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Management processes in marketing planning

Management processes

Gordon Greenley, Graham Hooley and John Saunders Aston Business School, Aston University, Birmingham, UK Keywords Marketing planning, Management activities, Decision making, Adaptability, Flexible organizations, Competitive analysis

933 Received May 2002 Revised October 2002

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

Introduction Marketing planning has been defined as all rational, incremental and intuitive processes that guide a firm’s marketing to its future (Saunders et al., 1996). In the literature the tradition has been to prescribe marketing planning as a model of logical-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 this traditional 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 adequately consider management processes that are inherent within marketing planning (Dunn et al., 1994; John and Martin, 1984; Martin, 1987; McDonald and Leppard, 1991), and it fails to address the organisational context of marketing planning adequately (Greenley and Oktemgil, 1996; McDonald and Leppard, 1991; Piercy and Morgan, 1994; Speed, 1994). The aim of this article is a new conceptualisation that proposes key management processes about how marketing planning decisions are made in a dynamic context. The motives for this conceptualisation are to contribute to understanding by advancing the traditional model of marketing planning, to stimulate academic and practitioner debate about how marketing planning decisions are made, and to initiate new directions in marketing planning research. In guiding a firm’s marketing to its future, marketing planning decision making is used to pursue dynamic market opportunities. As market opportunities change, firms will need to adapt their plans in order to pursue these developing opportunities. Adaptation is achieved through the process of flexibility in marketing planning decision making, which is the extent to which managers are willing to explore alternative and new decision-making options, with respect to objectives, strategies, tactics, implementation and control. In turn, the strategic management literature

European Journal of Marketing Vol. 38 No. 8, 2004 pp. 933-955 q Emerald Group Publishing Limited 0309-0566 DOI 10.1108/03090560410539104

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suggests that flexibility is determined by other management processes. However, these processes have not been explicated in either the strategic management or marketing planning literatures. Therefore, there is little understanding about how to achieve flexibility in marketing planning decision making, and hence adaptation to market opportunities. For the conceptualisation proposed in this article, six key management processes are proposed. First, proactive management, which is managerial eagerness to pursue market opportunities. Second, competitive aggression, being propensity to challenge competitors intensely. Third, innovative management, which is developing novel 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 market intelligence. Sixth, deploying slack resources, which are the means for achieving flexibility in marketing planning. Inadequacies of the traditional model There has been some commentary about the inadequacy of the traditional model of marketing planning. Managerial behaviour There are claims that the traditional marketing planning model does not sufficiently incorporate management processes. Piercy and Morgan (1990, 1994) propose that traditional marketing planning should be extended to include managerial behaviour and organisational dimensions, such as corporate culture, information systems and communications. Greenley and Bayus (1994) and Piercy and Morgan (1994) report empirical support for this proposal, and conclude that a fuller understanding of such dimensions is required. Managerial behaviour and organisational structure in marketing planning have been researched by John and Martin (1984) and Martin (1987), while the role of corporate culture in marketing planning has been researched by Dunn et al. (1994) and McDonald and Leppard (1991). These studies also conclude that a fuller understanding of such dimensions is required. Prahalad (1995) has listed examples of the many changes that industries have experienced over the last decade, such as technological discontinuities, increasing global competition, and changing customer expectations, which pose major challenges to companies, with respect to their influence over their markets. Prahalad (1995) claims that there has been little systematic study of processes that firms use to influence markets, when addressing such change. Similarly, Saunders et al. (1996) and Speed (1994) have suggested that, although marketing planning should facilitate addressing market turbulence, managers may have difficulty in planning during turbulent market conditions. Indeed, traditional marketing planning theory does not include processes for addressing change and turbulence, and for enhancing market influence. Gap between theory and practice Evidence 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 not have 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

marketing to become market-driven. He proposes that a market orientation is achieved and sustained through distinctive capabilities, which are difficult for competitors to imitate. Such gaps between theory and practice suggest inadequacy in the traditional marketing planning literature. Coordinating role of marketing planning Zinkhan and Pereira (1994) observe that although marketing planning is a sub-set of strategic planning, which includes other business operations, there is little integration of marketing planning and other operations. Ruekert and Walker (1987) say that marketing personnel have an important coordinating role in linking demands from outside 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 has potential for providing such coordination and integration, this role has not been explicated in the marketing planning literature.

