explicit account of competitors’ position and behaviour in strategy definition (Henderson, 1983)13.

38There are several broad areas of interest that constitute the structure to guide the collection and analysis of information about competitors. The relevant questions are the following :

  • Who are the priority competitors ?

  • What are competitor’s mains strengths and weaknesses ?

  • What type of competitive advantage do we have over priority competitors ?

  • What are the competitors’ major objectives ?

  • What is the current strategy being employed to achieve the objectives ?

  • What are the capabilities of rivals to implement their strategies ?

  • What are their likely future strategies ?

  • How are priority competitors performing financially ?

  • What pro-active and reactive competitive actions can be expected ?

  • 14 Trout J. and Rivkin S. (1999), The Future of Marketing ? It’s Simple. Marketing News, 33, p23. See (...)

39A more radical definition of competitors’ orientation is given by Trout and Rivkin (1999)14, “In the global market, everyone, everywhere, is after everyone else’s business, being competitors-oriented means marketing warfare”. The solution is to learn how to deal with your competitors, how to avoid their strengths and to exploit the weaknesses.

• Competitors identification

40One important objective of competitor orientation is to increase managerial awareness of competitive threats and opportunities. To maximise awareness it is essential to survey the competitive landscape broadly to avoid the dangers of a myopic approach to competitive strategy. There may be a temptation for managers to pay attention only to competitors who display a product or technology overlap because these competitors are salient and because the task of broad scanning is difficult.

Figure 7. Competitors Identification matrix

Figure 7. Competitors Identification matrix

Source : Adaptedfrom Bergen and Peteraf, (2002)

  • 15 Porter M.E. (1980), Competitive Strategy, New York, The Free Press.
  • 16 Bergen M. And Peteraf M.A. (2002), Competitor Identification and Competitor Analysis : A Broad-Base (...)

41The five forces model developed by Porter (1980)15 is helpful for scanning the global competitive landscape of the reference market, but does not permit to identify the most dangerous competitors. Note that the reference market definition in ternis of generic need and solution-sought should help avoiding a myopic approach of competition definition. The diagram presented in Figure 7 can help management to maximise their awareness of competitive threats and to classify the types of competition they face or will face in a near future16.

42In Figure 7, the vertical axis measures the degree (low-high) to which a given competitor overlaps with the focal firm in terms of customers needs served. This is consistent with the reference market definition in terms of generic need and recognises that competition may include firms that do not share the same technological platform (e.g. paint versus wall paper for home interior decoration). This need-based definition encourages managers to look beyond restrictive product marker boundaries to assess competitive threats more broadly.

43The horizontal axis refers - also at two levels - to resource similarity as the extent to which a given competitor possesses strategic resources and capabilities comparable to those of the focal firm. We can therefore identify four types of competitors.

  • The direct competitors, i.e. the firms that score high in terms of both market needs and technological platform.

  • The potential competitors scoring high in terms of technological platform but that are not presently serving the same market needs.

  • The substitute competitors that serve the same market needs than the focal firm but with different types of resources and/or technologies.

  • The sleeping competitors that constitute presently a low threat, having different market targets and technologies.

44This framework can be useful not only for increasing awareness of the various dimensions of the competitive landscape, but it can be used to track potential competitors movements’ over time.

• Competitive advantage

  • 17 Cook V.J. (1983), Marketing Strategy and Differential Advantage, Journal of Marketing, 47, Spring, (...)

45Competitive advantage refers to those characteristics or attributes of a product or a brand that give the firm some superiority over its direct competitors. These characteristics or attributes may be of different types and may relate to the product itself (the core fonction), to the necessary or added fonctions accompanying the core fonction, or to the modes of production, distribution or selling specific to the product or to the firm. When it exists, this superiority is relative and is defined with respect to the best-placed competitor in the product-market or segment. We then speak of the most dangerous competitor, or the priority competitor. In a competitive market, a strategy should be defined with reference to the behaviour of rivals. Central in strategy definition is the concept of strategic marketing ambition (Cook, 1983)17.

  • 18 Porter M. (1980), op.cit.

46A competitor’s relative superiority may resuit from various factors, and the value chain model is particularly useful to identify them (Porter 1980)18. Generally speaking, competitive advantages can be classified into two main categories, according to the nature of advantage they provide.

  • A quality competitive advantage is based on some distinctive qualities of the product which give superior value to the customer, either by reducing its costs or by improving its performance, therefore giving the firm the capacity to charge a price higher than competition. A strategy based on a quality competitive advantage is a differentiation strategy, which calls into question the firm’s strategic marketing know-how, and its ability to better detect and meet those expectations of customers which are not yet satisfied by existing products. This strategy increases the firm’s market power and its ability to charge higher prices without losing sales.

  • A cost competitive advantage is based on the firm’s superiority in matters of cost control, administration and product management, which brings value to the producer by enabling it to have a lower unit cost than its priority competitor. A cost competitive advantage results from better productivity, thus making the firm more profitable and more resistant to price cuts imposed by the market or by the competition.

  • 19 Andrew J.P., Blackburn A. and Sirkin H.L. (2003), Electronic Marketplaces : Strategies for Sellers, (...)

47In the Internet environment, the objective of increasing market power through differentiation is more difficult to achieve, given the absence of protection of proprietary offerings, the easiness of price comparisons and the increased rivalry among competitors. To create an online competitive advantage, several strategic options still exist however for the seller (Andrew, Blackburn, and Sirkin 2003)19.

  • Exploiting dynamic pricing by setting differentiated prices on the basis of industry demand, a technique successfully used by airline companies.

  • Promoting attributes other than price. Price is not necessarily the most important criterion by which buyers select a supplier. Superior quality, durability, order-to-delivery time are also important criteria.

  • By making easier for customers to collaborate with them, sellers can become more attractive business partners than their competitors.

  • Increasing customisation and improving customer support by providing online self-help in product use and maintenance is another way to create differentiation.

48Thus, operating in the Internet environment does not imply the elimination of the traditional objective of strategic marketing of creating market power through product differentiation and customisation. The same principles can be applied, but adapted to a new environment.

