Developing Competitive Marketing Strategies and Competitive Positioning

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Developing Competitive MarketingStrategies and Competitive Positioning

(Stakeholder perspectives)

By

Ibrahim Zubairu Abubakar

Gideon Gathuru

Isa Musa

June, 2013.



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Table of Content

Introduction

1.0 Evaluation of Underlying Concepts1.1 Moves from Market Orientation to Stakeholder Orientation1.2 Organization Mission and Strategic Management Orientation1.3 Shareholder orientation1.4 Stakeholder orientation1.4 Customer orientation1.5 Market orientation

Literature Review

2.0 Market Orientation: A Classical Perspective

2.0 Introduction

2.1 Competitive marketing strategies for market leaders

2.1.0 Expanding total market demand2.1.1 Increasing market share2.1.3 Protecting market share2.1.3.0 Proactive marketing2.1.3.1 Defensive marketing2.2 Importance of market share2.3 Strategies for increasing market share2.4 Other competitive strategies

2.4.1 Market challenger’s strategy 2.4.2 Market followers’ strategies 2.4.3 Market nicher strategy2.4.4 Time-based competition strategy2.4.5 Specific Attack competitive Strategies2.4.6 The GE/McKinsey Matrix competitive strategy

2.4 Company’s Competitive Behaviors

2.5 Customer Ratings of Competitors on Key Success Factors

2.5 Competitive Positions of Firms

2.7 Hypothetical Market Structure

3.1 Stakeholder Theory: A Contemporary Approach

3.1.0 Defining Stakeholders3.1.1 Components of Stakeholders3.1.2 Identifying Stakeholders



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3.1.3 Classifying Stakeholders3.1.4 Stakeholder Influence3.1.5 Stakeholder Analysis

3.2 Importance-Influence matrix

3.3 Identifying and mapping internal and external stakeholders (and partnerships

3.4 Assessing the nature of each stakeholder’s influence and importance

3.5 Construct a matrix to identify stakeholder influence and importance

3.6 Monitor and manage stakeholder relationships

3.7 Managing Stakeholders3.8 Spectrum of Stakeholder Positions

4.0 ConclusionReferencesList of tablesList of figures



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Developing Competitive Marketing Strategies and Competitive Positioning

Introduction

1.0 Evaluation of Underlying Concepts

In order to better understand how competitive marketing strategies and positioning are

developed, an examination and definition of each of these concepts must be made. This includes

the examination of marketing strategies, positioning and their competitive elements.

Marketing as a concept has been defined in numerous ways by the leading texts in marketing.

Marketing has been defined as “the process by which companies create value for customers and

build strong customer relationships in order to capture value f rom customers in return” (Kotler &Armstrong, 2010, p. 29).

The definition above is considered to take the traditional approach to the concept of marketing

and is classified under the narrow view of marketing as its main focus is on the building and

managing of customer relationships and satisfying a narrow range of stakeholders.

Therefore, it is no surprise that some authors have opted to take a different approach in defining

marketing through appreciating all parties involved in the marketing process. This shift in focus

towards a broader view of marketing is marked by the inclusion of stakeholders in its definition,

and has led to the development of what has been termed as a contemporary approach to

marketing.

According to the interpretation of (Rachhod & Gurau, 2007, p.5) “Marketing is the process of

planning and executing activities that satisfy individual, ecological and social needs ethically and

sincerely, while also satisfying organizational objectives”.

Similarly the American Marketing Association as cited by (Kotler & Keller, 2009, p.45) define

marketing as “an organisational function and a set of processes for creating, communicating and

delivering value to customers and for managing customer relationship in ways that benefit the

organisation and its stakeholders”.



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Much like marketing, the inherent distinction between the existing definitions of marketing

strategies is evidence of the existence of different schools of thought. Marketing strategy has

been defined as “the marketing logic by which the business unit hopes to create customer value

and achieve profitable relationships” (Kotler & Armstrong, 2010, p.72). According to (Ranchhod

& Garau, 2007, p.5) “marketing strategies are defined by the overall corporate vision of an

organization and constitute the actions taken to satisfy customers and their needs”.

Despite both definitions focus on the customer, they can be distinguished based on the factors

that they propose should be considered when developing competitive marketing strategies. The

first definition is narrow in its sole focus on customer value and relationships, whereas the later

definition takes a broader perspective with its acknowledgement that the organization’s overall

vision must be taken into account.

