Management processes inmarketing planning

Gordon Greenley, Graham Hooley and John SaundersAston Business School, Aston University, Birmingham, UK

Keywords Marketing planning, Management activities, Decision making, Adaptability,Flexible organizations, Competitive analysis

Abstract There has been concern in the literature about the adequacy of the traditional model ofmarketing planning, which focuses on what decisions should be made and not on how to makethem. The aim of this article is a new conceptualisation that proposes key management processesabout how marketing planning decisions are made in a dynamic context. The motives for thisconceptualisation are to contribute to understanding by advancing the traditional model ofmarketing planning, to stimulate academic and practitioner debate about how marketing planningdecisions are made, and to initiate new directions in marketing planning research. Two newcompeting models of marketing planning are developed, which address key management processesabout how marketing planning decisions are made in a dynamic context, and research directionsare proposed.

IntroductionMarketing planning has been defined as all rational, incremental and intuitiveprocesses that guide a firms marketing to its future (Saunders et al., 1996). In theliterature the tradition has been to prescribe marketing planning as a model oflogical-sequential decision making, incorporating objectives, strategies, tactics,implementation and control (Ferrell et al., 1999; Jain, 1999; Lambin, 2000; McDonald,1996). However, there has been concern in the literature about the adequacy of thistraditional model, as it focuses on what marketing planning decisions should be made,and not on how to make them. For example, the traditional model fails to adequatelyconsider management processes that are inherent within marketing planning (Dunnet al., 1994; John and Martin, 1984; Martin, 1987; McDonald and Leppard, 1991), and itfails to address the organisational context of marketing planning adequately (Greenleyand Oktemgil, 1996; McDonald and Leppard, 1991; Piercy and Morgan, 1994; Speed,1994). The aim of this article is a new conceptualisation that proposes key managementprocesses about how marketing planning decisions are made in a dynamic context.The motives for this conceptualisation are to contribute to understanding byadvancing the traditional model of marketing planning, to stimulate academic andpractitioner debate about how marketing planning decisions are made, and to initiatenew directions in marketing planning research.

In guiding a firms marketing to its future, marketing planning decision making isused to pursue dynamic market opportunities. As market opportunities change, firmswill need to adapt their plans in order to pursue these developing opportunities.Adaptation is achieved through the process of flexibility in marketing planningdecision making, which is the extent to which managers are willing to explorealternative and new decision-making options, with respect to objectives, strategies,tactics, implementation and control. In turn, the strategic management literature

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Received May 2002Revised October 2002

European Journal of MarketingVol. 38 No. 8, 2004

pp. 933-955q Emerald Group Publishing Limited

0309-0566DOI 10.1108/03090560410539104

suggests that flexibility is determined by other management processes. However, theseprocesses have not been explicated in either the strategic management or marketingplanning literatures. Therefore, there is little understanding about how to achieveflexibility in marketing planning decision making, and hence adaptation to marketopportunities. For the conceptualisation proposed in this article, six key managementprocesses are proposed. First, proactive management, which is managerial eagernessto pursue market opportunities. Second, competitive aggression, being propensity tochallenge competitors intensely. Third, innovative management, which is developingnovel ideas for change to pursue market opportunities. Fourth, organisational learning,being purposely gaining knowledge, insights and experience. Fifth, market orientation,which is moulding corporate culture and managerial behaviour with respect to marketintelligence. Sixth, deploying slack resources, which are the means for achievingflexibility in marketing planning.

Inadequacies of the traditional modelThere has been some commentary about the inadequacy of the traditional model ofmarketing planning.

Managerial behaviourThere are claims that the traditional marketing planning model does not sufficientlyincorporate management processes. Piercy and Morgan (1990, 1994) propose thattraditional marketing planning should be extended to include managerial behaviourand organisational dimensions, such as corporate culture, information systems andcommunications. Greenley and Bayus (1994) and Piercy and Morgan (1994) reportempirical support for this proposal, and conclude that a fuller understanding of suchdimensions is required. Managerial behaviour and organisational structure inmarketing planning have been researched by John and Martin (1984) and Martin(1987), while the role of corporate culture in marketing planning has been researchedby Dunn et al. (1994) and McDonald and Leppard (1991). These studies also concludethat a fuller understanding of such dimensions is required.

Prahalad (1995) has listed examples of the many changes that industries haveexperienced over the last decade, such as technological discontinuities, increasingglobal competition, and changing customer expectations, which pose major challengesto companies, with respect to their influence over their markets. Prahalad (1995) claimsthat there has been little systematic study of processes that firms use to influencemarkets, when addressing such change. Similarly, Saunders et al. (1996) and Speed(1994) have suggested that, although marketing planning should facilitate addressingmarket turbulence, managers may have difficulty in planning during turbulent marketconditions. Indeed, traditional marketing planning theory does not include processesfor addressing change and turbulence, and for enhancing market influence.

Gap between theory and practiceEvidence suggests that only about one-fifth of companies practice marketing planning,as prescribed in the traditional marketing planning model (Cosse and Swan, 1983;Greenley, 1987; Hooley et al., 1984; McDonald, 1982). Also, some managers may nothave the capabilities to be effective planners (Cespedes and Piercy, 1996; Greenley,1988). For example, Day (1994) claims that many firms have failed to change their

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marketing to become market-driven. He proposes that a market orientation is achievedand sustained through distinctive capabilities, which are difficult for competitors toimitate. Such gaps between theory and practice suggest inadequacy in the traditionalmarketing planning literature.

