Theories of Marketing
LITERATURE
, Topic 1:
Overview of development in
marketing thinking
,Framework for Marketing Strategy
Formation
Dolan (2014)
Overview
Dolan’s framework explains how companies can develop a coherent marketing strategy:
a long-term “blueprint” for competing in the marketplace. Its central purpose is to
create customers, retain them, and ideally turn them into brand ambassadors who
recommend the brand to others.
Marketing strategy is not about serving everyone. Instead, firms must choose which
customers they can serve best, create differentiated value for them, and design a
coordinated plan to reach them profitably. The reading uses Peloton as a main example
of how this works in practice.
The overall marketing process
Benson Shapiro identifies six connected components of a customer-centred marketing
process:
1. Marketing strategy formation
Defines long-term goals and the company’s fundamental market approach. It
includes deciding which customer groups to serve, which needs to address, and
how to create customer value.
2. Marketing planning
Translates strategy into plans. The time horizon depends on the industry:
dynamic industries, such as technology, need frequent revision, while stable
industries may plan two or three years ahead.
3. Programming, allocating, and budgeting
Sets short-term objectives and detailed annual plans, including the resources
assigned to marketing activities.
4. Implementation
Executes the selected programs and activities.
5. Monitoring and auditing
Measures performance against objectives and develops corrective actions when
results are below expectations.
6. Analysis and research
Collects internal and external information to support all major decisions.
Research should not be a one-time activity; it must continuously inform strategy,
planning, execution, and evaluation.
,The reading mainly focuses on the first part: marketing strategy formation.
The strategy-formation framework
Dolan’s framework has three interconnected elements:
Element Main question Key components
Analysis What is happening in the market? The 5 Cs
Decisions What does the company want to achieve, STP and the 4 Ps
and how will it do so?
Outcomes What results does the strategy produce? Customer acquisition,
retention, brand advocacy,
sales, profit, and brand
strength
A marketing strategy is not a fixed, linear process. Companies move back and forth
between analysis and decisions. For example, choosing to sell through retailers rather
than only through a website creates new questions: which retailers fit the brand, what
margins will they require, and how should the company manage those relationships?
The 5 Cs analysis
Before making strategic decisions, a company should analyse its market through the
5 Cs:
1. Customer
Customer analysis is the most important part of the framework. Companies need to
understand:
• Who is involved in the purchase decision.
• How the customer makes a decision.
• What benefits, costs, and trade-offs customers consider.
• What criteria they use to compare alternatives.
• What makes customers willing to pay for a product or service.
The people involved in a buying decision are called the decision-making unit (DMU). In
consumer markets, this may be one person or a couple. In business markets, it is often a
group with several different roles:
1. Initiators recognise a problem or opportunity and start the search.
2. Gatekeepers control information or access to decision-makers.
3. Deciders make the final choice.
4. Influencers shape the decision without making it themselves.
5. Purchasers complete the transaction.
6. Users actually use or consume the offering.
,A company must also understand the decision-making process (DMP): how customers
search for information, compare alternatives, interact with others, and weigh decision
criteria. Firms can use surveys, focus groups, interviews, social-media feedback, and
other qualitative or quantitative research methods to understand this process. The goal
is to achieve strong product–market fit: an offering that fits the needs and preferences
of the chosen market.
2. Company
Company analysis examines whether the organisation has the resources and abilities
needed to deliver its proposed value to customers. This includes:
• Financial resources.
• Research and development capabilities.
• Manufacturing capabilities.
• Technology.
• Distribution and sales capabilities.
• Brand and organisational assets.
• Skills and expertise.
A central concept is the core competency. A core competency should:
1. Make an important contribution to customers’ perceived value.
2. Be difficult for competitors to copy.
A successful strategy must fit both the market and the company. A product may appeal
to customers, but it is not a viable strategy if the company lacks (or cannot obtain) the
capabilities needed to deliver and support it.
3. Collaborators
Collaborators are external partners that provide capabilities or resources the company
does not possess itself. They can include:
• Suppliers.
• Manufacturers.
• Retailers and distributors.
• Technology partners.
• Financial investors.
• Media partners.
• Sales agents or other channel partners.
The company must identify which outside assets it needs and determine how to
motivate partners to contribute effectively. Collaborators can allow a company to focus
on the activities in which it has the strongest capabilities, rather than trying to do
everything internally.
,4. Competition
Competitive analysis means identifying all alternatives that customers may see as
substitutes, not only direct competitors selling similar products.
Companies should analyse competitors’:
• Product or service offerings.
• Target customers.
• Positioning and value proposition.
• Marketing mix and route to market.
• Strengths and weaknesses.
• Current and future capabilities.
• Likely strategic intentions.
Useful sources of competitive information include public company reports,
competitors’ communications, customer interviews, observation of marketing activities,
and product “tear-downs” to assess features and probable costs.
The key principle is that a company wins by creating more customer value than the
alternatives customers know about.