Positioning has been defined as “arranging for a product to occupy a clear, distinctive, and

desirable place relative to competing products in the minds of target consumers” (Kotler &

Armstrong, 2010, p. 74). Alternatively positioning can be defined as “what is done in the minds

of pros pective consumers through the various components of the market offering” (John, 2001,

p. 209).

In order to link the various concepts defined above it has been acknowledged that these concepts

can be developed and implemented in a competitive manner. This refers to their ability to create

a competitive advantage for the organization; with competitive advantage being “what sets

organizations apart from others and provide it with a distinctive edge in the marketplace”

(Richard & Dorathy, 2009, p. 152).

Ramesh (2012 p. 1-4) defined Competitive marketing strategies (CMS) as a systematic action

setting process as much as it is a dynamic adjustment process. Petzer, Steyn & Mostert (2008 p.

3) View it as a service to be deployed by an organization to improve its own ability to compete

with others, gain a competitive advantage and thus retain a greater number of customers.

Alternatively, Dann & Dann (2007) defined Competitive marketing strategy as a paradoxical

aspect of modern business. At times, it relies on the instincts, skills and artistry of the marketer,

yet at the same time, there is an expectation that the scientific rigour of market research, business



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statistics and economic measurement be applied in equal measure. Strategy, on the other hand is

a technique that is an art form that is learnt best by doing, and a science that is learned through

models, theories and the analysis of existing knowledge.

Over time, marketing scholars have broadened the marketing concept beyond current customers

and competitors to include future consumers and societal needs. There is a connection between

how these marketing and stakeholder concepts have evolved the company’s obligations beyond

shareholder to include customers as one of their primary stakeholders. Marketers adopting the

stakeholder concept have shifted the firm’s focus to a broader set of stakeholders, including

suppliers, employees, regulators, shareholders, and the local community.

1.2 Move from Market Orientation to Stakeholder Orientation

From the analysis of the concepts above, it is clear that there are different approaches to

marketing based on focus on the various parties involved within the organization’s operations.

(Ferrell et al 2010) documented the change in approach as a move from market orientation to

stakeholder orientation. They identified that market orientation focuses on customers and

competitors as the primary stakeholders, with other stakeholders receiving less attention and

consideration from the organization. They distinguished the above with the stakeholder

orientation, which they suggest has no hierarchy of stakeholders, despite the fact that there is no

claim that the various stakeholders are equal in importance. This dilemma is reconciled by their

claim that under the stakeholder’s approach the weight or importance of stakeholders is based on

contextual considerations that affect the company which include the country, industry and

strategic group market segment.

On a broader scale the move has been termed as one from a traditional to contemporary

perspective of marketing and indication of the acceptance that the two concepts are being

appreciated as separate and independent theories.



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1.3 Organization Mission and Strategic Management Orientation

A company’s mission orientation can provide valuable information in analysing which strategic

management orientation the firm has adopted. It is argued that mission statements reflect a

company’s orientation either towards shareholder, stakeholders, customers or markets. (Atrill,

Omran, Pointon, 2005, p. 29-30). Examples of each will be explored below.

1.4 Shareholder orientation

Mission statements assert the primacy of shareholders and reflect a concern for their financial

returns. An example of such a mission statement is as follows:

‘We aim to maximize shareholder returns over the long term through the acquisition and active

management of investments and developments with secure and improving income in good

locations.’ (Town Centre Securities PLC. - 1997 Annual report and accounts).

1.5 Stakeholder orientation

Mission statement reflects a concern for satisfying the needs of a range of different stakeholders.

There is no attempt to identify any particular stakeholder group as having prima facie priority

over others. An example of such a mission statement is as follows:



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‘Our mission is ongoing and challenging and is to increase the value of our Group to customers,

employees, suppliers and shareholders...’ (Liberfabrica PLC. - 1998 Annual Report and

Accounts).

1.6 Customer orientation

This category of mission statements reflects the importance to the business of satisfying

customer needs. For example, ASDA Group plc is committed to: ‘…satisfying the weekly

shopping needs of ordinary people and their families who demand value.’ (ASDA Group plc. -

Annual report and accounts)

1.7 Market orientation

This category of mission statements reflects the drive to achieve and/or retain market leadership.

An example of such a mission statement is as follows: ‘Our mission is to be revered as the

hothouse for world changing ideas.’ (Saatchi and Saatchi PLC. - 1998 Annual report and

accounts)



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Literature Review

2.0 Market Orientation: A Classical Perspective

2.1 Introduction

All organizations face an external business environment that constantly changes. Sometimes

these changes are slight e.g. minor amendments to regulations or a new firm entering the market

as a ‘small player’. Companies of all sizes around the globe are in a constant struggle to build

their competitive capabilities to strengthen their position and outperform their rivals. Rivalry

between firms does not always lead to conflict and aggressive marketing battles. Determining a

competitor strategy involves answering three questions.