Coordinating role of marketing planningZinkhan and Pereira (1994) observe that although marketing planning is a sub-set ofstrategic planning, which includes other business operations, there is little integrationof marketing planning and other operations. Ruekert and Walker (1987) say thatmarketing personnel have an important coordinating role in linking demands fromoutside the organisation with the operational departments that satisfy these demands.They propose that such coordination and integration are based on social systems,driven by common organisational objectives, although managerial conflict can arise,owing to differences among operational objectives. Although marketing planning haspotential for providing such coordination and integration, this role has not beenexplicated in the marketing planning literature.

Modelling management processes in marketing planningIn order to develop understanding, stimulate academic and practitioner debate andinitiate new research directions, two competing models are proposed (see Figures 1and 2). As market opportunities change, firms will need to adapt their plans in order topursue these developing opportunities. The central decisions are changing marketingobjectives to exploit these dynamic opportunities, and changing marketing strategiesand tactics to attain the chosen objectives. Adaptation has been given severalperspectives in the literature; a series of choices about how an organisation couldrespond to perceived opportunities and threats (Bowman and Hurry, 1993; Sharfmanand Dean, 1997); gradual and incremental organisational change, rather than radicaland discontinuous change (Jennings and Seaman, 1994); and surviving environmentconditions (Chakravarthy, 1982). The latter differentiates between the process of

Figure 1.Management processes in

marketing planning Model 1: direct effects

model

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adaptation to environment conditions as carried out by managers, and the outcome ofthis process as a consequential state of adaptation of the company. Threeconsequential states of adaptation are proposed by Chakravarthy (1982): a neutralstate where a firm can withstand most environmental change; a stable state where afirm can only react to environmental change; and an unstable state, where a firm isextremely susceptible to environmental change. The neutral state is likely the mostdesirable, as there is more managerial choice in decision making, and less detrimentalimpact from environmental change. The outcome of adaptation is similar to theconcepts of coalignment and strategic fit. While there are several meanings of theseconcepts (Venkatraman, 1990), they are the extent of efficient alignment of resourcesand capabilities with opportunities and threats (Bourgeois, 1980; Powell, 1992;Venkatraman, 1990). The implication is that, rather than three discrete states ofadaptation as proposed by Chakravarthy (1982), there can be various states ofadaptation. In both the competing models, state of adaptation to market opportunitiesis the dependent variable, as a consequence of the adaptation of marketing plans.

A key process for achieving adaptation is flexibility, which is the extent to whichcompanies explore alternative and new options in their decision making (Aaker andMascarenhas, 1984; Evans, 1991; Feigenbaum and Karnani, 1991; Greenley andOktemgil, 1997; Sharfman and Dean, 1997). With respect to marketing planning, it iswillingness on the part of managers to generate different options in marketingplanning decision making, for pursuing market opportunities. It will involveconsidering alternative objectives, and alternative marketing strategies and tactics forpursuing these objectives. It will also involve considering different options forimplementing strategies and tactics and for controlling this implementation to achievethe chosen objectives. The consideration of several decision-making options is morelikely to lead to choosing the most effective for adapting to market opportunities,compared to scant consideration of few options. Consequently, in both the competingmodels, flexibility of marketing planning decision-making has a direct effect on theresultant state of adaptation to market opportunities.

The extent of flexibility and hence adaptation that a firm is able to achieve isdetermined by other management processes (Aaker and Mascarenhas, 1984;Chakravarthy, 1982, 1986; Evans, 1991; Greenley and Oktemgil, 1997; Nutt, 1993).

Figure 2.Management processes inmarketing planning Model 2: moderator effectsmodel

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Volberda (1996) proposes variety in managerial capabilities for exploring new options,while Evans (1991) proposes preparedness for change. However, these are only outlinesuggestions, and detailed proposals of the management processes that are likely topromote flexibility and adaptation have not been developed. Given the lack of guidancein the literature, the theory developed in this article argues that the key managementprocesses are proactive management, competitive aggression, innovative management,organisational learning, market orientation, and slack resources. Proactivemanagement is included because it explains managerial eagerness to pursue marketopportunities (Dutton, 1993; Mullens and Cummings, 1999; Venkatraman, 1989).Competitive aggression is included because it is propensity to challenge competitorsintensely (Lumpkin and Dess, 1996; Venkatraman, 1989). Innovative management isincluded because it uses novel ideas for changing the organisation, to pursue marketopportunities (Amabile et al., 1996; Damanpour, 1991; West and Farr, 1990).Organisational learning is included because it is purposely gaining knowledge,insights and experience about changing market opportunities (Huber, 1991; Lant et al.,1992; Sinkula et al., 1997). Market orientation is included because it provides a potentialbarrier for protecting marketing planning from competitive imitation (Narver andSlater, 1990; Peteraf, 1993; Rumelt, 1982, 1984). Slack resources are included becausethey are the means for achieving flexibility and adaptation in marketing planning(Greenley and Oktemgil, 1998; Sharfman and Dean, 1997).