• The development of co-opetition

  • 20 Brandenburger A.M. and Nalebuff B.J., (1996), Co-opetition, New York, Currency-Doubleday.

49As underlined above (see section 2.4), the Internet and e-business tools have played a key role in the development of the market as an ecosystem, i.e. as a combination of different markets actors that cooperate or compete and gain benefit from one another. Co-opetition is defined as the simultaneous cooperation and competition20. The co-opetition perspective recognises that, given the complexity of today’s markets, companies cannot act in isolation to create value. They have to recognise their interdependence. The traditional concept of business as a “winner takes ail” is giving way to a realisation that, in a networked economy, companies must both cooperate and compete. Examples of co-opetition include Apple and Microsoft building closer ties on software development, Toyota and PSA Peugeot/Citroën cooperating for the development of small car for the European market and branded with the Toyota, Peugeot and Citroën names. The concept has been taken most enthusiastically in the computer industry, where strategic alliances are common, particularly between software and hardware firms. Co-opetition can be multifaceted. For example, the R&D departments of two companies may have extensive cooperation while the marketing department may be in fierce competition. US airlines companies are arch rivals but, having the same fleet of Boeing aircrafts, they cooperate to negotiate with Boeing.

  • 21 Eikebrokk T.R. and Olsen D.H., (2005), Co-opetition and e-Business Success in SMEs : An Empirical I (...)

50Many Small and Medium sized Enterprises (SMEs) are in co-opetition relationships with major partners. Small companies dependent on a dominating partner face the challenge of compliance versus securing their own interests in the partnership. Limited resources in SMEs have led to new cooperation forms to achieve economies of scale and/or synergy effects. For SMEs, the potential benefits of cooperation with competitors are access to new markets or to new distributors and access to valuable information, knowledge and competence. In a cross sectional study based on a sample of 339 SMEs from three industries (tourism, transportation, and food and beverages) in three European countries (Norway, Finland and Spain), Eikebrokk and Olsen (2005)21 have shown that co-opetition has a positive influence on e-business performance.

51As companies develop strategies to leverage co-opetition, they will have to address the following questions :

  • Who are the market players in their network with whom they can collaborate to maximise value ?

  • What relationships are complementary in nature - Which companies can they work with that can add value to what they provide ?

  • Are there competitors with whom there are mutually beneficial ways to create value ?

  • What can they do to sustain their competitive advantage over time ? The fast pace of change in the global electronic market (GEM) necessitates that strategies and relationships evolve over time. Companies should challenge themselves to look outside their usual reference market to develop their business by initiating new relationships with other market players.

3.4. AN INFLUENCERS’ SUB-ORIENTATION

52In the global market, being customers, distributors and competitors oriented is not enough if influencers in the reference market do not support the product or the brand. Influencers are individuals or organisations that do not buy, do not use and do not pay, but who formally recommend products or services. Influencers are opinion leaders who, through word-of-mouth, have informal influence over potential buyers. Confronted with an increasing complexity of purchase decisions, people naturally seek a guide, someone they trust, someone who has been out ahead of them, who has already identified the issues, has addressed them, and can offer good reliable informed insights, advice, and information on what ”s going on now and on what’s to come. An influencer orientation implies that the firm identifies the key influencers or opinion leaders, assesses the nature of their role in the purchase decision process and develops a specific communication programme to inform them, to motivate them and to obtain their support.

• Role of prescription in the global market

53The growth of Internet has led to largescale changes in information processing. The number of products involved in online and offline transactions is considerable and rapidly increasing. In this context, new market influencers or prescribers emerge having the role to improving transactions and making them more efficient.

  • 22 Hatchuel A. (2003), Le marché à prescripteurs. Crises de l’échange et genèse sociale. In : Jacob A. (...)

54The phenomenon of prescription is much diffused and can be found in several industries and professions, from doctors (who prescribe medications), to educators (who prescribe textbooks), architects (who prescribe equipments), financial advisers and assets managers. The emergence of prescription services demonstrates how markets are becoming increasingly complex, promoting a form of competition that focuses simultaneously on information, price and customer control. Confronted with this complexity, consumers disqualify themselves as decision makers by relying on an outside influencer (Hatchuel22). The Internet has broadened the conversation range allowing people to research purchases, post questions to companies and to

55other consumers, e-mail their friends and develop relationships with people with similar interest.

• Who are the influencera ?

56One can establish a distinction between three types of influencers : prescribers, opinion leaders, and certification agencies.

  • Prescribers are individuals or organisations that formally, i.e. within the framework of a contractual role, single out a product or a brand that responds to the consumer needs. Prescribers hold their authority to their professionalism and technical competence. It is a top-down influence.

  • Opinion leaders are people who influence a purchase decision in an informal way. They exert a lateral influence because they generally are consumers themselves. People today are far more likely to turn to friends, family and other personal experts than to use traditional media for ideas or information on a range of topics.

  • Certification agencies are independent organisations having developed common international management standards. Compliance to the standards by companies must be demonstrated by obtaining certification of their management practices by independent audit organisations.

57Prescribers and certification agencies are favourable influencers. The impact of opinion leaders is more difficult to assess objectively.

• The prescription market

58In B2B markets, prescribers are people that affect a sales decision like consultants, analysts, academics, regulators, system integrators, customer organisations, communities, trade associations, management gurus, etc. The relationship between the customer and the prescriber is based on trust and on common interest which is the sole interest of the customer. The prescriber has to regularly update his knowledge and to keep his independence vis-à-vis suppliers.

  • 23 Benghozi P.J. and Paris Th. (2005). The Economics and Business Models of Prescription in the Intern (...)

59As proposed by Benghozi and Paris (2005)23, there is no longer one sole market, operating between producers and potential customers, but three sub-markets.

  • The primary market of goods and services where customers make a selection from a range of goods provided.

  • The prescriber market, which governs the relations between customers and prescribers.

  • The referral market, which regulates the acquisition of goods and the exchange of information between prescribers and sellers.