Should we compete?

If so, what market should we compete?

How should we compete?

Military analogies have been drawn upon to identify strategic options under the conditions of

conflict and competition. Ramesh (2012 p.1-4) lamented that the objective of competitive

strategy is to improve financial performance of the firm through the route of sustainable

competitive advantages. It must be (1) valuable; (2) it must be rare among competitors; (3) it

must be imperfectly imitable; (4) there must not be any strategically equivalent substitutes for

this resource skill.

2.2 Competitive marketing strategies for market leaders

Kotler & Keller (2012) opined that to stay number one, the firm must first find ways to expand

total market demand, protecting market share, and increase market share.

Expanding total market demand

Protecting market share

Increasing market share

2.1.0 Expanding total market demand:



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When the total market share expands, the dominant firm usually gains the must. This means that

the market leader or the firm should look for new customers or more usage from existing

customers.

Marketers can try to increase the amount, level or frequency of consumption. This include

Find new customers

Increase or convince more usage from existing customers

New ways to use brand

2.1.1 Protecting market share:

A dominant company can protect market share by continuous innovation in two ways;

Proactive marketing: Proactive marketing involves the perception of an opportunity, where the

firm perceives a hostile environment as an opportunity; a conceptualization missing from

strategic flexibility. Proactive marketing describes the firm’s marketing response specific to a

general economic downturn. It’s also limited to focused, aggressive marketing behaviour during

times of economic stress. Proactive marketing results in improving both market and business

performance during the recession (Srinivasan, Lilie & Rangaswamy, 2012). Marketers can be

proactive in 3 ways

A responsive marketer- finds a states needs and fills Anticipated marketer- looks ahead to find customers future needs

Creative marketer- finding unaware need of customers

Defensive marketing: this meant to reduce the probability of attack from the competitors. It

includes:

Position Defence: These means occupying the most desirable market space in the mind of

consumers and make it impossible for competitors to penetrate.

Flank Defence: this means to protect a weak front or support a possible counterattack

Pre-emptive defence: this means keeping all competitors off balance by aggressive maneuvers.



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Counteroffensive defence: the market leader can meet the attacker frontally and hits its flank.

E.g. UPS & FedEx

Mobile defence: this means market broadening service/ product

Contraction defence: means withdrawal of weaker market to concentrate on their stronger

market

Protecting Market Share Strategy Diagram

Source: Kotler & Keller (2012).

Bypass Attack. Bypassing the enemy altogether to attack easier markets.

Guerrilla Attack. Guerrilla attacks consist of small, intermittent attacks, conventional and

unconventional, including selective price cuts, intense promotional blitzes, and occasional legal

action, to harass the opponent and eventually secure permanent footholds.

2.1.2 Increasing market share: increasing the values of a firm/company one share can be

worth tens of millions of dollars, but this does not necessarily mean an increase in profit. Point

to consider when increasing market share. Market share is a company's percentage of sales in a

particular industry. Both increases and decreases may affect profits, so managers typically adjust

operations and marketing strategies to increase or decrease it as needed. Market share can be



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calculated either in terms of the money earned from sales or the number of units sold. The basic

way of calculating this percentage has been just revenue or units sold divided by that of the total

market

Possibility of provoking antitrust action

The danger of pursuing the wrong marketing activities.

Increasing market share


2.2 Importance of market share

Having a large sizable market share enables a company to get products and supplies more

cheaply, since it is able to buy in bulk. This in turn can help with sales, since the company can

stock more of an item at a cheaper price, meaning that people will be more likely to go there to

buy it since they can be reasonably sure of getting it there at competitive price.



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Businesses with a big presence in the market are seen as a worthwhile investment, as they

usually profit by keeping up with the whole industry. It can give investors a better idea of its

competitiveness. Though this doesn't always go hand in hand with profitability, it's often a good

indicator of whether a business is performing well or not, and drastic changes often indicate

problems or changes for the better.

2.3 Strategies for increasing market share

Sometimes something as basic as increasing advertising can have huge effects, as can adjusting

pricing. Breaking products into groups and targeting them at specific demographics can also

increase this percentage, as can make complementary products.

By improving the product or service itself, which can attract customers from competitors, though

this can be difficult, so many companies try to grow along with a growing market rather than

trying to take business from the competition (http://www.wisegeek.org/what-is-market-share.htm

accessed, 24 May, 2013 2:07am).