In model 1 (Figure 1) it is proposed that all six management processes have a directeffect on flexibility, consistent with the literature cited earlier. In model 2 (Figure 2) it isproposed that only two management processes have direct effects, while the otherprocesses generate moderator effects, as a competing stance to model 1 (Figure 1). Asproactive management means being eager to pursue market opportunities, it is likely tolead to willingness to explore options in decision making, giving flexibility. Therefore,proactive management is a direct predictor of flexibility. Similarly, as competitiveaggression is propensity to challenge competitors, it is likely to lead to willingness toexplore options in decision making as flexibility in order to identify the most effectivechallenges. Therefore, competitive aggression is a direct predictor of flexibility. Thesearguments are further developed below. For a moderator effect the moderator variableinteracts with a predictor variable to affect the form of the association between apredictor variable and the dependent variable (Jaccard et al., 1990; Sharma et al., 1981).In the following sections arguments are presented that propose that innovativemanagement, organisational learning, market orientation and slack resources producemoderator effects, as they are processes for using capabilities and resources that willpromote the effectiveness of proactive management, competitive aggression andflexibility in impacting on the state of adaptation. These effects are shown in Figures 1and 2.

Proactive managementProactive management is smanagerial eagerness to pursue market opportunities in theabsence of environment threats or poor performance, in this context marketopportunities, whereas reactive management occurs in response to threats or poorperformance (Dutton, 1993; Jackson and Dutton, 1988; Miller and Friesen, 1978;Mullens and Cummings, 1999; Mullens and Walker, 1996; Venkatraman, 1989). Acentral issue in the strategic management literature is the extent to which change in the

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external environment determines decision making and adaptation to marketopportunities, rather than the proactiveness of managers (Astley and Fombrun,1983; Astley and Van de Ven, 1983; Bourgeois, 1984; Grant, 1996). The environmentdeterminism perspective posits that environment change determines organisations andtheir strategy decision making (Aldrich, 1979; McKelvey and Aldrich, 1983), while themanagerial choice perspective posits that companies are able proactively to choosetheir strategies and manipulate their environments (Child, 1972; Pfeffer and Salancik,1978; Yasai-Ardekani, 1986). The two are not necessarily exclusive, representing acontinuum of organisational adaptation between pure environment determinism andunrestrained freedom of choice (Astley and Van de Ven, 1983; Hrebiniak and Joyce,1985; Veliyath and Srinivasan, 1995; Zammuto, 1988).

Mullens and Cummings (1999) propose four key disciplines of proactivemanagement for adapting to change, which are pertinent to market opportunitiesand marketing planning. First, uniform encoding among managers of the changesituation, to yield a common understanding of market opportunities. Second,consensus among managers about the appropriate objectives and strategy options topursue market opportunities. Third, motivation to implement the agreed strategyoptions, which will involve various individual and organisational incentives. Fourth,organisational ability to implement the chosen strategy options, by marshallingimplementation capabilities and resources. Similarly, Dutton and Duncan (1987)propose that the momentum in companies for adapting to change is created frommanagers perceptions of their understanding of change, and their beliefs about thefirms capabilities for adapting; the extent to which change is diagnosed as urgent andfeasible; and the extent of resources for adapting to change.

Therefore, proactive management that is disciplined and systematic in the abovefashion is predicted to result in careful consideration of environment change andmarket opportunities, and greater flexibility of marketing planning decision making,through eagerness to formulate alternative objectives and strategies for pursuingmarket opportunities. It is therefore predicted that proactive management is anessential process for achieving effective marketing planning for adapting to marketopportunities, overcoming environment determinism, achieving managerial choice,and moving towards a neutral state of adaptation. As it is argued that proactivemanagement is an integral part of marketing planning decision making, it is predictedto have a direct effect on flexibility:

H1. The greater the proactive management, the greater the flexibility ofmarketing planning decision making, and successively the greater theadaptation to market opportunities (models 1 and 2).

Despite the above, overcoming environment determinism may be problematic. Thereare several problems in addressing environment change. First, managers may simplifytheir perceptions of the environment and may undermine the challenges posed byexternal uncertainty (Amit and Schoemaker, 1993; Senge, 1990). Second, internalmanagerial conflict may follow environment turbulence, as managers often developconflicting solutions for addressing turbulence (Wiersema and Bantel, 1992). Third, alack of accord among managers about their ability to manipulate and exploit change intheir environments can be problematic (Bourgeois, 1984; Hrebiniak and Joyce, 1985;Whittington, 1988). Fourth, more managerial attention will likely be given to recent

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experiences, rather than forecasting future events (Lant et al., 1992). Fifth, recentsuccess in exploiting change may bias managers toward an illusion of control,resulting in unrealistically high objectives (Langer, 1975). Sixth, managers maymistakenly believe that successful outcomes arising through chance are a result oftheir capabilities (Fischhoff and Beyth, 1975). In some companies there may be limitedrecognition of the necessity to address these problems of environment determinism.Even where there is recognition, overcoming them may not be straightforward.However, proactive management that is systematic and disciplined should yieldcareful consideration of environment change and market opportunities, and greaterflexibility in considering alternative objectives and strategies in marketing planningdecision making. Therefore, proactive management is likely more effective inovercoming environment determinism problems than reactive management, and inachieving adaptation to market opportunities:

H2. The greater the application of proactive management to overcomingenvironment determinism, the greater the flexibility of marketing planningdecision making, and successively the greater the adaptation to marketopportunities (models 1 and 2).

