International Marketing Review

Emerging Marketing Strategies in a Changing Macroeconomic Environment: A

Commentary
Jagdish N. Sheth
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Jagdish N. Sheth, (1992),"Emerging Marketing Strategies in a Changing Macroeconomic Environment:
A Commentary", International Marketing Review, Vol. 9 Iss 1 pp.
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 Emerging Marketing Strategies Emerging
Marketing
in a Changing Macroeconomic Strategies
Environment: A Commentary
Jagdish N. Sheth 57
Emory University, USA

In this IMR issue, the editors and authors have eloquently discussed and
described the macroeconomic forces that shape marketing strategies both
domestically and globally. I will, therefore, focus more on the implications of
these macroeconomic forces on reshaping marketing strategies and less on their
description, beginning with a brief discussion of four major macroeconomic forces
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that are shaping marketing strategies and practices.

A Framework for Macroeconomic Forces

There are four major macroeconomic forces that are shaping international
business and marketing strategies. They are: regional integration and the
emergence of the triad power; technology advances, especially the adoption
of information technologies in business operations; the emergence of an ideology-
free world and the role of the market economy policy; and finally, a borderless
economy as a consequence of global sourcing and global competition. This is
represented in Figure 1.

Regional Framework
Regional integration of Western Europe (EC92) and Southeast Asia (ASEAN)
have recently demonstrated that nations can gain more competitive advantages International Marketing Review,
Vol. 9 No. 1, 1992, pp. 57-63. ©
by enduring alliances than by self-reliance or bilateral trade agreements (Porter, MCB University Press 0265-1335
 International 1990). The emerging economic power of "Europe 92 is, in turn, creating a
Marketing domino effect on the rest of the world. For example, it is encouraging North
Review American regional integration between the United States, Canada and Mexico;
9,1 Japan is attempting to align with the ASEAN bloc. The triad of Europe, Japan
and the United States dominate the world economy today (Ohmae, 1985). It
is estimated that 75 per cent of the world GDP and 70 per cent of world trade
are concentrated in these three regional economic blocs.
58 Regional integration is not a new concept. It has been practised by kings
and emperors in ancient times and by colonial powers in more modern times
(Kennedy, 1987). In fact, the United States, after the Civil War, created regional
integration among all its states which resulted in several competitive advantages
against dominant European nations such as England, France and Germany. What
is new are two things: first the emergence of three economic superpowers is
replacing the old model of a single economic superpower ruling the world;
second, the three superpowers are highly interdependent in their economic
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activities through mutual presence and mutual trade. The future of each one
is increasingly dependent on the future of the others, resulting in the need
for greater co-operation and understanding.

Technology Advances
Technology advances, especially in electronics, have revolutionized business
processes and practices (Gerstein, 1987; Guile and Brook, 1987).
Computerization of people, machinery and physical facilities has literally reshaped
the traditional economic concepts of scale, scope and structure. Similarly,
improvement in telecommunications and information technologies has reduced
the time and place barriers of doing business. It is no exaggeration to suggest
that traditional marketing theories based on location (for example, the law of
retail gravitation, wheel of retailing, inventory management, logistics and physical
distribution) may be obsolete when customers and suppliers can do business
at any time and from anywhere. Finally, electronics advances are resulting in
market egalitarianism. The traditional trickle-down theory of markets (from
government to industrial to services to consumer markets) for diffusion of
technology and products is being replaced by simultaneous introduction of
technology to all markets. Better yet, the trickle-up theory (from consumer
to services to industrial markets) is now evident as shown by the use of
transistors in personal radios prior to computers; or mass marketing of television
prior to the emergence of CRT; or the use of compact disc (CD-ROM) in
personal entertainment prior to storage of library information.
In a later section this egalitarian and convergent nature of the electronics
technology is discussed with regards to how it will challenge such well known
concepts as diffusion of innovation theory and product-market definitions in
marketing strategy.
Ideology-free World
A third macroeconomic force is the economic collapse of ideology-driven nations,
especially the communist countries. As governments become more pragmatic
 and remain less ideology-driven, it is inevitable that many of the traditional beliefs Emerging
about the role of the market economy and private enterprises will change Marketing
(Drucker, 1989; Burnstein, 1991). This is likely to result in privatization of the Strategies
public sector; less regulation of most industries; and development of pro-
competitive policies to encourage innovation and the efficiency of different sectors
of the economy. This is bound to blur the marketing practices of profit versus
non-profit entities and industries. Also, significantly different market practices
across nations, which were based on government trade and employment policies, 59
are likely to give way to more market-based marketing practices in the future.

Borderless Economy
Finally, and probably as a consequence of the other three macroeconomic forces,
there is increasing globalization of the domestic economy, primarily through
global sourcing and global competition. Marketing practices will have to
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understand and adjust to this reality of a borderless economy (Ohmae, 1990).

Borderless markets emerge when four flows are driven by market practices
and without government intervention (Reich, 1991) — these are the flows of
products/services, people, money and information. In a borderless economy,
marketing practices related to procurement, marketing mix and customer
understanding are bound to change.