60The relationships between these three sub-markets are described in Figure 8.

Figure 8. The prescription market

Figure 8. The prescription market

Source : Adaptedfrom Benghozi and Paris, (2005)

• Different forms of prescriptions

61A prescription can take different forms. It can be an injunction, a selection or simply an evaluation taking the form of a ranking.

62When the prescription is an injunction, the prescriber singles out a product or a brand that responds to the consumer requirements, as a medical prescription or a textbook. In this case, the decision is transferred in full from the consumer to the prescriber. The customer is deprived from the right to choose and has no option. The typical example is the medical prescription, but similar situations are observed, for example, in the home construction market where architects are important prescribers for house equipment. Similarly, in B2B markets, Original Equipment Manufacturers (OEM) can impose specific components to ensure technical compatibility or conformance to specifications. The same situation prevails for system integrators, engineering companies, or safety regulators.

63When the prescription takes the from of a selection, the prescriber identifies a list of approved products that meet the consumer’s requirements or grants certification with its own criteria and accordingly provides a referral for a given product or company. The customer still makes the final decision, but must choose from a product supply that has been chosen as part of an initial selection process conducted by the prescriber.

64Finally, when the prescription is an évaluation, it takes the form of a ranking. A hierarchy or a list of proposed solutions accompanied by an assessment regarding essential and specific factors based on qualitative and quantitative criteria. In this case, consumers made their decision by relying on the selection factors provided by the prescriber. The Internet economy provides several examples like price comparison sites that rank available products according to price or other criteria.

65Note that in an injunction, the customer is not aware of the alternatives whereas in the other two cases the supply remains visible.

• How to identify prescribers ?

66Market-driven firms must consider questions such as :

  • Which influencers have the greatest potential effect on our sales ?

  • At what point of the customer activity cycle do they become important ?

  • How powerful is their voice ?

  • Who listens to them and why ?

  • 24 Influencer 50 (2006), Who’s Really Influencing Your Customers ? White Paper, October 2006 (www.infl (...)

67A model for ranking business influencers has been developed by Influencer 5024,

  • Market reach - the number of people an individual has the ability to connect with.

  • Quality of impact - the esteem in which an individual’s views and opinions are held.

  • Frequency of contact - the number of opportunities an individual has to influence buying decisions.

  • Closeness to decision - how near an individual is the decision-maker ? Note that unfavourable influencers also exist ; they are called the gate keepers”.

How to communicate to prescribers ?

68Having identified the key prescribers in the market, and given the important role they play, the market-oriented firm must develop an appropriate communication strategy having the objective to make the prescriber an objective ally or supporter of the firm.

69This communication strategy targeting the prescribers should be very different from the firm’s selling approach targeting the customers. The objective is not to sell but to communicate a maximum of information about the firm’s offerings, while respecting and preserving the profile of independence of the prescriber, a virtue that the firm cannot claim. The goal is to position the firm in the prescriber’s mind as an adviser, as a competent and professional partner susceptible to help the prescriber in his prescribing job. The tools used to achieve this goal are typically product catalogues, technical guides and manuals, training sessions, contributions in the professional press, plants or company visits. Particularly important is the trust relationship avoiding presenting the prescriber as the firm’s representative.

• Who are the opinion leaders ?

  • 25 Keller E. and Berry J. (2003), The Influentials, New York, The Free Press.

70Opinion leaders are people who influence a purchase decision in an informal way, by contrast with the prescribers. At a time when the number of media is exploding and advertising is becoming more pervasive throughout life, the channel with the greatest influence in is neither the traditional media of television, radio, or print advertising nor the new medium of the Web, but the human channel of individual, person-to-person, word-of-mouth communication, or consumer-generated media. The challenge then for society’s institutions œ businesses and government and the people who run them œ is to adjust to this new reality in which word-of-mouth rules and to learn the word-of-mouth rules (Keller and Berry, 2003)25.

  • 26 Keller E. and Berry J. (2003), op.cit.
  • 27 Klepacki L. (2003), P&G Locates Consumers With Tremor, WWD Magazine, October 6.

71Consumers are exposed to several hundred messages a day from the media and are induced to pay more attention to the advice and opinions of people they trust. Two reasons explain this situation. First, the traditional —shot gun “ advertising approach is impersonal and more and more often ignored. In fact consumers are hiding from advertising messages. As put by Keller and Berry (2003)26—…business is working harder and paying more to pursue people who are trying to watch and listen less to its messages“. Second, a growing credibility gap exists, as buyers and decision makers struggle to verify information. People increasingly are depending on trusted, respected sources to make decisions and form opinions. Procter & Gamble (P&G) has come to the conclusion that the most effective form of marketing is an endorsement from a friend27.

  • 28 Keller E. and Berry J. (2003), op.cit., see chapter 1.

72Keller and Berry (2002, p. 31)28 have identified five characteristics shared by opinion leaders. They generally have (a) an activist approach to life that extends from the community to the workplace to leisure time ; (b) a network of contacts broader than the norm for the society ; (c) a tendency to be looked by others for advice or opinions ; (d) restless minds that seem to be constantly engaged in and fascinated by problem solving ; and (e) a pattern of trendsetting in areas that have made a substantial difference to the mainstream society.

73In demographic terms, opinions leaders are college educated, midlife, in the child-rearing years, upper-middle income, in position of responsibility in the work place, but they are not a uniform group by conventional measures. They are about as likely to be women or men.

• Viral marketing

  • 29 Rayport J.F. (1996), The Virus of Marketing, Fast Company, December-January, 68-69

74Rayport (1996)29, from the Harvard Business School, coined the term viral marketing to describe the process of disseminating messages using pre-existing social networks, analogous to the spread of pathological and computer viruses. Viral marketing is then a marketing communication method that induces and encourages people to pass along voluntarily marketing messages promoting a brand or a company. Viral promotions may take the form of word-of-mouth or the form of video clips, images or text messages delivered through Internet. The goal of marketers designing a viral communication campaign is to identify opinion leaders who will become “infected” by priority and who will go on in their social network to “infect” several other potential users. The total number of “infected users” will grow exponentially according to a logistic curve. Viral marketing is a legitimate communication method as long as it does not violate the basic principle that a person should know who is behind the campaign and when he or she is advertised to.