Competitive aggressionCompetitive aggression is defined as propensity to directly and intensely challengecompetitors, with the aim of outperforming them in the marketplace (Covin and Covin,1990; Davidson, 1997; Lumpkin and Dess, 1996; Porter, 1985; Venkatraman, 1989). Forexample, pursuing ambitious market share objectives to challenge competitors;entering a market segment dominated by a competitor; outspending competitors oncommunications; imitating competitors strengths; and aggressive price competition.Competitive aggression also reflects managerial willingness in being unconventionalin marketing planning, rather than relying on conventional methods of competing(Fombrun and Ginsberg, 1990; Lumpkin and Dess, 1996). Miller and Camp (1985) foundthat the most successfully aggressive firms are those that pursue a wide breadth ofmarkets and products. However, as some opportunities feature high risk, such asmarket entry or a new product launch, it is suggested that competitive aggression isparticularly important in such risky situations, to gain an advantage over competitors(MacMillan, 1982; Porter, 1985). Consequently, competitive aggression is likelyaccompanied by high risk taking propensity (Covin and Slevin, 1989). Timing may beimportant for successful competitive aggression, and fast followers timing may be aseffective as first mover advantage timing (Lumpkin and Dess, 1996).

The realisation of this aggression propensity will be through managers being eagerto be competitively confrontational in the flexibility of their marketing planningdecision making, by setting objectives that are threatening to competitors, and byselecting a marketing strategy and tactics that are challenging and hostile tocompetitors. This may involve formulating decision-making options that shift thebalance of attention away from customers and more toward competitors. This couldmean that marketing strategy options are formulated that are more concerned withgaining market share from competitors than attracting new customers into the market.If aggressive marketing strategy options are unconventional and address a breadth ofmarkets and products, then they are likely risky. This suggests that careful attention isneeded in formulating and choosing options, ensuring that potential opportunities

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equate to risk, although competitive aggression is likely accompanied by high risktaking propensity.

Competitive aggression will also be realised through managerial behaviour inimplementing marketing strategies and tactics, by monitoring their progress inachieving the set objectives, and by taking action to challenge any counter strategymoves by competitors. However, to ensure that competitors are outperformed a widerange of marketing planning decision-making options will need to be considered, inorder to select the most effective way of beating competitors current marketingstrategies, and to overcome any counter strategy moves by them. Again this may meanselecting options that are risky, but again competitive aggression is likely associatedwith high risk taking propensity. Indeed, the general principle in the flexibilityliterature is that planned offensive moves against competitors will lead to a necessityto consider several options in decision making, as a search is made for the mosteffective competitive challenge (Bowman and Hurry, 1993; Evans, 1991). These optionscan be offensively formulated as competitive aggression to force competitors to disturbtheir current marketing plans, or offensive options can be formulated in response to achange in a competitors marketing strategy. Competitive aggression will also bereflected in the timing of the implementation of marketing strategies and tactics. Assuggested earlier, although first mover advantage timing may be the mostaggressive option, fast follower timing may be a more appropriate option in somesituations, as it will allow for learning about competitors strategies and tactics. It istherefore predicted that competitive aggression is an essential management process forachieving effective marketing planning for adapting to market opportunities. As it isargued that competitive aggression is an integral part of marketing planning decisionmaking, it is predicted to have a direct effect on flexibility:

H3. The greater the competitive aggression, the greater the flexibility ofmarketing planning decision making, and successively the greater theadaptation to market opportunities (models 1 and 2).

Innovative managementInnovation is the generation and implementation of new and creative ideas, processes,products and services, providing the means for changing an organisation (Amabileet al., 1996; Daft, 1978; Damanpour, 1991; Damanpour and Evan, 1984; Thompson,1986; Stata, 1989; West and Farr, 1990). Nutt (1993) and Sharfman and Dean (1997)advocate that to achieve flexibility and adaptation managers should make strategychoices that are innovative, by differentiating from the competitive norm. Amabile et al.(1996) and Van de Ven (1986) emphasise that innovation is the successfulimplementation of creative and novel ideas in an organisation. West and Farr (1990)emphasise that innovation is restricted to intentional attempts to derive anticipatedbenefits. With respect to processes, innovation involves intentionally initiating creativeand novel ways for gaining anticipated benefits, giving innovative management.

Innovative management will be needed to intentionally create new and modifiedmarketing strategies and tactics in marketing planning decision-making options, forexploiting and adapting to changing market opportunities, and challengingcompetitors strategies. This will involve generating novel ways of using themarketing mix to achieve competitive advantage, and novel ways for positioning inexisting or new market segments, relative to competitors positioning. Innovative

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managerial processes can be for planning and implementing the full range of themarketing mix, and for controlling implementation to achieve marketing objectives.Novel ideas within this innovation can be intrinsic within the elements of the mix, andalso novel ideas for motivating staff to develop their capabilities. Innovation can alsobe new technology for gaining competitive advantage, as in product technology forenhancing customer benefits, and new technology for improving marketingcommunications, distribution and customer service. This new technology may alsoraise managerial confidence to deliver a more effective marketing strategy, againenhancing their capabilities. However, as emphasised by West and Farr (1990), suchinnovation needs to be intentionally directed at achieving intentional outcomes, in thiscase planned marketing objectives. Therefore, by being innovative in their marketingplanning, companies will be able to formulate and consider alternative options forflexible decision making, moving towards a neutral state of adaptation. It is thereforepredicted that innovative management is an essential management process forachieving effective marketing planning for adapting to market opportunities. Asinnovative management may be an integral part of marketing planning decisionmaking, it may exert a direct effect on flexibility:

H4a. The greater the innovative management, the greater the flexibility ofmarketing planning decision making, and successively the greater theadaptation to market opportunities (model 1).