2.4 Other Competitive Strategies

2.4.1 Market challenger’s strategy: many market challengers have gained ground or even

overtaking the leader. E.g. Toyota & General motors

2.4.2 Market followers’ strategies:

This is a strategy of product imitation rather than product innovation. It includes;

Counterfeiter- duplication of leader products

Cloner- emulate the leader product

Imitator- copy leader's product, but differentiate packaging

Adapter- improving leader’s product.

2.4.3 Market niche strategy: smaller companies target smaller market in order to avoid

competition with larger firms.

http://www.wisegeek.com/what-is-profitability.htm

http://www.wisegeek.org/what-is-market-share.htm




http://www.wisegeek.com/what-is-profitability.htm



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2.4.4 Time-based competition strategy: this means developing and distributing goods and

services more quickly than competitors.

2.4.5 Specific Attack Strategies

Specific Attack Strategies include Price, discounts, Lower-priced goods, Value-priced goods,

Prestige goods, Product proliferation, Product innovation, improved services, Distribution

innovation, Manufacturing-cost reduction, Intensive advertising promotion.

2.4.6 The GE/McKinsey Matrix

The GE/McKinsey Matrix is a composite portfolio model that expands the basic premise of the

BCG Matrix. The GE/McKinsey Matrix consists of two measures:

industry attractiveness

the business’s competitive position



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Source: Peters (1993)

1. Leader: all strategies in this field are based around defending and holding this position for as

long as possible.

2. Growth leader: high competitive position/medium industry attractiveness.

3. Try harder: the market conditions are extremely positive, but the company has not

sufficiently developed to take advantage of that fact.

4. Cash generation: the company holds a solid market share in a viable and financially attractive

marketplace.

5. Proceed with care: the company is neither dominant nor clearly deficient, and the market is

neither highly attractive or clearly worth leaving.

6. Double or quits’; the point where the organization has to either invest heavily in its

competitive capacity, or withdraw from the market. Whilst the opportunity is present, an

organization in this position currently lacks the ability to capitalize.

7. Phased withdrawal: the resources should be examined to determine if they could be better

used elsewhere in the organization.

8. Phased withdrawal: The organization has the option of either withdrawing from the market

(writing off the failed venture to tax and experience) or trying to improve its competitive

position, assuming that the resources could not be better used elsewhere in the firm.

9. Withdrawal: The firm is losing money on a product and has low market share and low

capacity to improve the position (Dann & Dann, 2007).

2.4. Company’s Competitive Behaviours.

Competitive behaviour can take the following forms.

Conflict- to drive competitors out of the market place.

Competition- to perform better than competitors.



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Cooperation- coming together of 2 or more companies in order to overcome problems

and take advantage of new opportunities (Kotler & Keller, 2012).

Customer Ratings of Competitors on Key Success Factors

Customer

awareness

Product

quality

Product

availability

Technical

assistance

Selling

staff

Competitor A E E P P G

Competitor B G G E G E

Competitor C E P G F F

Source: Kotler & Keller (2012)

Key

E= Excellent, G= Good, F= Fair & P= Poor

2.5 Competitive Positions of Firms

Desai, S.S (2013) cited that ‘As noted by Kotler et al. (1996), Boyd et al. (1997), and Kotler

(2000), firms competing in a given market are likely to vary in terms of their size, resources and

objectives. Some are large, have plenty of resources and aspire to become the dominant players

in the market; while others are small, have limited resources and only wish to survive. As a resultof these variations, firms occupy different competitive positions in the target market. On the

basis of a firm’s resources, market share and promotion spending, Kotler et al. (1996) and Kotler

(2000) has classified them into four competitive positions:

1. Market Leader: These firms have the largest market share and usually lead other firms in

‘price changes, new product introductions, distribution coverage and promotion spending’.

Kotler et al. (1996) estimate that market leader firms control about 40% of the market share.

2. Market Challenger: This is a ‘runner -up firm’ in the industry and ‘fights hard to increase its

market share’. Firms labelled as a market challenger control about 30% of the market.



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3. Market Follower: These firms are also called runner-up firms; they ‘want to hold their share

without rocking the boat’. Market followers control about 20% of the market share (Kotler et al.,

1996).

4. Market Niche: Firms labelled as ‘market niches’ serve small market segments, largely ignored

by other firms. Their market share is estimated to be around 10%. This classification offers a

useful analytical scheme to compare companies in terms of the specific marketing strategies or

approaches they use.