• Stealth marketing

  • 30 Dunnewind S. (2004), Teen Recruits Create Word-of-mouth “Buzz” to Hook Peers on Products, The Seatt (...)
  • 31 See for example, Jack Neff (2005), P&G Broadens its Interactive Effort : Rolls Out Sweepstakes for (...)

75Stealth marketing (also called buzz marketing) is an unethical form of viral marketing, consisting in artificially creating the impression of spontaneous word-of-mouth enthusiasm. It is a practice where people are paid to use or pitch products in public settings without disclosing the fact that they are being paid to do so. Stealth marketing can take several forms : paying celebrities or famous people money to covertly promote products ; hiring actors to approach people in real life situations to slip them a commercial message ; embedding brands and logos in electronic games ; embedding commercial messages in popular music, etc. As observed by Dunnewind from the Seattle Times30, companies are increasingly targeting gregarious teens as underground spokespeople, paid in free products, discounts, and cutting-edge cachet to market to friends, without disclosing that they are being compensated by a firm.31 Concerns about deception are heightened when minors are the target audience of stealth marketing, because children and teenagers tend to be more impressionable and easy to deceive.

  • 32 Quoted in : Commercial Alert (2005), Request for Investigation of Companies that Engage in Buzz Mar (...)

76Most marketing professionals agree that stealth marketing is absolutely wrong. The sponsoring company should be clearly identifiable, with zero tolerance for any tactics that could be considered covert, sneaky or deceptive. This view has been confirmed by the US Federal Trade Commission (2005)32, stating that, —… the failure to disclose (the sponsor) is fundamentally fraudulent and misleading and might violate federal prohibitions against unfair or deceptive acts and practices affecting commerce.”

• Consumer Generated Media

77Consumer Generated Media, also known as User Generated Content (UGC), refers to various kinds of media content that are produced by end-users, as opposed to traditional media producers such as professional writers, publishers, journalists and licensed broadcasters. The term entered mainstream usage during 2005 after arising in Web publishing and new media content production circles. It reflects the expansion of media production through new technologies that are accessible and affordable to the general public. These include digital video, blogging, aggregators, and mobile phone photography. An online aggregator is an entity that collects and analyses information from different sources thereby defining a new landscape in information retrieval for goods and services on the Internet. Aggregators gather information from multiple sources with or without the permission or the knowledge of the underlying sources. By reducing the consumer’s search cost and enabling transparent comparisons across different offerings, aggregators eliminate information asymmetry in the market place. For examples, visit : “howstuffworks.com” (www.howstuffworks.com) or for travelling, Expedia (www.expedia.fr). User generated content is generally created outside of professional routines and practices. It often does not have an institutional or a commercial market context. UGC may be produced by non-professionals without the expectation of profit or remuneration. Motivating factors include : connecting with peers, achieving a certain level of fame or prestige, and the desire to express oneself.

• Certification agencies

78ISO is the International organisation for standardisation. ISO 9000 is concerned with quality management : ISO 14000 is concerned with the impact of the firm’s activities on the environment. ISO 9001 is a family of standards which sets out requirements and recommendations for the design and assessment of quality management systems. ISO 9001 is grounded on the —conformance to specifications “definition of quality. A company or an organisation that has been independently audited and certified to be in conformance with ISO 9001 may publicly state that it is ISO 9001 certified or ISO 9001 registered.

79The major reason for management to seek ISO 9000 certification is to maintain effective operations. Behind this general objective, one can identify three more specific reasons.

  • Customers’ pressure. Pressure from the company’s customers who demand such certification of their suppliers. Company’s customers demand that even the sub contractors follow ISO 9001.

  • International passport. Companies engaged in international business feel that they will have better access to international markets. Many European companies have agreed only to deal with ISO 9001 registered suppliers to assure quality and services.

  • Advertising. Some companies want to become certified so that they can advertise that fact and use the argument of being better than their competitors.

  • 33 Buttle F. (1997), ISO 9 000 : Marketing Motivations and Benefits, International Journal of Quality (...)
  • 34 See also : Final Report to ISO/TC 176/SC2 on the findings of the survey of users of ISO (November 2 (...)

80Several literature reviewers33 have identified the benefits which have been claimed as outcomes of ISO 9001 certification. All authors indicate that the benefits are marketing benefits. Marketing benefits include gaining new customers, keeping existing customers, using the standard as a promotion tool, increasing market share, increasing growth in sales, and improving customer satisfaction.34

3.5. “OTHER STAKEHOLDERS” SUB-ORIENTATION

81Being customers, competitors, and distributors oriented is not enough, if other powerful stakeholders, like the consumerist or the ecologists, decide to boycott your products. Consumers are represented today by powerful and vocal consumerist groups and by non-governmental organisations (NGOs). Just as significant is the growing influence of environmental groups, human rights activists, labour and religious groups, and a host of other relationship organisations who collectively make up “civil society”. Successful companies must learn the importance of also satisfying non-customer groups. As the world becomes more linked and interconnected by global media and by Internet, the power of the civil society has increased considerably making companies more vulnerable when confronted with an alleged and actual corporate social misbehaviour. Thus, being market-oriented means also being publicly driven.

• Shortcomings of the shareholder model

  • 35 Friedman M. (1970), The Social Responsibility of Business is to Increase its Profits, New York Time (...)

82Since the mid-1980’s, an increasing focus on shareholder value has been observed, in particular in US and UK companies. The traditional shareholder oriented approach, following Milton Friedman (1970)35, holds that —the business of business is business and that profit is the sole objective of the firm”. The main argument for supporting the shareholder model is quite straightforward. Failure by managers to recognise the primacy of the shareholders group will result in poorer returns to shareholders, reduced motivation for potential investors and eventually reduced activity and unemployment. This slogan implies that social issues are peripheral to the challenges of corporate management.