However, processes for idea generation, innovative management may have moreinfluence on the impact of proactive management and competitive aggression onflexibility, than directly on flexibility. Innovative management can provide creativeand novel ways to allow managers to be proactive in pursuing market opportunities. Itcan also provide creative and novel ways for challenging competitors. This suggestsmoderating effects, giving the following competing hypotheses to H4a:

H4b. The greater the innovative management, the greater the impact of proactivemanagement on the flexibility of marketing planning decision making(model 2).

H4c. The greater the innovative management, the greater the impact ofcompetitive aggression on the flexibility of marketing planningdecision making (model 2).

Grant (1996) has emphasised the role of managerial capabilities in innovativemanagement. Capabilities for architectural innovation are particularly important, thelatter being implementing creative ideas across organisational boundaries (Abernathyand Clark, 1985; Baden-Fuller and Stopford, 1994). Grant (1996) suggests thatimagination, intuition and creativity are key capabilities for architectural innovation,although creativity is seemingly the most important. However, a creative idea will notbe realised unless there are organisational conditions that foster innovativemanagement and until the idea is implemented (Van de Ven, 1986). Severalorganisational conditions have been proposed for fostering the creation of novel ideas,such as support of managers in risk taking and evaluating new ideas; autonomy inday-to-day work; resource availability for developing novel ideas; and control of timepressure when developing new ideas (Amabile et al., 1996; West, 1997; West andAnderson, 1996).

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Such conditions are applicable to marketing planning decision making. Muchdecision making in the marketing mix is clearly creative, such as creating brandimages, developing USPs, enhancing customer care and creating advertisingmessages. In order to create new ideas that will lead to flexibility and adaptation tomarket opportunities, supportive organisational conditions will be needed. As manyinnovative marketing mix decisions carry considerable risk with respect to marketsuccess, there needs to be a common understanding and acceptance of these riskswithin the management hierarchy. As a considerable investment of resources is likelyto pursue an innovative decision, such as new product development (NPD) and productlaunch costs, then a common understanding is needed in the management hierarchy ofthe potential benefits compared to associated risks. There also needs to be companysupport for the time pressures associated with innovative marketing mix decisions,such as first-mover advantages for achieving competitive advantage, break-evenperiods in NPD, and likely lagged effects in advertising expenditure. In somecompanies there may be limited recognition of the necessity to address theseconditions, but even where there is, addressing them may not be straightforward.However, by establishing conducive conditions for fostering innovative management,companies can be more flexible in their marketing planning decision making, movingtowards a neutral state of adaptation:

H5. The more a company addresses organisational conditions for creativity ininnovative management, the greater the flexibility of marketing planningdecision making, and successively the greater the adaptation to marketopportunities.

Organisational learningAlthough it has many definitions, organisational learning is a process for purposelygaining knowledge, insights and experience, that develops company understanding ofconnections among managerial actions and the environment, and that influences futuremanagerial behaviour (Fiol and Lyles, 1985; Huber, 1991; Lant et al., 1992; Nevis et al.,1995; Schein, 1996; Sinkula, 1994). In marketing planning, learning will lead toincreased understanding of the dynamics of market opportunities, and of managerscapabilities for making effective marketing planning decisions. It is proposed that theoutcome of learning, through this increased understanding, will be more effectiveadaptation to environment change (Grant, 1996; Kilmann, 1996; Sinkula, 1994; Sinkulaet al., 1997). Thus learning promotes firm heterogeneity through managerialcapabilities, resulting in competitive advantage (Cohen and Levinthal, 1990;Mahoney, 1995; Senge, 1990). In marketing planning this increased understandingthrough learning should foster confidence among managers to formulate and considerseveral decision making options in their marketing planning, and to be bold in theirdecision making, resulting in more flexibility. Sinkula et al. (1997) found that learningresults in increased market information and dissemination, and there is evidence thatlearning is associated with high levels of market orientation. It is therefore predictedthat organisational learning is an essential management process for achieving effectivemarketing planning for adapting to market opportunities. As organisational learningmay be an integral part of marketing planning decision making, it may exert a directeffect on flexibility:

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H6a. The greater the organisational learning, the greater the flexibility ofmarketing planning decision making, and successfully the greater theadaptation to market opportunities (model 1).

However, as a process of gathering information and changing understanding,organisational learning may have more influence on the impact of proactivemanagement and competitive aggression on flexibility. By generating a greaterunderstanding of market dynamics and of managers capabilities, it will give managersmore confidence to be proactive. Similarly, it will provide more understanding andconfidence to challenge competitors. This suggests moderator effects, giving thefollowing competing hypotheses to H6a:

H6b. The greater the organisational learning, the greater the impact of proactivemanagement on the flexibility of marketing planning decision making(model 2).