Hypothetical Market Structure

Market

nichers

10%

Market

followers

20%

Market challengers

30%

Market leaders

40%


3.1 Stakeholder Theory: A Contemporary Approach

As mentioned earlier stakeholder orientation has adopted the inclusion of a wider group of

stakeholders in marketing considerations than the traditional market orientation approach.

Stakeholder orientation as defined by (Ferrell et al 2010, p. 93) is “the organizational culture and

behaviours that induce organizational members to be continuously aware of and proactively act

on a variety of Stakeholder issues”.



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Edward Freeman is accredited as being the pioneer of the stakeholder theory. This was clearly

evidenced by his novel 1984 text ‘Strategic Management: A Stakeholder Approach’, which

provided an entirely independent and alternative perspective marketing strategies.

According to (Ranchhod & Garau, 2007, p.82) the literature on stakeholder theory has

developed to a point where different facets within the theory have emerged based on their focus

of different aspects of the theory. It is proposed that some theorists such as (Bailey and Clancey,

1997) have opted to take a corporate governance view; whereas theorists such as (Hutton, 1996)

have adopted a socio-economic view, and (MacDougall, 1995) an operational view.

Stakeholder theory provides solutions on to how to choose among multiple stakeholders with

competing and, in some cases, conflicting interests (Jensen, 2001, p. 13). This is of particular

importance as one of the central underlying concepts behind stakeholder theory is the creation of

value for each of the organizations stakeholders that affect or can be affected by the firm’s

projects, policies and strategies.

3.1.0 Defining Stakeholders

A stakeholder is said to be “any group or individual who can affect or is affected by the

achievement of organisations objectives” (Freeman, 1984, p. 46).

Stakeholders have also been defined as “organizations, groups, and individuals that have a

‘stake’ in the success of the organization” (Swayne, Duncan and Ginter, 2008, p. 62).

According to (Fassin, 2009, p.116) based on the numerous definitions of stakeholders proposed

by leading scholars, two dichotomous views emerge (Kaler, 2002) the ‘claimant’ definition and

the ‘influencer’ definition of what it is to be a stakeholder, plus the combinatorial definition

which (Freeman 1984) adopted in his seminal work and is now considered as the classical

definition of stakeholders.

It is argued that a dichotomy in the approach to defining stakeholders exists on the basis of the

directness of the stakeholder’s relevance to the organization. This has been termed as the broad

and narrow distinction (Ranchhod & Garau, 2007:103-4). The narrow definition of stakeholders



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is said to include only select stakeholders that have a direct relevance to the firm’s core

economic interests, hence are also defined as business stakeholders as they are task-related

By contrast where consideration is given to the full range of stakeholders, their likely impacts on

the company from either an economic or an ethical point of view, on a long-term basis, such

stakeholders are said to fall under the broad definition of stakeholders.

It is argued that in general, companies are likely to shower more attention on these tasks-related

stakeholders than on other kinds of stakeholders as they are central to their economic activity.

This position is what has led to most scholars arguing that the traditional perspective of

stakeholders is evidenced in part by the adoption of parties that fall under the narrow definition

of stakeholders.

3.1.1 Components of Stakeholders

Different scholars identify various groups as being a component of stakeholders. For example,

some academics deconstruct the owners group above to entail the board of directors and

shareholders. Similarly, some authors distinguish managers from other employees. It can be



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argued that these distinctions are drawn due to the differences in the authors’ perceived

importance of these constituent groups. This determination is based on the various groups’

ability to affect and be affected by the reorganization; hence they need to recognize some of

them as separate and independent stakeholder components.

3.1.2 Identifying Stakeholders

According to Freeman as cited by (Ferrell, 2010, p. 94), “the contemporary stakeholder

perspective takes into account the interests of the groups for which firms are responsible. An

individual or group is considered a stakeholder of a business unit when any one of three

characteristics applies: (1) when the actor has the potential to be positive or negatively affected

by organizational activities and/or is concerned about the organization’s impact on his or her or

others’ well-being, (2) when the actor can withdraw or grant resources needed for organizational

activities or (3) when the actor is valued by the organizational culture.

3.1.3 Classifying Stakeholders

Stakeholders are labelled and categorized into different groups based on different considerations

of stakeholders. The most common of these categories is the internal and external divide. Under

this classification group, theorists such as (Swayne, Duncan & Ginter, 2008, p.62) propose that

stakeholders be grouped according to their functional position in the organization.

Internal stakeholders are grouped as those “who operate primarily within the bounds of

organization”. Managers and other employees are given as an example of stakeholders that fall

within this category.