83In reality, companies that ignore public sentiment make themselves vulnerable to attack. Examples abound of the long-term impact of social issues. In the pharmaceutical sector, for instance, social pressures œ stemming from issues such as public perceptions of excessive price charged for HIV/AIDS drugs in developing countries œ are now translating into a general toughening of the regulatory environment. Similarly, in the food and restaurants sector, the long debate about obesity is now resulting in calls for further controls on the marketing of unhealthy foods. And all this is nothing of the way social and political pressures have reshaped the tobacco, and the oil and mining industries.

  • 36 Davis I. (2005), What is the Business of Business ? The McKinsey Quarterly, Number 3, 106-113.

84If companies shy away from broad debates about current social issues, they are likely to face mounting criticisms over their activities as well as a greater risk of becoming embroiled in local political tensions. As suggested by Davis (2005, p. 112)36, the purpose of business should be articulated in terms less dry than shareholder value by describing the ultimate purpose of business as —the efficient provision of goods and services that society wants.“

• The theory of the stakeholders model

  • 37 Freeman R.E (1984), Strategic Management : A Stakeholder Approach, Boston, Pitman.
  • 38 Dowling G. (2001), Creating Corporate Reputation : Identity, Image and Performance, Oxford, Oxford (...)
  • 39 Steger U. (2006) Editor, Inside the Mind of the Stakeholder, Houndmills, Basingstoke, Palgrave Macm (...)

85The stakeholder approach asserts that the firm is responsible to and should be run for the benefit of number constituencies, i.e. its stakeholders (Freeman, 1984)37. Who are these stakeholders ? A popular definition is that stakeholders are any groups or individual who can affect or are be affected by the organisations objectives : employees, customers, suppliers, investors, local community and the environment (see Figure 9)38. Unless the needs of stakeholders are properly addressed there will be an adverse effect on company performance and therefore on shareholders returns. For a good reference on the stakeholder theory, see Steger (2006)39.

Figure 9. Who are the stakeholders ?

Figure 9. Who are the stakeholders ?

Source : DowlingG. (2001).

86The stakeholder approach does not specify however which stakeholder group has priority over another. Stakeholders usually have conflicting needs. Owners expect superior financial returns ; customers want more and better products for lower prices employees expect greater benefits and remuneration and suppliers want maximum prices for their inputs. The challenge for management is to develop a vision and a set of values to unite stakeholders by answering three questions : (a) who are our stakeholders and what expectations do they have M (b) What is their relative priority M (c) How can their interests be linked ?

• How to prioritise stakeholders ?

  • 40 Mitchell R.K., Agle R.R. and Wood D.J. (1997), op.cit.

87Having identified stakeholders, one can classify them by reference to three criteria : power, legitimacy and urgency (Mitchell, Agle, and Wood 1997)40.

  • Power refers to the means one party has to exert influence over others. These means can come from the control of goods and resources. Power can also be symbolic : personal authority, expertise, charisma. It can also be latent that is not exercised until the interest is awakened.

  • Legitimacy refers to the rights of each party resulting from some relationships that exist between the firm and the stakeholder. A moral claim also constitues legitimacy. Power is often mistaken for legitimacy, the “might is right” phenomenon. But how sustainable is the illegitimate exercise of power in business ?

  • Urgency refers to the time sensitive claim of critical nature to stakeholders or to the company. The urgency dimension is important in helping managers to decide which stakeholder matters take priority.

88The combination of power, legitimacy, and urgency creates a definitive stakeholder. Most of the time, the business case coincides with the stakeholder case, when powerful, legitimate, and urgent stakeholders are involved.

• International standards of corporate social responsibility

  • 41 Elkington J. (1997), op.cit.

89This philosophy of responsible management is rapidly gaining acceptance in Europe in the business community, as evidenced by the proliferation of charters and codes of conduct and by the growing adoption of the Triple Bottom Line (TBL) reporting systems (Elkington 1997)41. The charter of Human Responsibility suggested by the Alliance for a Responsible World (www.alliance21.org), the efforts of Transparency International, (www.transparency.org), the OECD Anti Bribery Convention are also important expressions of a growing awareness of CSR. The TBL reporting system is particularly critical. The TBL represents the idea that businesses should account for their performance on economic, environmental, and social criteria and attempt to satisfy their stakeholders on all three sets of criteria.

90These initiatives - regrouped under the label CSR - all share the principle that it is possible to reconcile a market economy with a good society and that economic competition can coexist with social cooperation. Three tools are particularly useful.

  • ISO 14001 provides a framework for companies looking to manage their environmental issues. Specifically, the standard describes how a firm might manage and control its organisational system so that it measures, controls and continually improves the environmental aspects of its operations. In future, the certification ISO-14001, which measures and certifies the degree of greenness, will probably become a pre-condition for being short-listed in international tenders, as it is already the case for the ISO-9000 norm.

    • 42 Miles M.P. and Munilla L.S. (2004), The Potential Impact of Social Accountability Certification on (...)

    Social accountability 8000 is a standard for companies seeking to make the workplace more humane. This global and comprehensive set of CSR guidelines can be applied throughout a marketer’s supply chain, and it is possible that SA8000 certification may eventually become an “international passport” for registered firms or a barrier of entry for unregistered firms in international and domestic markets. The standards are also expected to eventually trickle down to the suppliers of the larger firms, i.e. the small and medium-sized enterprises (Miles and Munilla 2004)42.

  • The life-cycle inventory model (LCI) is the basic tool used by the ecologists and through which a product’s total environmental impact is evaluated from “cradle to grave”. The LCI is a process that quantifies the use of energy, resources, and emission to the environment associated with a product throughout its life cycle. It accounts for the environmental impact of raw materials procurement, manufacturing and production, packaging, distribution, and in-use characteristics straight through to after-use and disposal.

  • 43 Vogel D.J. (2005), Is there a Market for Virtue ? The Business Case for Corporate Social Responsibi (...)
  • 44 Johnson H.H. (2003), Does it Pay To be Good ? Social Responsibility and Financial Performance, Busi (...)