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Modelling management processes in marketing planning In order to develop understanding, stimulate academic and practitioner debate and initiate new research directions, two competing models are proposed (see Figures 1 and 2). As market opportunities change, firms will need to adapt their plans in order to pursue these developing opportunities. The central decisions are changing marketing objectives to exploit these dynamic opportunities, and changing marketing strategies and tactics to attain the chosen objectives. Adaptation has been given several perspectives in the literature; a series of choices about how an organisation could respond to perceived opportunities and threats (Bowman and Hurry, 1993; Sharfman and Dean, 1997); gradual and incremental organisational change, rather than radical and discontinuous change (Jennings and Seaman, 1994); and surviving environment conditions (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 of this process as a consequential state of adaptation of the company. Three consequential states of adaptation are proposed by Chakravarthy (1982): a neutral state where a firm can withstand most environmental change; a stable state where a firm can only react to environmental change; and an unstable state, where a firm is extremely susceptible to environmental change. The neutral state is likely the most desirable, as there is more managerial choice in decision making, and less detrimental impact from environmental change. The outcome of adaptation is similar to the concepts of coalignment and strategic fit. While there are several meanings of these concepts (Venkatraman, 1990), they are the extent of efficient alignment of resources and capabilities with opportunities and threats (Bourgeois, 1980; Powell, 1992; Venkatraman, 1990). The implication is that, rather than three discrete states of adaptation as proposed by Chakravarthy (1982), there can be various states of adaptation. In both the competing models, state of adaptation to market opportunities is 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 which companies explore alternative and new options in their decision making (Aaker and Mascarenhas, 1984; Evans, 1991; Feigenbaum and Karnani, 1991; Greenley and Oktemgil, 1997; Sharfman and Dean, 1997). With respect to marketing planning, it is willingness on the part of managers to generate different options in marketing planning decision making, for pursuing market opportunities. It will involve considering alternative objectives, and alternative marketing strategies and tactics for pursuing these objectives. It will also involve considering different options for implementing strategies and tactics and for controlling this implementation to achieve the chosen objectives. The consideration of several decision-making options is more likely to lead to choosing the most effective for adapting to market opportunities, compared to scant consideration of few options. Consequently, in both the competing models, flexibility of marketing planning decision-making has a direct effect on the resultant state of adaptation to market opportunities. The extent of flexibility and hence adaptation that a firm is able to achieve is determined by other management processes (Aaker and Mascarenhas, 1984; Chakravarthy, 1982, 1986; Evans, 1991; Greenley and Oktemgil, 1997; Nutt, 1993).

Volberda (1996) proposes variety in managerial capabilities for exploring new options, while Evans (1991) proposes preparedness for change. However, these are only outline suggestions, and detailed proposals of the management processes that are likely to promote flexibility and adaptation have not been developed. Given the lack of guidance in the literature, the theory developed in this article argues that the key management processes are proactive management, competitive aggression, innovative management, organisational learning, market orientation, and slack resources. Proactive management is included because it explains managerial eagerness to pursue market opportunities (Dutton, 1993; Mullens and Cummings, 1999; Venkatraman, 1989). Competitive aggression is included because it is propensity to challenge competitors intensely (Lumpkin and Dess, 1996; Venkatraman, 1989). Innovative management is included because it uses novel ideas for changing the organisation, to pursue market opportunities (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 potential barrier for protecting marketing planning from competitive imitation (Narver and Slater, 1990; Peteraf, 1993; Rumelt, 1982, 1984). Slack resources are included because they 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 direct effect on flexibility, consistent with the literature cited earlier. In model 2 (Figure 2) it is proposed that only two management processes have direct effects, while the other processes generate moderator effects, as a competing stance to model 1 (Figure 1). As proactive management means being eager to pursue market opportunities, it is likely to lead to willingness to explore options in decision making, giving flexibility. Therefore, proactive management is a direct predictor of flexibility. Similarly, as competitive aggression is propensity to challenge competitors, it is likely to lead to willingness to explore options in decision making as flexibility in order to identify the most effective challenges. Therefore, competitive aggression is a direct predictor of flexibility. These arguments are further developed below. For a moderator effect the moderator variable interacts with a predictor variable to affect the form of the association between a predictor variable and the dependent variable (Jaccard et al., 1990; Sharma et al., 1981). In the following sections arguments are presented that propose that innovative management, organisational learning, market orientation and slack resources produce moderator effects, as they are processes for using capabilities and resources that will promote the effectiveness of proactive management, competitive aggression and flexibility in impacting on the state of adaptation. These effects are shown in Figures 1 and 2. Proactive management Proactive management is smanagerial eagerness to pursue market opportunities in the absence of environment threats or poor performance, in this context market opportunities, whereas reactive management occurs in response to threats or poor performance (Dutton, 1993; Jackson and Dutton, 1988; Miller and Friesen, 1978; Mullens and Cummings, 1999; Mullens and Walker, 1996; Venkatraman, 1989). A central 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 market opportunities, rather than the proactiveness of managers (Astley and Fombrun, 1983; Astley and Van de Ven, 1983; Bourgeois, 1984; Grant, 1996). The environment determinism perspective posits that environment change determines organisations and their strategy decision making (Aldrich, 1979; McKelvey and Aldrich, 1983), while the managerial choice perspective posits that companies are able proactively to choose their strategies and manipulate their environments (Child, 1972; Pfeffer and Salancik, 1978; Yasai-Ardekani, 1986). The two are not necessarily exclusive, representing a continuum of organisational adaptation between pure environment determinism and unrestrained 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 proactive management for adapting to change, which are pertinent to market opportunities and marketing planning. First, uniform encoding among managers of the change situation, to yield a common understanding of market opportunities. Second, consensus among managers about the appropriate objectives and strategy options to pursue market opportunities. Third, motivation to implement the agreed strategy options, which will involve various individual and organisational incentives. Fourth, organisational ability to implement the chosen strategy options, by marshalling implementation capabilities and resources. Similarly, Dutton and Duncan (1987) propose that the momentum in companies for adapting to change is created from managers’ perceptions of their understanding of change, and their beliefs about the firm’s capabilities for adapting; the extent to which change is diagnosed as urgent and feasible; and the extent of resources for adapting to change. Therefore, proactive management that is disciplined and systematic in the above fashion is predicted to result in careful consideration of environment change and market opportunities, and greater flexibility of marketing planning decision making, through eagerness to formulate alternative objectives and strategies for pursuing market opportunities. It is therefore predicted that proactive management is an essential process for achieving effective marketing planning for adapting to market opportunities, overcoming environment determinism, achieving managerial choice, and moving towards a neutral state of adaptation. As it is argued that proactive management is an integral part of marketing planning decision making, it is predicted to have a direct effect on flexibility: H1.