Emerging Market Practices

These macroeconomic forces are certainly impacting on market practices.
Indeed, they may be capable of creating several paradigm shifts in marketing.
Consequently, doing faster and better may not be sufficient and, instead,
businesses will be required to develop new marketing concepts and practices
(Kotler, et al, 1985; Rosow, 1988; Thurow, 1985).
Ten emerging market concepts and practices are identified as a consequence
of macroeconomic forces. These are represented in Figure 2. Some of them
may be more immediate in their emergence while others may take some time;
some of them may be more appropriate for services marketing while others
may be for products marketing; finally, some of them may be easy to implement,
while others may face strong resistance.

Borderless Marketing
Marketing concepts such as market segmentation, product differentiation, and
buyer behaviour, as well as marketing practices related to product, price,
promotion and distribution, will require global orientation as technology, regional
integration and market economy processes create borderless marketing. This
is likely to reduce the importance of international marketing and enhance the
need lor global marketing concepts and practices. Even companies totally focused
on domestic markets will have to incorporate a global perspective in their
strategic and operational planning processes to include global competition and
sourcing (Davis, 1987; Davis and Davidson, 1991).
 International
Marketing
Review
9,1

60
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Relationship Marketing
As the political and regulatory climate encourages free market processes, it
becomes more difficult to sustain market leadership based on short-term sales-
oriented transaction marketing. It becomes increasingly necessary to rely on
customers to pre-empt competition, especially offshore competition. This is
likely to encourage marketing practitioners to practise customer retention
economics and enter into ongoing relationship marketing with their suppliers
and customers on a global basis (Davis and Davidson, 1991).

Fifth "P" of Marketing

As the geopolitical dynamics of the world restructure markets and competition,
it becomes increasingly important to actively shape the policy of the nations
and regional blocs to ensure that the timing and nature of restructuring will
be manageable. This is referred to as the fifth " P " of marketing and implies
that policy shaping is equally influential and should be practised simultaneously
along with the traditional four "Ps" of marketing. Unfortunately practitioners
 do not know how to blend the fifth " P " into their marketing mix and the Emerging
academics do not have an integrative conceptual framework which incorporates Marketing
the fifth " P " of marketing (Kotler, 1987). Strategies
Mass Customization
As markets become borderless, they will be segmented not only by national
characteristics, but also by customer or user characteristics. In other words,
intranational differences on a global basis will be equally as important as 61
international differences. This will require the oxymoron marketing of "think
global, act local". In other words, global market segments based on user
characteristics will need customization to physical, economic and cultural
localization. One way to manage this oxymoron is the practice of mass
customization in which each element of the marketing mix (product, price,
promotion and distribution) is based on standard platforms or architecture, but
it is customized to unique applications (Davis, 1987).
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Anticipatory Innovation
As market opportunities expand due to an ideology-free world and regional
integration, and as technology advances generate breakthrough innovations, it
will become increasingly necessary for marketing practitioners to anticipate
what customers want or need. Customers often do not know how breakthrough
technologies can enable them to increase their value (performance-price ratio).
While marketing practitioners are very good in responding to market demands,
they tend to do less well (especially in cross-national settings) in anticipating
what markets will buy (Sheth and Ram, 1987).

Customer-focused Quality
The definition and practice of quality of all marketing activities, which includes
product, selling and customer service, will change from operations-focused to
customer-focused. This means that quality does not necessarily imply a long
life, but consistency of performance or reliability. Marketing practices in the
future will be judged as superior or inferior on the consistency dimensions across
time and place dimensions (Lele and Sheth, 1987).
Trickle-up Marketing
Technology advances created by the electronics revolution suggest that marketing
to the least affordable market may generate more efficient marketing practices
than marketing to the elite (Davis, 1987). In other words, introducing new
products first to less developed nations or less developed segments and
upstreaming the markets may allow firms to learn, by trial and error, more
efficiently. This means penetration marketing becomes more prevalent than
skimming marketing.

Value-based Marketing
Marketing concepts and practices have been traditionally based on volume or
weight as a unit of analysis for costing and pricing. In the future, marketing
 International practices will have to cost and price products and services more based on their
Marketing time and place associated values. This is often prevalent in the services sector,
Review but is not consciously practised in the products sector.
9,1 Coverage Marketing
As borderless markets become accessible by technology advances, it will become
increasingly necessary to develop market coverage concepts and marketing
62 practices that will be based more on availability and exposure aspects, and less
on location and comparative aspects of a marketing mix, including product and
promotion.
Networked Marketing
Cross-functional processes will be increasingly important as markets become
global and volatile. It will become increasingly important for the left hand to
know what the right hand is doing, especially at the market boundary or frontline
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personnel level in procurement, manufacturing, selling and servicing market

offerings. Fortunately, online information technologies are becoming increasingly
affordable to network the organization.

Summary and Conclusions

Macroeconomic forces have been always important in marketing practice.
Unfortunately, marketing scholars have treated them as ceteris paribus or
exogenous variables. Consequently, they have failed to develop conceptual
frameworks which consciously incorporate their influence on marketing practices.
In this article, macroeconomic forces are aggregated into four categories:
regional integration, ideology-free world, technology advances and borderless
economy. By examining changes in these macroeconomic forces, ten emerging
marketing strategies to respond effectively to these forces are proposed. These
include, among others, borderless marketing, relationship marketing, mass
customization, trickle-up marketing and networked marketing.
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