91The social and environmental concern comes from the market and is the expression of new needs within society. It is not a fad or a protest trend. It is a way of life, which has and will spread rapidly throughout all levels of society and throughout the world. This preponderance of collective over individual needs is a new economic phenomenon and represents a check to the wilder forms of capitalism. For a review of the literature on this subject, see Vogel (2005)43 and Johnson (2003)44.

  • 45 Louche C. (2003), Sustainable Investment, an invitation to dialogue, European Business Forum, Issue (...)

92The image of the firm having a good socio-ecological reputation is becoming a stronger argument for creating loyalty among customers, employees and shareholders. Today, more investors are expressing their preferences for ethical funds regrouping firms having good social and ecological credentials, as illustrated by the growth of sustainable investments funds (Louche, 2003).45

• Trends in sustainability reporting

  • 46 Kolk A. (2003), Trends in Sustainability Reporting by the Fortune Global 250, Business and Strategy (...)

93The analysis of the Global Fortune 250 companies has shown that, compared to 1998, the number of companies that include societal issues in their reports has increased considerably (Kolk, 2003)46. Of these reports, 60 per cent dealt with the triple bottom line covering environmental, social, and economic aspects. The majority of the remaining 40 per cent involves reports that combine environmental and social issues. The social topics addressed are presented in Table 4.

94At the European level, an interesting initiative taken in 1995 by Jacques Delors, the former President of the European Commission, is the creation of CSR Europe (www.csreurope.org), an European business network for corporate social responsibility with around 70 multinational companies and 25 national partner organisations as members. The CSR is a platform for connecting companies to share best practice on CSR, innovating new projects between business and stakeholders, shaping the modern day business and political agenda on sustainability and competitiveness. Particularly interesting is the description of 600 CSR solutions adopted, end of year 2007. by leading European companies (www.cseurope.org.pages/en/solutions. html). Reviewing the CSR solutions described above in www.csreurope, provides convincing evidence of the growing acceptance and integration of CSR among European companies.

Table 4. Social topics addressed in sustainability reports published by the Fortune Global 250

Table 4. Social topics addressed in sustainability reports published by the Fortune Global 250

Source : KolkA. (2003), p. 287

• Communicating with multiple stakeholders

  • 47 Ambler T., (2003), Marketing and the Bottom Line, London, FT Prentice Hall, 2nd Edition.
  • 48 Interview with Brigitte Cerfontaine, Director Advertising Development Europe from P&G.

95The corporate brand equity is the instrument used by the firm to communicate with its stakeholders. The concept of brand equity is reviewed in more details in section 5.1 below. In short, brand equity refers to “... whctt is in people’s head about the brand.” (Ambler, 2003)47. From the firm’s perspective, and in the ternis adopted by P&G, “Brand equity is the brand’s DNA. It defines what our brands stand for : a desired experience that is meaningful and relevant to our consumer’s life”48.

  • 49 Examples of good corporate slogans would be : For L’Oréal : “To build beauty, we need talent”. For (...)

96Corporate branding shares the same objective as product branding, i.e. to communicate the positioning chosen for the brand, but it has a much broader scope than merely organising the communication between customers and the brand, since it has to deal with multiple stakeholders having different requirements. The difficulty here is to find a brand positioning, sufficiently simple and universal to appeal to all stakeholders and susceptible to guide all the activities of the firm in order to consistently build the long-term corporate brand equity. Sometimes, the corporate slogans describing the firm’s mission can do thejob49.

  • 50 Balmer J.M.T : and Gray E.R. (2003), Corporate Brands : What Are They ? What of Them ? European Jou (...)

97The existence of diverging views of the corporate brand equity occurring between different stakeholders - for instance between customers and distributors or between management and shareholders - can be a threat. An alternative would be to develop a stakeholder-specific approach rather than trying to ensure that the same aspects of the corporate brand are equally valid for all stakeholder groups (Balmer, 2003)50.

• The shareholder and the stakeholder models reconciled

98The emerging values in the corporate world place the shareholder versus stakeholder debate in a new perspective and suggest that there is an increasing convergence between the shareholder and the stakeholder models. Our views can be summarised as follows.

  • The shareholder approach is the foundation stone of a market economy system and should be clearly reaffirmed : the role of the firm is to create shareholder value. To challenge this view is like shooting on ones own foot and undermine the credibility of the capitalist system and the trust of investors, keeping in mind that those investors are increasingly institutional investors.

    • 51 Anderson E.W., Fornell C., and Mazvancheryl S.K. (2004), Customer Satisfaction and Shareholder Valu (...)

    In a competitive market economy, there is no other way for creating shareholder value than by creating first customer value. Compelling empirical evidence (see for instance Anderson, Fornell, and Mazvancheryl 2004)51 supports the proposition that customer satisfaction generates shareholder value. Thus, the objective of customer satisfaction should be the central preoccupation of the firm by adopting the market driven business philosophy described in this book.

  • Today’s customers are more demanding in their recognition of value. They do not want to have guilty feelings in their consumption. They expect from the firms or the brands they are dealing with to meet good behaviour criteria such as product greenness, social and human practice of the firm, its political and strategic commitments, ethical conduct, etc.

99It is therefore the objective of customer satisfaction that will eventually induce firms to adopt the stakeholder approach. The market-oriented firm will joyfully adopt this approach because it will contribute to increase shareholder value.

3.6. AN INVESTORS’ SUB-ORIENTATION IN THE GLOBAL MARKETS

100Among the stakeholders, investors are particularly important market players in the global market, and it is imperative that companies understand the needs of investors and their perception of the company. Calls for increased corporate transparency are becoming ever more frequent and detailed. Whereas investors may have been simply looking for a stable pattern of earnings growth and/or dividend distribution in the past, today they wish to project trends for the key drivers of future value creation such as new product development and innovative use of new business practices. On the other hand, the collapse of Parmalat in Italy, Lernout & Hauspie in Belgium Enron in the US and other financial scandals have created a crisis in investors’ confidence. Companies need to find ways to restore their credibility and reconnect with their investor base.