On the other hand it is proposed that there are those stakeholders “who operate outside the

organization”. Such stakeholders are referred to as external stakeholders and are said to include

supplier, third party payors, regulatory agencies the media, the communities and competitors.

“Such stakeholders have been referred to as the “organization ecosystem” as they affect and can

be affected by the creation and delivery of the organizations product and services”.

In addition to the categories above a hybrid category known as interface stakeholders is said to

exist. This group classifies those stakeholders who function both internally and externally within



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the organization. Medical staff and corporate staff of a parent company are examples given of

stakeholders who fall within the confines of this group.

Another common classification is that of primary and secondary stakeholders. This

categorization is made on the basis of the level of importance that the stakeholder is perceived as

having in the success or failure of the organization.

Primary (direct) stakeholders are said to be groups seen by business to be vital to the

organization’s success or failure. An example would be butchery or a meat supplier in the

context of a steakhouse. In this example the supplier would fall under the category of a primary

stakeholder as the reputation of the restaurant depends upon the quality of the food served which

is almost importantly dependent on the quality of meat supplied to it.

Secondary (indirect) stakeholders on the other hand, are people or groups who feel involved in

the organization’s success or failure, whether or not the management agrees. An example of a

stakeholder that falls within the confines of this category would be a local resident who may be

affected by noise pollution from a factory. The resident may consider himself/herself to be

having some influence in the factory’s success or failure; however the company may consider the

resident as insignificant. Stakeholders with such minimal actual influence fall under the category

of secondary stakeholders.

It is proposed that other criteria for classification include generic versus specific, legitimate

versus derivative, strategic and moral, core, strategic and environmental stakeholders (Fassin,

2009, p.116)

3.1.4 Stakeholder Influence

The organization’s performance affects stakeholders, but stakeholders also can have a

tremendous effect on the organization’s performance and success. Monsanto, a leading Americanmultinational agricultural biotechnology corporation experienced big problems in the recent past

due to its failure to satisfy a variety of stakeholders. The company’s genetic seed business had

been the target of controversy and protest with European consumers rebelling against a perceived

imposition of unlabeled, genetically modified food ingredients. Research institutes and other

organizations took offense at what they perceived as Monsanto’s arrogant approach to the new

http://en.wikipedia.org/wiki/Multinational_corporation

http://en.wikipedia.org/wiki/Agricultural_biotechnology

http://en.wikipedia.org/wiki/Agricultural_biotechnology

http://en.wikipedia.org/wiki/Multinational_corporation



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business. Activist groups accused the company of creating “Frankenstein foods”. Partly as a

result of these public sentiments, investor confidence in the company waned and the stock took a

downhill slide.

To make matters even worse, in seeking to sell genetically modified seeds in Indonesia,

managers allegedly bribed government officials, which got Monsanto into hot water with the

U.S. Securities and Exchange Commission. The leadership has promised an ongoing dialogue

between Monsanto managers and various stakeholder constituencies. The company paid $1.5

million to settle the SEC charges and voluntarily cooperated with regulatory investigators. One

thing came out clearly from the scandal; if Monsanto managers had been unable to effectively

manage critical stakeholder relationships, Monsanto was not likely to have survived as a

corporation.

More specifically stakeholders have been acknowledged as being able to influence an

organisation’s financial performance. Research conducted by (Berman et al, 1999, p. 501) that

employees and product safety/quality were the factors that had the greatest influence on a firm’s

financial performance.

Kotler & Armstrong (2011) use the examples of Toyota and L’Oreal whose company’s success

they attribute to their inclusion and focus on creating value for their respective suppliers. It is

argued that their mission statements are evidence of this approach as they both place emphasis

on the role of their suppliers.

The dynamic influence that stakeholders wield has been experienced first-hand by Marks &

Spencer within a short period of time. Citing local press publications, (Rachhod &Garau, 2007,

p.80-1) illustrate how decisions by the board of directors and managers of the company were

responsible for both company successes and failures.

Profit, high dividend & values of their share

Voting rights at AGM’sShareholders

Managers Company growth & job security

Day to day decision making powers

Pay levels, working conditions and job security

STAKEHOLDERS INTREST AND INFLUENCES OVER



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3.1.5 Stakeholder Analysis

Stakeholder analysis is a technique used to identify and assess the influence and importance of

key people, groups of people, or organisations that may significantly impact the success an

organisation’s activity or project (Friedman & Miles, 2006).