The greater the proactive management, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities (models 1 and 2).

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

experiences, rather than forecasting future events (Lant et al., 1992). Fifth, recent success in exploiting change may bias managers toward an illusion of control, resulting in unrealistically high objectives (Langer, 1975). Sixth, managers may mistakenly believe that successful outcomes arising through chance are a result of their capabilities (Fischhoff and Beyth, 1975). In some companies there may be limited recognition 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 yield careful consideration of environment change and market opportunities, and greater flexibility in considering alternative objectives and strategies in marketing planning decision making. Therefore, proactive management is likely more effective in overcoming environment determinism problems than reactive management, and in achieving adaptation to market opportunities: H2.

The greater the application of proactive management to overcoming environment determinism, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities (models 1 and 2).

Competitive aggression Competitive aggression is defined as propensity to directly and intensely challenge competitors, with the aim of outperforming them in the marketplace (Covin and Covin, 1990; Davidson, 1997; Lumpkin and Dess, 1996; Porter, 1985; Venkatraman, 1989). For example, pursuing ambitious market share objectives to challenge competitors; entering a market segment dominated by a competitor; outspending competitors on communications; imitating competitors’ strengths; and aggressive price competition. Competitive aggression also reflects managerial willingness in being unconventional in marketing planning, rather than relying on conventional methods of competing (Fombrun and Ginsberg, 1990; Lumpkin and Dess, 1996). Miller and Camp (1985) found that the most successfully aggressive firms are those that pursue a wide breadth of markets and products. However, as some opportunities feature high risk, such as market entry or a new product launch, it is suggested that competitive aggression is particularly important in such risky situations, to gain an advantage over competitors (MacMillan, 1982; Porter, 1985). Consequently, competitive aggression is likely accompanied by high risk taking propensity (Covin and Slevin, 1989). Timing may be important for successful competitive aggression, and “fast followers” timing may be as effective as “first mover advantage” timing (Lumpkin and Dess, 1996). The realisation of this aggression propensity will be through managers being eager to be competitively confrontational in the flexibility of their marketing planning decision making, by setting objectives that are threatening to competitors, and by selecting a marketing strategy and tactics that are challenging and hostile to competitors. This may involve formulating decision-making options that shift the balance of attention away from customers and more toward competitors. This could mean that marketing strategy options are formulated that are more concerned with gaining market share from competitors than attracting new customers into the market. If aggressive marketing strategy options are unconventional and address a breadth of markets and products, then they are likely risky. This suggests that careful attention is needed in formulating and choosing options, ensuring that potential opportunities