• Treating investors like customers

  • 52 Hansell G. and Olsen E.E. (2002), Treating Investors Like Customers, The Boston Consulting Group.

101Companies need to start applying to investors the same kind of strategic discipline they typically apply to customers. This does not mean that corporate executives should let investors determine the business strategy any more than they should let customers determine product strategy. What it does mean is developing a detailed process for ensuring that a company’ strategy is informed by the perspectives and requirements of the investors base, and then working over time to create alignment between strategy and shareholders (Hansell and Olsen, 2002)52.

  • 53 Simon H., Ebel B., and Hofer M.B. (2002), The Challenge of Investor Marketing, European Business Fo (...)

102As in any strategic marketing exercise, the first step is to systematically segment the market. Different classes of investors have different appetites for growth, profitability, cash flow generation, and risk. Who are the target groups M Are they banks, analysts, fund managers, private investors, previous shareholders, customers, employees M What needs and expectations do these groups have M Should all groups or only selected groups be addressed M Having analysed investors’ needs, Simon, Ebel, and Hofer (2002)53 report the following observations.

  • Expectations and requirements of each group vary significantly.

  • Large companies should address all target groups.

  • The quality of information collected by companies about their investors is generally poor.

  • Systematic target thinking is rudimentary at best.

103The output of this segmentation analysis should be a fact-based view of why each group of investors has chosen to put their money with the company.

• Communicating with investors

104Investors-oriented companies do not view communication with investors as an exercise in sales, nor do they rely exclusively on analysts to reflect the views of the capital market. Instead, they engage directly in a continuous dialogue with both current and potential investors. Investors often have information and perspectives that managers lack. They meet regularly with management teams across a wide range of companies. There is no law against asking investors good questions and listening carefully to their answers.

  • 54 Thomas A., Gietzmann, and Shyla A. (2002), Winning the Competition for Capital, European Business F (...)

105Investors are often overwhelmed by a plethora of expensive information that is of little interest to them such as annual reports filled with formal historical data. More transparent financial reporting-down to the level of the strategic business unit is essential. Increasingly, investors aren’t just looking at earnings per share ; they are looking at how these earnings are generated, which includes the company strategy, growth plans, competitive advantage, and so on. Once a company knows what is shareholders really value, it can start building the internal system necessary to deliver the kind of performance those shareholders want and to predict and communicate results in a way that avoids negatives, surprises, and builds credibility over time (Thomas, Gietzman, and Shyla, 2002)54.

• Targeting the right investors

  • 55 Hansell G. and Olsen E.E. (2002), op.cit.

106There are of course situations when the imperatives of a company’s long-term strategy and the needs of current investors are in conflict. Once a company has developed an in-depth understanding of its investor base, it can identify such disconnects, analyse their causes and prepare to migrate to those investors that make the most sense given the company’ strategy. Just as some customers are more profitable than others, some investors are more attractive than others. Cultivating these aligned investors will help the company migrate toward an owner base that supports the long-term strategy and will reduce unnecessary volatility as short-term investors move into and out of the stock (Hansell and Olsen, 2005)55.

Notes

1 Sheth J., Mittal B. and Newman B.I (1999),. Customer Behaviour, Consumer Behaviour and Beyond, Fort Worth TX, Dryden Press.

2 Schuiling I. and Lambin J.J. (2003), Do Global Brands Benefit from a Unique Worldwide Image ? Symphonya Emerging Issues in Management, 2. Also in : The ICFAI Journal of Brand Management, 2,2, 2005.

3 Interview with Brigitte Cerfontaine from Procter &Gamble, Director of Advertising Development Europe.

4 Veloutsou C. (2007), Identifying the Dimensions of the Product-Brand and Consumer Relationship, Journal of Marketing Management, 23, 1-2, 7-26.

5 Webster F.E. and Wind Y. (1972), Organisational Buying Behaviour, Englewood Cliffs, NJ, Prentice-Hall.

6 Manning B. and Thorne C., (2003), Demand Driven, New York, McGraw-Hill.

7 Day G.S. (1999), The Market Driven Organisation, New York, The Free press. Note that Day assimilates customer orientation with market orientation.

8 Day G.S. (1999), op.cit., p. 34.

9 Pellemans P. (1998), op.cit.

10 Sheth J., Mittal B., and Newman B.I, (1999), op.cit.

11 Lambin et al. (2007), op.cit. p. 328.

12 Kearney A.T. (2008), Growth Opportunities for Global Retailers, The A.T. Kearney 2007 Global Retail Development Index (www.atkearney.com).

13 Henderson B.D. (1983), The Anatomy of Competition, Journal of Marketing, 47, Spring, 7-11.

14 Trout J. and Rivkin S. (1999), The Future of Marketing ? It’s Simple. Marketing News, 33, p23. See also by the same authors (2000) : Differentiate or Die : Survival in our Era of Killer Competition, New York, John Wiley and Sons.

15 Porter M.E. (1980), Competitive Strategy, New York, The Free Press.

16 Bergen M. And Peteraf M.A. (2002), Competitor Identification and Competitor Analysis : A Broad-Based Managerial Approach, Managerial and Decision Economics, 23, 4/5,157-69.

17 Cook V.J. (1983), Marketing Strategy and Differential Advantage, Journal of Marketing, 47, Spring, 68-75.

18 Porter M. (1980), op.cit.

19 Andrew J.P., Blackburn A. and Sirkin H.L. (2003), Electronic Marketplaces : Strategies for Sellers, The Boston Consulting Group, Perspectives on Commerce (www.bcg.com/publications).

20 Brandenburger A.M. and Nalebuff B.J., (1996), Co-opetition, New York, Currency-Doubleday.

21 Eikebrokk T.R. and Olsen D.H., (2005), Co-opetition and e-Business Success in SMEs : An Empirical Investigation of European SMEs, Proceedings of the 38th Hawaii International Conference on System Science.