Put otherwise, “Stakeholder analysis is a process of systematically gathering and analyzing

qualitative information to determine whose interests should be taken into account when

developing and/or implementing a policy or program” (Schmeer, .K. 2000, Section 2-3). The

definition of stakeholder analysis offered by Schmeer can be construed as being more applicable

when dealing with an organisation’s development of competitive marketing strategies and

competitive positioning policies.

There are numerous methods of conducting stakeholder analysis; (Bryson.J, 2004, p.27) is ableto demonstrate this as his article through his review of fifteen different methods of analysis. Of

those methods, the influence-importance matrix and salience models are the most prominent and

are both evaluated below.

3.2 Importance-Influence matrix

The stakeholder analysis process involves four stages

1. Firstly the internal and external stakeholders must be identified and mapped.

2. Secondly the nature of stakeholder’s importance and influence must be assessed.

3. Thirdly a matrix should be constructed to identify the influence and importance of the

relevant stakeholder.

Employees

Society

CSR, free environment, and treat em lo ees fairl

Industrial action or strike to persuade for their need

STAKEHOLDERS INTREST INFLUENCESKey



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4. Fourthly the stakeholder relationships should be monitored and managed.

3.3 Identifying and mapping internal and external stakeholders (and partnerships)

The identification process involves classifying the stakeholders on the basis of the scope of their

involvement in the workings of the organisation. The mapping aspect involves identifying the

target groups and pulling together as much information about them as possible.

The following questions are designed to reveal the stakes as well as help to identify the right

people to involve in any particular situation.

Who is or will be affected, positively or negatively, by what you are doing or proposing

to do?

Who holds official positions relevant to what you are doing?

Who runs organisations with relevant interests?

Who has been involved in any similar situations in the past

Whose names come up regularly when you are discussing this subject?



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3.4 Assess the nature of each stakeholder’s influence and importance

Understanding that individual and groups behave differently depending on the situation is central

in discerning stakeholders influence and importance. The impact that stakeholders can have on

organizational policy, project and strategy is dependant to their relationship to either the

organization itself or the issues of concern, or both. Influence and importance is always

measured in relation to the organisational objectives that the company seeks to achieve.

In relation to competitive marketing strategies and competitive positioning, influence refers to

how powerful a stakeholder is in terms of manipulating the direction of the project and its

outcomes. Impotence on the other hand, refers to those stakeholders whose problems, needs and

interests are a priority for an organization. That is if those certain important stakeholders are not

assessed effectively, then the organizational policies, projects and strategies cannot be deemed a

success.

3.5 Construct a matrix to identify stakeholder influence and importance

He matrix is arguably the most important stages of the stakeholder analysis as it provides a

platform upon which the correlation between the influence and importance of the stakeholders in

relation to the organization's strategies can be established. This in turn allows the organisation to

compare the different stakeholders identified in order for their relative priority to be properly

determined. As a result, the organisation’s dif ferent stakeholders can be managed appropritately

as well as be maintained in their current positioning.



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The Importance-Influence matrix is divided into four distinct sections known as quadrants. The

stakeholders in each quadrant are identified based on their character composition, which is a

combination of their relative importance and influence marked on a scale of either low or high.

An analysis of these quadrants in a clockwise motion reveals the following.

Quadrant one: Stakeholders such as stakeholder one have high influence and high importance

and therefore need to be fully engaged on the organisational strategy/project. The style of

participation for stakeholders in this group needs to be appropriate for gaining and maintaining

their ownership.

Quadrant two: Stakeholders akin to stakeholder two can be highly important but with low

influence or direct power, however they need to be kept informed through appropriate education

and communication.

Quadrant three: Stakeholders similar to stakeholder three have low influence as well as low

importance therefore care should be taken to avoid the dangers of unfavourable lobbying and

consequently they should be closely monitored and kept on board.

Quadrant four: Stakeholders such as stakeholder four placed in this section can hold potentially

high influence but low importance hence should be kept satisfied with appropriate approval and

perhaps bought in as patrons or supporters.



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Despite the fixed number of quadrants it is important to recognise, that the map is not static,

changing events can mean that stakeholders can move around the matrix with consequent

changes to the list of the most influential stakeholders.

3.6 Monitor and manage stakeholder relationships

The central facet of stakeholder relationships is the interaction between the organisation and the

stakeholders, in particular how the firm is affected by stakeholder actions. The management to be

employed are stated above in organisational responses to the different quadrants in the

Importance-Influence matrix. The Strategy-Power matrix demonstrates how stakeholders are

identified and categorised on the basis of their level of power (influence) within the organisation,

and the relevant strategies that the organisation adopts in order to manage them.