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equate to risk, although competitive aggression is likely accompanied by high risk taking propensity. Competitive aggression will also be realised through managerial behaviour in implementing marketing strategies and tactics, by monitoring their progress in achieving the set objectives, and by taking action to challenge any counter strategy moves by competitors. However, to ensure that competitors are outperformed a wide range of marketing planning decision-making options will need to be considered, in order to select the most effective way of beating competitors’ current marketing strategies, and to overcome any counter strategy moves by them. Again this may mean selecting options that are risky, but again competitive aggression is likely associated with high risk taking propensity. Indeed, the general principle in the flexibility literature is that planned offensive moves against competitors will lead to a necessity to consider several options in decision making, as a search is made for the most effective competitive challenge (Bowman and Hurry, 1993; Evans, 1991). These options can be offensively formulated as competitive aggression to force competitors to disturb their current marketing plans, or offensive options can be formulated in response to a change in a competitor’s marketing strategy. Competitive aggression will also be reflected in the timing of the implementation of marketing strategies and tactics. As suggested earlier, although “first mover advantage” timing may be the most aggressive option, “fast follower” timing may be a more appropriate option in some situations, as it will allow for learning about competitors’ strategies and tactics. It is therefore predicted that competitive aggression is an essential management process for achieving effective marketing planning for adapting to market opportunities. As it is argued that competitive aggression is an integral part of marketing planning decision making, it is predicted to have a direct effect on flexibility: H3.

The greater the competitive aggression, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities (models 1 and 2).

Innovative management Innovation is the generation and implementation of new and creative ideas, processes, products and services, providing the means for changing an organisation (Amabile et 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 strategy choices that are innovative, by differentiating from the competitive norm. Amabile et al. (1996) and Van de Ven (1986) emphasise that innovation is the successful implementation of creative and novel ideas in an organisation. West and Farr (1990) emphasise that innovation is restricted to intentional attempts to derive anticipated benefits. With respect to processes, innovation involves intentionally initiating creative and novel ways for gaining anticipated benefits, giving innovative management. Innovative management will be needed to intentionally create new and modified marketing strategies and tactics in marketing planning decision-making options, for exploiting and adapting to changing market opportunities, and challenging competitors’ strategies. This will involve generating novel ways of using the marketing mix to achieve competitive advantage, and novel ways for positioning in existing or new market segments, relative to competitors’ positioning. Innovative

managerial processes can be for planning and implementing the full range of the marketing mix, and for controlling implementation to achieve marketing objectives. Novel ideas within this innovation can be intrinsic within the elements of the mix, and also novel ideas for motivating staff to develop their capabilities. Innovation can also be new technology for gaining competitive advantage, as in product technology for enhancing customer benefits, and new technology for improving marketing communications, distribution and customer service. This new technology may also raise managerial confidence to deliver a more effective marketing strategy, again enhancing their capabilities. However, as emphasised by West and Farr (1990), such innovation needs to be intentionally directed at achieving intentional outcomes, in this case planned marketing objectives. Therefore, by being innovative in their marketing planning, companies will be able to formulate and consider alternative options for flexible decision making, moving towards a neutral state of adaptation. It is therefore predicted that innovative management is an essential management process for achieving effective marketing planning for adapting to market opportunities. As innovative management may be an integral part of marketing planning decision making, it may exert a direct effect on flexibility: H4a. The greater the innovative management, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities (model 1). However, processes for idea generation, innovative management may have more influence on the impact of proactive management and competitive aggression on flexibility, than directly on flexibility. Innovative management can provide creative and novel ways to allow managers to be proactive in pursuing market opportunities. It can also provide creative and novel ways for challenging competitors. This suggests moderating effects, giving the following competing hypotheses to H4a: H4b. The greater the innovative management, the greater the impact of proactive management on the flexibility of marketing planning decision making (model 2). H4c. The greater the innovative management, the greater the impact of competitive aggression on the flexibility of marketing planning decision making (model 2). Grant (1996) has emphasised the role of managerial capabilities in innovative management. Capabilities for architectural innovation are particularly important, the latter being implementing creative ideas across organisational boundaries (Abernathy and Clark, 1985; Baden-Fuller and Stopford, 1994). Grant (1996) suggests that imagination, intuition and creativity are key capabilities for architectural innovation, although creativity is seemingly the most important. However, a creative idea will not be realised unless there are organisational conditions that foster innovative management and until the idea is implemented (Van de Ven, 1986). Several organisational conditions have been proposed for fostering the creation of novel ideas, such as support of managers in risk taking and evaluating new ideas; autonomy in day-to-day work; resource availability for developing novel ideas; and control of time pressure when developing new ideas (Amabile et al., 1996; West, 1997; West and Anderson, 1996).