H6c. The greater the organisational learning, the greater the impact of competitiveaggression on the flexibility of marketing planning decision making(model 2).

There are several impediments to learning. First, Day and Nedungadi (1994) found thatmanagers tend to pay selective attention to their environments and define reality innarrow terms (Kiesler and Sproull, 1982). Consequently, managers have inadequateperceptions of environmental change, and therefore less scope for effective learning(Levinthal and March, 1993). Second, even if there is an adequate environmentintelligence system, there may be resistance in the company to change attitudes andbehaviour (Osland and Yaprak, 1995; Schein, 1996). Therefore, managerial resistanceto change may limit the benefits of learning. Third, there may be managerial inertia tochange marketing plans, particularly when they have been effective in achievingprevious performance objectives. Therefore, benefits of learning will not be fullyrealised (Kiesler and Sproull, 1982; Lant et al., 1992). Fourth, there may be a tendency toignore the long run. Focusing on short-term performance may lead to ignoring futuretrends, so that learning is short-run focused and therefore limited (Levinthal andMarch, 1993). Fifth, there may be a tendency to overlook failures. Basing learning onpast successes gives a biased understanding of reality, so that learning should also befrom failures (Lant et al., 1992; Levinthal and March, 1993). Sixth, there is evidence thatfunctional heterogeneity in the top management team contributes to learning (Lantet al., 1992; Wiersema and Bantel, 1992). A diversity of managerial backgrounds givesa richness of perspectives when addressing decision making, giving many learningopportunities. Therefore, a lack of diversity may be an impediment to learning. In somecompanies there may be little recognition of such impediments, but even where there isrecognition, overcoming them may not be straightforward. However, by addressingthese impediments, companies can be more flexible in their marketing planningdecision making, moving towards a neutral state of adaptation:

H7. The more a company addresses impediments to organisational learning, thegreater the flexibility of marketing planning decision making, andsuccessively the greater the adaptation to market opportunities.

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Market orientationMarket orientation is generating and internally disseminating intelligence aboutcustomers and competitors, and moulding corporate culture and managerial behaviourwith respect to this intelligence (Hunt and Morgan, 1995; Kohli and Jaworski, 1990;Narver and Slater, 1990). It is proposed that an effective market orientation is difficultfor competitors to imitate, as it is achieved through idiosyncratic management, whichcan be difficult for competitors to both identify and copy, creating a barrier to imitation(Day, 1994; Hunt and Morgan, 1995; Lippman and Rumelt, 1982; Mahoney andPandian, 1992; Oktemgil et al., 2000). The following characteristics of idiosyncraticmanagement contribute to achieving inimitability.

TacitnessThis is accumulated skills-based capabilities, resulting from experience and learningby doing, which is difficult for competitors to imitate (Polanyi, 1967). These tacitcapabilities make up idiosyncratic management. Understanding and addressingcustomers and competitors requires tacit capabilities that are based on experience andlearning by doing, for the effective use of intelligence in marketing planning decisionmaking. Tacit capabilities are also needed to achieve and sustain a market-focus in thecorporate culture and managerial behaviour.

ComplexityThis results from using large numbers of interrelated tacit capabilities, which createsidentification problems for competitors (Peteraf, 1993; Lippman and Rumelt, 1982).Market orientation covers a wide range of complex organisational phenomena,requiring many organisation-wide skills. Such skills are needed to establish a marketorientation, to achieve its organisation-wide dissemination across many job functions,and to sustain market-focused corporate culture and managerial behaviour.

SpecificityThis is dedicating particular capabilities to specific aspects of market orientation, suchas developing long-term customer relationships. Dedicated capabilities are needed tobuild an effective market orientation, and to mould corporate culture and managerialbehaviour. It should be difficult for competitors to identify and understand thesededicated capabilities.

Non-transferabilityShould a competitor identify the mix of capabilities that led to a successful marketorientation, they would then need to acquire them to achieve imitation. Transferring amarket orientation to another company will likely be difficult, featuring hightransaction costs, given that it is inherent within corporate culture, the values andattitudes of managers, and their behaviour (Chi, 1994; Peteraf, 1993). Indeed, theseissues are the very essence of the unique human fabric of a company.

Non-tradabilityCapabilities may not, however, be tradable, as managers and team-based skills may beless effective in a different corporate culture. Therefore, they may have little externalvalue (Chi, 1994; Dierickx and Cool, 1989; Nelson and Winter, 1982; Peteraf, 1993). A

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market orientation is likely not tradable, as tacit market orientation capabilities may beless effective in other corporate cultures, and they may not be openly traded.