3.7 Salience Model

A stakeholder can be analysed and consequently classified using the salience model of

classification. Mitchell, Agle and Wood (1997-99) have come up with a stakeholder analysis

model that can help a project manager in the early phase of planning process to identify

stakeholders and classify them according to three major attributes-



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1. Power – this is the ability to influence the organization, project, policy or strategy

2. Legitimacy – this refers to the relationship and actions of stakeholders in terms of

desirability, properness or appropriateness;

3. Urgency – this are the requirements in terms of criticality & time sensitivity for the

stakeholder.

Based on the combination of these attributes, priority is assigned to the stakeholder.

Based on the various combinations of degree of power, legitimacy and urgency inherent within

the characteristics of each stakeholder; the salience model proposes that eight different categories

of stakeholder exist. These include dormant, discretionary, demanding, dominant, dangerous,

dependent, and definitive. Those groups or individuals who after analysis are discovered not to

possess any power, legitimacy or urgency are said to fall under the eighth category known as

non-stakeholders.



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According to Scheemer (2000) stakeholder analysis is of paramount importance as policymakers

and managers can use it to identify the key actors and to assess their knowledge, interests,

positions, alliances, and importance related to the policy. This would allow policymakers and

managers to interact more effectively with key stakeholders and to increase organizations’

support for a given policy or program amongst stakeholders. When this analysis is conducted

before a policy or program is implemented, policy makers and managers can be able to detect

and act in order to prevent potential misunderstandings about, and/or opposition to the policy or

program. When a stakeholder analysis and other key tools are used to guide the implementation,

it is argued that the policy or program is more likely to succeed.

Following the stakeholder analysis the organization finds itself in a situation where it can

develop competitive positioning strategies that evolve over time. In developing these positioning

strategies, the organization has to consider the following factors with reference to the

strategy/power matrix (Ranchhod & Garau, 2007, p.110-11)

The key factors that must be taken into consideration include the following;

Competitor hostility

Market turbulence

Technological change

Ease of market entry

3.8 Managing Stakeholders

Following the analysis of the identified stakeholders, the organization should be able to place

each of them in one of the spectrum of stakeholder’s positions below and determine their

position regarding the firm’s policies, projects and strategies. This will enable the organization to

adopt appropriate managing techniques with regards to stakeholder relationships. Asacknowledged by (Ranchhod & Garau, 2007, p.101-2) “interactions between stakeholders can

help a company to gain a degree of competitive advantage in the marketplace”, in one the

following ways;

reducing the costs of managing relationships



30

adding a social and ethical dimension

taking a long-term view

developing a competitive advantage over the firms rivals

enhancing and develop marketing relationships

Spectrum of Stakeholder Positions

Once the stakeholder’s position is determined the organization will have to adopt a managing

technique as prescribed in the stakeholder analysis. This could either a proactive,

accommodating, defensive or reactive.



31

4.0 Conclusion

From an evaluation of the traditional approach towards strategic management, companies mainly

focussed on customer-company relationship when developing competitive marketing strategies

and competitive positioning.

The policies adopted are marked by market leaders who focus on expanding their market

demand, increasing and protecting their market share in order to stay number on top. In addition,

there are market challengers who focus on overtaking market leaders. Market followers may

adopt a product imitation strategy. Market niche can focus on smaller market thus according to

their competitive positioning. Adams Smith further argued that perfect competition causes firms

to develop new product, service and technology, which give customers a greater selection and

better product and this leads to low price for a product. But this result to workers stress, long

work hours, abusive working relationship and poor working condition as identified by Karl

Marx.

On the other hand, it is evident from the examination of stakeholder analysis that the process is

central to the development of an organization’s competitive marketing strategy and competitive

positioning under the contemporary perspective. While the specific nature of this model has

evolved over time, the basic assumptions upon which it rests remain the same.

Acceptance of the ‘systems’ view of organization acknowledges that they need to interact with

their environment. Specific interest groups (stakeholders) exist in that environment and have an

impact on (a stake in) the behavior and effectiveness of that organization. While these groups can

be identified and classified in various ways, they have in common a willingness and competency

to act with the intent to influence the organization. In turn, the organization is aware of these

groups and recognizes the need to deal with them. To do so, the organization develops strategies

that guide their behavior with regard to those groups and their interests. This behavior and

supporting strategies are in turn based on the assumption that the groups (stakeholders) can be

‘managed’ to enable the organization to achieve its goals.



32

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Developing Competitive Marketing Strategies and Competitive Positioning