22 Hatchuel A. (2003), Le marché à prescripteurs. Crises de l’échange et genèse sociale. In : Jacob A. et Verin H. (eds.), L’inscription sociale du marché, Paris, L’Harmattan.

23 Benghozi P.J. and Paris Th. (2005). The Economics and Business Models of Prescription in the Internet. In : Brousseau E. and Curein N. (eds.), Internet Economics, Cambridge University Press.

24 Influencer 50 (2006), Who’s Really Influencing Your Customers ? White Paper, October 2006 (www.influencer50.com).

25 Keller E. and Berry J. (2003), The Influentials, New York, The Free Press.

26 Keller E. and Berry J. (2003), op.cit.

27 Klepacki L. (2003), P&G Locates Consumers With Tremor, WWD Magazine, October 6.

28 Keller E. and Berry J. (2003), op.cit., see chapter 1.

29 Rayport J.F. (1996), The Virus of Marketing, Fast Company, December-January, 68-69

30 Dunnewind S. (2004), Teen Recruits Create Word-of-mouth “Buzz” to Hook Peers on Products, The Seattle Times, November 23.

31 See for example, Jack Neff (2005), P&G Broadens its Interactive Effort : Rolls Out Sweepstakes for Prilosec, Will Launch Buzz Programs for Moms, Advertising Age, September 26. P&G has assembled a sales force of 250.000 teens - dubbed connectors, “thought leaders” or “influencers through the Internet for buzz marketing purposes.

32 Quoted in : Commercial Alert (2005), Request for Investigation of Companies that Engage in Buzz Marketing, a staff opinion letter, October 18.

33 Buttle F. (1997), ISO 9 000 : Marketing Motivations and Benefits, International Journal of Quality and Reliability Management, 149, 936-947.

34 See also : Final Report to ISO/TC 176/SC2 on the findings of the survey of users of ISO (November 2004). Responses were received from 63 countries and the number of respondents was 944. Improved performance, improved customer satisfaction and improved customer communication were identified as the most important benefits.

35 Friedman M. (1970), The Social Responsibility of Business is to Increase its Profits, New York Time Magazine, September 13.

36 Davis I. (2005), What is the Business of Business ? The McKinsey Quarterly, Number 3, 106-113.

37 Freeman R.E (1984), Strategic Management : A Stakeholder Approach, Boston, Pitman.

38 Dowling G. (2001), Creating Corporate Reputation : Identity, Image and Performance, Oxford, Oxford University Press.

39 Steger U. (2006) Editor, Inside the Mind of the Stakeholder, Houndmills, Basingstoke, Palgrave Macmillan.

40 Mitchell R.K., Agle R.R. and Wood D.J. (1997), op.cit.

41 Elkington J. (1997), op.cit.

42 Miles M.P. and Munilla L.S. (2004), The Potential Impact of Social Accountability Certification on Marketing : A Short Note, Journal of Business Ethics, 50, 1-11.

43 Vogel D.J. (2005), Is there a Market for Virtue ? The Business Case for Corporate Social Responsibility, California Management Review, 47, 4, 19-45.

44 Johnson H.H. (2003), Does it Pay To be Good ? Social Responsibility and Financial Performance, Business Horizons, 46, 6, 34-40. For a similar view, see Vogel D.J. (2005), op.cit.

45 Louche C. (2003), Sustainable Investment, an invitation to dialogue, European Business Forum, Issue, 15, Autumn.

46 Kolk A. (2003), Trends in Sustainability Reporting by the Fortune Global 250, Business and Strategy and the Environment, 12, 279-291.

47 Ambler T., (2003), Marketing and the Bottom Line, London, FT Prentice Hall, 2nd Edition.

48 Interview with Brigitte Cerfontaine, Director Advertising Development Europe from P&G.

49 Examples of good corporate slogans would be : For L’Oréal : “To build beauty, we need talent”. For Nokia : “Connecting people” : For DHL : “We keep your promises”. For Ford : “Feel the difference”.

50 Balmer J.M.T : and Gray E.R. (2003), Corporate Brands : What Are They ? What of Them ? European Journal of Marketing, 37, 7/8, 972-997.

51 Anderson E.W., Fornell C., and Mazvancheryl S.K. (2004), Customer Satisfaction and Shareholder Value, Journal of Marketing, 68, October, 172-185.

52 Hansell G. and Olsen E.E. (2002), Treating Investors Like Customers, The Boston Consulting Group.

53 Simon H., Ebel B., and Hofer M.B. (2002), The Challenge of Investor Marketing, European Business Forum, Issue 11, Autumn, 67-69.

54 Thomas A., Gietzmann, and Shyla A. (2002), Winning the Competition for Capital, European Business Forum, Issue 9, Spring, 80-83.

55 Hansell G. and Olsen E.E. (2002), op.cit.

Table des illustrations

Titre Figure 6. The different customer roles
Légende Source : Lambin et al., (2007)
URL http://books.openedition.org/pucl/docannexe/image/1649/img-1.jpg
Fichier image/jpeg, 188k
Titre Figure 7. Competitors Identification matrix
Légende Source : Adaptedfrom Bergen and Peteraf, (2002)
URL http://books.openedition.org/pucl/docannexe/image/1649/img-2.jpg
Fichier image/jpeg, 280k
Titre Figure 8. The prescription market
Légende Source : Adaptedfrom Benghozi and Paris, (2005)
URL http://books.openedition.org/pucl/docannexe/image/1649/img-3.jpg
Fichier image/jpeg, 276k
Titre Figure 9. Who are the stakeholders ?
Légende Source : DowlingG. (2001).
URL http://books.openedition.org/pucl/docannexe/image/1649/img-4.jpg
Fichier image/jpeg, 344k
Titre Table 4. Social topics addressed in sustainability reports published by the Fortune Global 250
Légende Source : KolkA. (2003), p. 287
URL http://books.openedition.org/pucl/docannexe/image/1649/img-5.jpg
Fichier image/jpeg, 376k

© Presses universitaires de Louvain, 2008

Conditions d’utilisation : http://www.openedition.org/6540

Acheter

Volume papier

Chargement

Unavailable