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Such conditions are applicable to marketing planning decision making. Much decision making in the marketing mix is clearly creative, such as creating brand images, developing USPs, enhancing customer care and creating advertising messages. In order to create new ideas that will lead to flexibility and adaptation to market opportunities, supportive organisational conditions will be needed. As many innovative marketing mix decisions carry considerable risk with respect to market success, there needs to be a common understanding and acceptance of these risks within the management hierarchy. As a considerable investment of resources is likely to pursue an innovative decision, such as new product development (NPD) and product launch costs, then a common understanding is needed in the management hierarchy of the potential benefits compared to associated risks. There also needs to be company support for the time pressures associated with innovative marketing mix decisions, such as first-mover advantages for achieving competitive advantage, break-even periods in NPD, and likely lagged effects in advertising expenditure. In some companies there may be limited recognition of the necessity to address these conditions, 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, moving towards a neutral state of adaptation: H5.

The more a company addresses organisational conditions for creativity in innovative management, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities.

Organisational learning Although it has many definitions, organisational learning is a process for purposely gaining knowledge, insights and experience, that develops company understanding of connections among managerial actions and the environment, and that influences future managerial 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 to increased understanding of the dynamics of market opportunities, and of managers’ capabilities for making effective marketing planning decisions. It is proposed that the outcome of learning, through this increased understanding, will be more effective adaptation to environment change (Grant, 1996; Kilmann, 1996; Sinkula, 1994; Sinkula et al., 1997). Thus learning promotes firm heterogeneity through managerial capabilities, resulting in competitive advantage (Cohen and Levinthal, 1990; Mahoney, 1995; Senge, 1990). In marketing planning this increased understanding through learning should foster confidence among managers to formulate and consider several decision making options in their marketing planning, and to be bold in their decision making, resulting in more flexibility. Sinkula et al. (1997) found that learning results in increased market information and dissemination, and there is evidence that learning is associated with high levels of market orientation. It is therefore predicted that organisational learning is an essential management process for achieving effective marketing planning for adapting to market opportunities. As organisational learning may be an integral part of marketing planning decision making, it may exert a direct effect on flexibility:

H6a. The greater the organisational learning, the greater the flexibility of marketing planning decision making, and successfully the greater the adaptation 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 proactive management and competitive aggression on flexibility. By generating a greater understanding of market dynamics and of managers’ capabilities, it will give managers more confidence to be proactive. Similarly, it will provide more understanding and confidence to challenge competitors. This suggests moderator effects, giving the following competing hypotheses to H6a: H6b. The greater the organisational learning, the greater the impact of proactive management on the flexibility of marketing planning decision making (model 2). H6c. The greater the organisational learning, the greater the impact of competitive aggression on the flexibility of marketing planning decision making (model 2). There are several impediments to learning. First, Day and Nedungadi (1994) found that managers tend to pay selective attention to their environments and define reality in narrow terms (Kiesler and Sproull, 1982). Consequently, managers have inadequate perceptions of environmental change, and therefore less scope for effective learning (Levinthal and March, 1993). Second, even if there is an adequate environment intelligence system, there may be resistance in the company to change attitudes and behaviour (Osland and Yaprak, 1995; Schein, 1996). Therefore, managerial resistance to change may limit the benefits of learning. Third, there may be managerial inertia to change marketing plans, particularly when they have been effective in achieving previous performance objectives. Therefore, benefits of learning will not be fully realised (Kiesler and Sproull, 1982; Lant et al., 1992). Fourth, there may be a tendency to ignore the long run. Focusing on short-term performance may lead to ignoring future trends, so that learning is short-run focused and therefore limited (Levinthal and March, 1993). Fifth, there may be a tendency to overlook failures. Basing learning on past successes gives a biased understanding of reality, so that learning should also be from failures (Lant et al., 1992; Levinthal and March, 1993). Sixth, there is evidence that functional heterogeneity in the top management team contributes to learning (Lant et al., 1992; Wiersema and Bantel, 1992). A diversity of managerial backgrounds gives a richness of perspectives when addressing decision making, giving many learning opportunities. Therefore, a lack of diversity may be an impediment to learning. In some companies there may be little recognition of such impediments, but even where there is recognition, overcoming them may not be straightforward. However, by addressing these impediments, companies can be more flexible in their marketing planning decision making, moving towards a neutral state of adaptation: H7.