Therefore, market orientation features the characteristics of idiosyncraticmanagement for achieving inimitability. In its dual role of moulding corporateculture and managerial behaviour, market orientation represents managementthinking and action as part of marketing capabilities. Within this thinking andaction there is much opportunity for developing idiosyncratic management, given themultidimensional nature of managerial actions for achieving an effective marketorientation, and the values to be created in corporate culture. However, as this thinkingand action is central to marketing planning, having a more effective market orientationthan competitors can create a competitive advantage. This thinking and action iscentral to all the logical sequential stages of marketing planning (objectives through tocontrol), where increased focus on customers and competitors is likely to result in amore effective matching of strategies and tactics with market opportunities. Indeed,given that market orientation is intrinsic within the logical sequential stages ofmarketing planning, it should contribute to protecting marketing planning fromcompetitive imitation. This will allow for the consideration of more decision-makingoptions, as their potential implementation can be protected from competitive imitation.It is therefore predicted that market orientation is an essential management process forachieving effective marketing planning for adapting to market opportunities. Asmarket orientation may be an integral part of marketing planning decision making, itmay exert a direct effect on flexibility:

H8a. The greater the market orientation, the greater the flexibility of marketingplanning decision making, and successively the greater the adaptation tomarket opportunities (model 1).

However, as a process of moulding corporate culture and managerial behaviour,market orientation may have more influence on the impact of flexibility on state ofadaptation than directly on flexibility. By providing protection from competitiveimitation of their marketing planning decision making, market orientation shouldfoster managerial confidence in decision making, and promote bolder decisions foradapting to market opportunities, than with little protection. This suggests amoderator effect, giving the following competing hypothesis to H8a:

H8b. The greater the market orientation, the greater the impact of the flexibility ofmarketing planning decision making on adaptation to market opportunities(model 2).

However, for a market orientation to contribute effectively to adaptation to marketopportunities, the literature implies that several underlying organisational conditionsare needed. First, there is an unstated assumption that values and expected behavioursfor creating a market orientation will be successfully incorporated into the corporateculture, and that there is a mechanism for assessing this incorporation. In the Hunt andMorgan (1995) theory there is an unstated assumption that this culture can beincorporated into decision-making frameworks. In the Webster (1992) theory there is anadditional unstated assumption that this incorporation takes place from the corporatelevel down to the SBU level, through the successful transfer of cultural values andexpected behaviours. Implicit in achieving these conditions is an assumption that

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effective changes can be made to company communications and managerial behaviour.Another condition for an effective market orientation is continuous investment in itsdevelopment, giving the assumption that managers have the inclination and resourcesto make this investment. Finally, to sustain an effective market orientation with time,there is an underlying assumption that managers will have capabilities for finding newways for disguising the make-up of their companys market orientation to avoidimitation. In some companies there may be little recognition of the necessity to addressthese conditions, but even if there is recognition, addressing them may not bestraightforward. However, establishing these facilitating conditions will enhance theeffectiveness of market orientation, contributing to flexibility of marketing planningdecision making, and moving towards a neutral state of adaptation:

H9. The more a company addresses facilitating organisational conditions forcreating a market orientation, the greater the flexibility of marketingplanning decision making, and successively the greater the adaptation tomarket opportunities.

Slack resourcesA proposition in the strategic management literature is that companies should not fullydeploy their resources, but should retain some spare or slack resources to enablechange to strategies (Bourgeois, 1981; Chakravarthy, 1986; Miller, 1994; Milliken andLant, 1991; Sharfman and Dean, 1997). Cyert and March (1963) defined slack as:

. . . that cushion of actual or potential resources that allows an organisation to successfullyadapt to change, by providing the means for adapting strategies to the external environment.

Slack resources provide the means for adapting to the environment and for pursuingopportunities in the future (Bourgeois, 1981; Dess and Origer, 1987; Greenley andOktemgil, 1998; Sharfman et al., 1988; Yang et al., 1992), as they can be used in adiscretionary manner, given that they are not committed to necessary expenditure(Dimmick and Murray, 1978; Riahi-Belkaoui, 1998).

Slack consequently provides potential for flexibility in strategy decision making(Bourgeois, 1981; Miller and Leiblein, 1996; Segars and Grover, 1994; Sharfman et al.,1988), allowing for adaptation to new environment conditions. These general principlesapply to marketing planning, as slack resources provide the means for formulating andconsidering different marketing strategy options, and for implementing those selected,in the pursuit of market opportunities. Therefore, slack resources allow for flexibility inmarketing planning decision making. Bourgeois (1981) and Hambrick and DAveni(1998) suggest that slack resources allow a company to compete more boldly, and theycan be a source of innovation (Cyert and March, 1963). The latter also suggest thatslack resources provide the means for experimenting with new strategies that arecostly and risky, such as entering new markets and launching new products. Inmarketing planning they allow for experimentation with new ways of managing themarketing mix, such as innovative advertising, enhanced after sales service, ortechnical innovation in product benefits.

Evans (1991) has suggested different modes in which slack can be used, based ontwo decision making dimensions. First, a temporal dimension, comprised of an ex antemode, preparing in advance of some future environmental change, and an ex postmode, taking action after a change has occurred. Second, an intentional dimension,

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comprised of an offensive mode, creating and seizing an initiative, and a defensivemode, guarding against competitive moves and correcting mistakes. Thesedecision-making dimensions give four different flexibility modes, where the processfor using slack resources is different in each mode (Greenley and Oktemgil, 1998).

Ex ante/offensive modeSlack allows for the formulation and holding of a range of strategy options forproactively accessing opportunities that may arise (Bowman and Hurry, 1993; Fox andMarcus, 1992). In marketing planning this means planning a range of competitivelyaggressive marketing strategy options, to be implemented when market opportunitiesarise.