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

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Market orientation Market orientation is generating and internally disseminating intelligence about customers and competitors, and moulding corporate culture and managerial behaviour with 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 difficult for competitors to imitate, as it is achieved through idiosyncratic management, which can 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 and Pandian, 1992; Oktemgil et al., 2000). The following characteristics of idiosyncratic management contribute to achieving inimitability. Tacitness This is accumulated skills-based capabilities, resulting from experience and learning by doing, which is difficult for competitors to imitate (Polanyi, 1967). These tacit capabilities make up idiosyncratic management. Understanding and addressing customers and competitors requires tacit capabilities that are based on experience and learning by doing, for the effective use of intelligence in marketing planning decision making. Tacit capabilities are also needed to achieve and sustain a market-focus in the corporate culture and managerial behaviour. Complexity This results from using large numbers of interrelated tacit capabilities, which creates identification 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 market orientation, to achieve its organisation-wide dissemination across many job functions, and to sustain market-focused corporate culture and managerial behaviour. Specificity This is dedicating particular capabilities to specific aspects of market orientation, such as developing long-term customer relationships. Dedicated capabilities are needed to build an effective market orientation, and to mould corporate culture and managerial behaviour. It should be difficult for competitors to identify and understand these dedicated capabilities. Non-transferability Should a competitor identify the mix of capabilities that led to a successful market orientation, they would then need to acquire them to achieve imitation. Transferring a market orientation to another company will likely be difficult, featuring high transaction costs, given that it is inherent within corporate culture, the values and attitudes of managers, and their behaviour (Chi, 1994; Peteraf, 1993). Indeed, these issues are the very essence of the unique human fabric of a company. Non-tradability Capabilities may not, however, be tradable, as managers and team-based skills may be less effective in a different corporate culture. Therefore, they may have little external value (Chi, 1994; Dierickx and Cool, 1989; Nelson and Winter, 1982; Peteraf, 1993). A

market orientation is likely not tradable, as tacit market orientation capabilities may be less effective in other corporate cultures, and they may not be openly traded. Therefore, market orientation features the characteristics of idiosyncratic management for achieving inimitability. In its dual role of moulding corporate culture and managerial behaviour, market orientation represents management thinking and action as part of marketing capabilities. Within this thinking and action there is much opportunity for developing idiosyncratic management, given the multidimensional nature of managerial actions for achieving an effective market orientation, and the values to be created in corporate culture. However, as this thinking and action is central to marketing planning, having a more effective market orientation than competitors can create a competitive advantage. This thinking and action is central to all the logical sequential stages of marketing planning (objectives through to control), where increased focus on customers and competitors is likely to result in a more effective matching of strategies and tactics with market opportunities. Indeed, given that market orientation is intrinsic within the logical sequential stages of marketing planning, it should contribute to protecting marketing planning from competitive imitation. This will allow for the consideration of more decision-making options, as their potential implementation can be protected from competitive imitation. It is therefore predicted that market orientation is an essential management process for achieving effective marketing planning for adapting to market opportunities. As market orientation may be an integral part of marketing planning decision making, it may exert a direct effect on flexibility: H8a. The greater the market orientation, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market 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 of adaptation than directly on flexibility. By providing protection from competitive imitation of their marketing planning decision making, market orientation should foster managerial confidence in decision making, and promote bolder decisions for adapting to market opportunities, than with little protection. This suggests a moderator effect, giving the following competing hypothesis to H8a: H8b. The greater the market orientation, the greater the impact of the flexibility of marketing planning decision making on adaptation to market opportunities (model 2). However, for a market orientation to contribute effectively to adaptation to market opportunities, the literature implies that several underlying organisational conditions are needed. First, there is an unstated assumption that values and expected behaviours for creating a market orientation will be successfully incorporated into the corporate culture, and that there is a mechanism for assessing this incorporation. In the Hunt and Morgan (1995) theory there is an unstated assumption that this culture can be incorporated into decision-making frameworks. In the Webster (1992) theory there is an additional unstated assumption that this incorporation takes place from the corporate level down to the SBU level, through the successful transfer of cultural values and expected 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 its development, giving the assumption that managers have the inclination and resources to make this investment. Finally, to sustain an effective market orientation with time, there is an underlying assumption that managers will have capabilities for finding new ways for disguising the make-up of their company’s market orientation to avoid imitation. In some companies there may be little recognition of the necessity to address these conditions, but even if there is recognition, addressing them may not be straightforward. However, establishing these facilitating conditions will enhance the effectiveness of market orientation, contributing to flexibility of marketing planning decision making, and moving towards a neutral state of adaptation: H9.