Ex ante/defensive modeThis mode of flexibility is about guarding against potentially damaging consequencesthat may arise in high risk situations, where slack is held as insurance against losses(Ansoff, 1965; Eppink, 1978; Evans, 1991). In marketing planning entering a newsegment under hostile market conditions, for example, but planning changes tostrategy or tactics when market conditions change.

Ex post/offensive modeIf unpredicted opportunities arise then slack will allow for formulating strategyoptions, to pursue these new opportunities offensively (Evans, 1991). As marketopportunities arise, this mode would mean implementing a marketing strategy andtactics speedily compared to competitors, to gain early entry, or to gain more marketshare than competitors.

Ex post/defensive modeThis mode of flexibility is about learning from mistakes, such as using slack to defendagainst unpredicted competitive strategies (Evans, 1991). In marketing planning thiswould be developing marketing strategy options to address an unpredicted change in acompetitors strategy.

These advantages of slack allow for the formulation of decision-making options,giving flexibility in marketing planning decision making. Therefore, it is predicted thata process for using slack resources is essential for achieving effective marketingplanning, for adapting to market opportunities. As a process for adapting to change,there may be a direct effect on flexibility:

H10a. The greater the slack resources, the greater the flexibility of marketingplanning decision making, and successfully the greater the adaptation tomarket opportunities (model 1).

However, as a means of achieving flexibility, slack resources may have more influenceon the impact of flexibility on state of adaptation, than directly on flexibility. They willallow managers to consider more decision-making options for adapting to marketopportunities, as they provide the means for implementing a wider range of options.They also provide the means for experimenting with different options to exploitmarket opportunities and to be bold in decision making. This suggests a moderatoreffect, giving the following competing hypothesis to H10a:

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H10b. The greater the slack resources, the greater the impact of the flexibility ofmarketing planning decision making on adaptation to market opportunities(model 2).

ConclusionTwo competing models were presented in this article, which propose key managementprocesses about how marketing planning decisions are made in a dynamic context.The motives for this conceptualisation were to contribute to understanding byadvancing the traditional model of marketing planning, to stimulate academic andpractitioner debate about how marketing planning decisions are made, and to initiatenew directions in marketing planning research. The new models address theinadequacies of the traditional model in several ways. First, they advance theprescriptive logical-sequential model of marketing planning by incorporatingmanagement processes about how decisions are made, as recommended by variouswriters. The processes are behavioural in nature, but include aspects of corporateculture, and they incorporate issues from several different literatures, which have notbeen previously incorporated into marketing planning. This has developed the domainof marketing planning, and has contributed to defining and developing its underlyingparadigm. Second, the new models contribute to understanding how companies canaddress market change. The models are about understanding management processesfor exploiting dynamic market opportunities, and the proposed processes contribute tounderstanding how companies can influence these market dynamics through theirmarketing planning. Third, the models also help to reduce the gap between theory andpractice. As the focus is on behaviour and culture, it gives guidance to firms about howto address marketing planning decision making. The conceptualisation also extendsDays (1994) proposal, as these marketing planning processes represent capabilitiesthat can become distinctive compared to those of competitors, and that can be difficultfor them to imitate. Fourth, the models also contribute to understanding the integratingand coordinating role of marketing planning. In order to develop marketing planningdecision-making options to achieve flexibility, the involvement of other internaloperations will be necessary, such as finance, personnel and production, in order toassess the commercial feasibility of each option. The management processes can bevehicles for developing the internal social systems needed for integrating andcoordinating operations, through the involvement of managers from other operationsin marketing planning decision making.

Research directionsClearly the first stage of empirical investigation would be the testing of the competingmodels, by measuring managers perceptions of how these management processesoperate in their companies, with respect to marketing planning. Second, as theseperceptions are likely to vary among managers, a direction is to investigate differencesamong managerial levels within the marketing function, and also among otherfunctional managers. Third, as the management processes are behavioural andcultural in nature, their relative degrees of impact on state of adaptation are likely tovary in different countries and economies. Therefore, a comparative study should beinsightful. Fourth, as there are no claims in this article that all influential managementprocesses have been included, other processes could be investigated as another

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research direction. For example, at the corporate level, directions and constraintsdictated from a strategic plan; the effectiveness of corporate communications; andinternal social systems that determine the ways that managers interact together. At theindividual manager level, for example, the importance of incentives and rewards formarketing planning decision making; perceived senior management support for risktaking; and perceived commitment to marketing plans by senior managers.

While the above directions are based on managers perceptions of how thesemanagement processes operate, a different research direction is to investigate the driveand determination of managers for pursuing effective marketing planning. Much of thedrive and thrust to exploit market opportunities will be through the willingness ofmanagers to be proactive, aggressive, innovative, to learn, to use market orientation tobuild competitive barriers, and to accumulate and then deploy slack resources.However, managerial recognition that marketing planning is needed is a prerequisite.Recognition that flexibility and its key management processes are more likely to beeffective in exploiting dynamic market opportunities is also needed, rather thanadopting inflexible and reactive marketing planning. Similarly, there will need to bedrive and determination to practise these management processes openly. Managerialdetermination to sustain an achieved state of adaptation into the future is alsonecessary. Indeed, as market opportunities and competitors strategies change, driveand determination are needed to generate further decision-making options to addressthe new market conditions. Therefore, a research direction would be to investigate theabove issues.

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