The more a company addresses facilitating organisational conditions for creating a market orientation, the greater the flexibility of marketing planning decision making, and successively the greater the adaptation to market opportunities.

Slack resources A proposition in the strategic management literature is that companies should not fully deploy their resources, but should retain some spare or slack resources to enable change to strategies (Bourgeois, 1981; Chakravarthy, 1986; Miller, 1994; Milliken and Lant, 1991; Sharfman and Dean, 1997). Cyert and March (1963) defined slack as: . . . that cushion of actual or potential resources that allows an organisation to successfully adapt 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 pursuing opportunities in the future (Bourgeois, 1981; Dess and Origer, 1987; Greenley and Oktemgil, 1998; Sharfman et al., 1988; Yang et al., 1992), as they can be used in a discretionary 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 principles apply to marketing planning, as slack resources provide the means for formulating and considering different marketing strategy options, and for implementing those selected, in the pursuit of market opportunities. Therefore, slack resources allow for flexibility in marketing planning decision making. Bourgeois (1981) and Hambrick and D’Aveni (1998) suggest that slack resources allow a company to compete more boldly, and they can be a source of innovation (Cyert and March, 1963). The latter also suggest that slack resources provide the means for experimenting with new strategies that are costly and risky, such as entering new markets and launching new products. In marketing planning they allow for experimentation with new ways of managing the marketing mix, such as innovative advertising, enhanced after sales service, or technical innovation in product benefits. Evans (1991) has suggested different modes in which slack can be used, based on two decision making dimensions. First, a temporal dimension, comprised of an ex ante mode, preparing in advance of some future environmental change, and an ex post mode, taking action after a change has occurred. Second, an intentional dimension,

comprised of an offensive mode, creating and seizing an initiative, and a defensive mode, guarding against competitive moves and correcting mistakes. These decision-making dimensions give four different flexibility modes, where the process for using slack resources is different in each mode (Greenley and Oktemgil, 1998). Ex ante/offensive mode Slack allows for the formulation and holding of a range of strategy options for proactively accessing opportunities that may arise (Bowman and Hurry, 1993; Fox and Marcus, 1992). In marketing planning this means planning a range of competitively aggressive marketing strategy options, to be implemented when market opportunities arise. Ex ante/defensive mode This mode of flexibility is about guarding against potentially damaging consequences that 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 new segment under hostile market conditions, for example, but planning changes to strategy or tactics when market conditions change. Ex post/offensive mode If unpredicted opportunities arise then slack will allow for formulating strategy options, to pursue these new opportunities offensively (Evans, 1991). As market opportunities arise, this mode would mean implementing a marketing strategy and tactics speedily compared to competitors, to gain early entry, or to gain more market share than competitors. Ex post/defensive mode This mode of flexibility is about learning from mistakes, such as using slack to defend against unpredicted competitive strategies (Evans, 1991). In marketing planning this would be developing marketing strategy options to address an unpredicted change in a competitor’s strategy. These advantages of slack allow for the formulation of decision-making options, giving flexibility in marketing planning decision making. Therefore, it is predicted that a process for using slack resources is essential for achieving effective marketing planning, 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 marketing planning decision making, and successfully the greater the adaptation to market opportunities (model 1). However, as a means of achieving flexibility, slack resources may have more influence on the impact of flexibility on state of adaptation, than directly on flexibility. They will allow managers to consider more decision-making options for adapting to market opportunities, as they provide the means for implementing a wider range of options. They also provide the means for experimenting with different options to exploit market opportunities and to be bold in decision making. This suggests a moderator effect, giving the following competing hypothesis to H10a:

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H10b. The greater the slack resources, the greater the impact of the flexibility of marketing planning decision making on adaptation to market opportunities (model 2). Conclusion Two competing models were presented in this article, which propose key management processes about how marketing planning decisions are made in a dynamic context. The motives for this conceptualisation were to contribute to understanding by advancing the traditional model of marketing planning, to stimulate academic and practitioner debate about how marketing planning decisions are made, and to initiate new directions in marketing planning research. The new models address the inadequacies of the traditional model in several ways. First, they advance the prescriptive logical-sequential model of marketing planning by incorporating management processes about how decisions are made, as recommended by various writers. The processes are behavioural in nature, but include aspects of corporate culture, and they incorporate issues from several different literatures, which have not been previously incorporated into marketing planning. This has developed the domain of marketing planning, and has contributed to defining and developing its underlying paradigm. Second, the new models contribute to understanding how companies can address market change. The models are about understanding management processes for exploiting dynamic market opportunities, and the proposed processes contribute to understanding how companies can influence these market dynamics through their marketing planning. Third, the models also help to reduce the gap between theory and practice. As the focus is on behaviour and culture, it gives guidance to firms about how to address marketing planning decision making. The conceptualisation also extends Day’s (1994) proposal, as these marketing planning processes represent capabilities that can become distinctive compared to those of competitors, and that can be difficult for them to imitate. Fourth, the models also contribute to understanding the integrating and coordinating role of marketing planning. In order to develop marketing planning decision-making options to achieve flexibility, the involvement of other internal operations will be necessary, such as finance, personnel and production, in order to assess the commercial feasibility of each option. The management processes can be vehicles for developing the internal social systems needed for integrating and coordinating operations, through the involvement of managers from other operations in marketing planning decision making. Research directions Clearly the first stage of empirical investigation would be the testing of the competing models, by measuring managers’ perceptions of how these management processes operate in their companies, with respect to marketing planning. Second, as these perceptions are likely to vary among managers, a direction is to investigate differences among managerial levels within the marketing function, and also among other functional managers. Third, as the management processes are behavioural and cultural in nature, their relative degrees of impact on state of adaptation are likely to vary in different countries and economies. Therefore, a comparative study should be insightful. Fourth, as there are no claims in this article that all influential management processes have been included, other processes could be investigated as another

research direction. For example, at the corporate level, directions and constraints dictated from a strategic plan; the effectiveness of corporate communications; and internal social systems that determine the ways that managers interact together. At the individual manager level, for example, the importance of incentives and rewards for marketing planning decision making; perceived senior management support for risk taking; and perceived commitment to marketing plans by senior managers. While the above directions are based on managers’ perceptions of how these management processes operate, a different research direction is to investigate the drive and determination of managers for pursuing effective marketing planning. Much of the drive and thrust to exploit market opportunities will be through the willingness of managers to be proactive, aggressive, innovative, to learn, to use market orientation to build 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 be effective in exploiting dynamic market opportunities is also needed, rather than adopting inflexible and reactive marketing planning. Similarly, there will need to be drive and determination to practise these management processes openly. Managerial determination to sustain an achieved state of adaptation into the future is also necessary. Indeed, as market opportunities and competitors’ strategies change, drive and determination are needed to generate further decision-making options to address the new market conditions. Therefore, a research direction would be to investigate the above issues. References Aaker, D.A. and Mascarenhas, B. (1984), “The need for strategic flexibility”, Journal of Business Strategy, Vol. 5 No. 2, pp. 74-82. Abernathy, W.J. and Clark, K.B. (1985), “Innovation: mapping the winds of creative destruction”, Research Policy, Vol. 14, pp. 3-22. Aldrich, H.E. (1979), Organizations and Environments, Prentice-Hall, Englewood Cliffs, NJ. Amabile, T.M.R., Conti, H., Coon, J., Lazenby, J. and Herron, M. (1996), “Assessing the work environment for creativity”, Academy of Management Journal, Vol. 39, pp. 1154-84. Amit, R. and Schoemaker, P.J.H. (1993), “Strategic assets and organizational rent”, Strategic Management Journal, Vol. 14, pp. 33-46. Ansoff, H.I. (1965), Corporate Strategy, Penguin, London. Astley, G. and Fombrun, C.J. (1983), “Collective strategy: the social ecology of organizational environments”, Academy of Management Review, Vol. 8, pp. 576-87. Astley, G. and Van de Ven, A.H. (1983), “Central perspectives and debates in organizational theory”, Administrative Science Quarterly, Vol. 28, pp. 245-73. Baden-Fuller, C. and Stopford, J.M. (1994), Rejuvenating the Mature Enterprise, Harvard Business School Press, Boston, MA. Bourgeois, L.J. (1980), “Strategy and environment: a conceptual integration”, Academy of Management Review, Vol. 5, pp. 25-39. Bourgeois, L.J. (1981), “On the measurement of organizational slack”, Academy of Management Review, Vol. 6, pp. 29-39. Bourgeois, L.J. (1984), “Strategic management and determinism”, Academy of Management Review, Vol. 9, pp. 586-96.

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