➔ Value can be understood as benefits minus the customer’s monetary, time,
effort, and psychological costs.
5. Context
Context refers to the external environment that shapes what is possible and what may
change. Important contextual forces include:
• Cultural trends.
• Technology.
• Social media and online communities.
• Political developments.
• Laws and regulation.
• Social norms.
• Economic conditions.
Context is dynamic, so firms should not take it for granted. Technological and cultural
changes can quickly make an existing strategy less relevant. Companies that identify
emerging trends early can create opportunities, whereas companies that ignore
regulation, culture, or technological disruption can face serious risks.
,The aspiration decision: STP
After analysing the market, the company makes its aspiration decision:
➔ what it wants to achieve in the market and what value it intends to represent for a
particular type of customer.
This decision consists of STP:
• Segmentation
- Dividing a broad market into meaningful groups of customers with different
needs, preferences, behaviours, or willingness to pay.
- The purpose is to recognise that customers are not all the same. They may
value different product benefits, prefer different channels, or make different
price–benefit trade-offs.
• Targeting
- choosing the segment or segments the company will serve.
- A firm often improves its chances of success by deliberately not serving
certain customers. Focus enables it to tailor its offering, communication,
distribution, and price to the group it can serve especially well.
• Positioning
- deciding how the product or service should be perceived in the minds of
target customers relative to competing alternatives.
- A good positioning answer explains:
Who the target customer is.
What need the offering solves.
What value it delivers.
Why it is different from or better than alternatives.
- For example, some brands position themselves around low price and
accessibility, while others target customers who value premium quality,
performance, design, exclusivity, or convenience.
The action plan: the 4 Ps
Once STP is clear, the company develops its action plan: the marketing mix, commonly
known as the 4 Ps.
Marketing-mix Main role
element
Product Creates value through the offering itself
Promotion Communicates the value to customers
Place Makes the offering available and accessible
Price Captures part of the value through revenue
,Product
Product: the physical good or service, but also the full customer experience around it:
• features,
• quality,
• design,
• performance,
• brand,
• service,
• content,
• supporting elements.
The product should be designed around the needs of the target market and should
support the intended positioning.
Promotion
Promotion: how the company communicates with customers. It can include:
• advertising,
• salespeople,
• social media,
• public relations,
• direct marketing,
• content,
• reviews,
• word-of-mouth.
Promotion must do more than inform customers. It should:
• explain the product’s value,
• distinguish it from alternatives,
• reduce uncertainty,
• encourage purchase, retention, and advocacy.
Place
Place: the mechanisms through which the company distributes its offering to
customers. This may include:
• a company website,
• physical stores,
• showrooms,
• retailers,
• wholesalers,
, • salespeople,
• other intermediaries.
Distribution decisions affect:
• customer convenience,
• customer experience,
• costs,
• margins,
• company’s control over the brand.
A company may choose direct sales when education, demonstration, or service is
important.
Price
Price: the the main way a company captures the value it creates. The first three Ps
(product, promotion, and place) create customer value; price turns some of that value
into revenue.
The maximum price a firm can charge is limited by the value customers perceive. To be
financially viable, the company should create enough customer value that:
➔ Customer willingness to pay > unit cost of producing and delivering the offering
Price is therefore not just a number. It reflects positioning, customer value, target-
market affordability, and the company’s profit model.
Peloton example
Peloton illustrates the full framework. The company did not simply sell an exercise bike;
it aimed to create a convenient, technology-enabled at-home fitness experience.
Customer insight
Peloton’s founder recognised a problem among busy people who liked high-energy
indoor cycling classes but found it difficult to travel to studios or secure places in
popular classes. The company identified demand for a product that would provide the
energy, instruction, and community of a studio class from home.
Initially, Peloton targeted affluent suburban consumers who could afford the
approximately $2,000 bike and monthly subscription. Customer research later showed
demand beyond this original segment, including urban consumers and people who saw
the bike as a worthwhile long-term investment. Peloton reframed the cost using
instalment financing, presenting the purchase as a monthly payment rather than a large
upfront expense.
,Company capabilities
Peloton’s competitive advantage depended on more than manufacturing a stationary
bike. Its value proposition required technology, live and on-demand content, engaging
instructors, music, performance tracking, and an online community.
The company’s ambition was to use technology to transform the fitness industry, not
merely to compete as a traditional exercise-equipment manufacturer. It therefore built
capabilities that matched this broader vision, including content development and a
strong member experience.
Collaborators
Peloton used external collaborators to fill capability gaps. It raised early funding through
Kickstarter and later attracted venture-capital investment. It also worked with
manufacturing partners for the bike and tablet components, allowing Peloton to focus
more on content, instructors, technology, and market education.
Competition
Peloton defined competition broadly. It competed not only with fitness-equipment
brands and studios such as SoulCycle, but also with the alternative of not exercising
regularly.
This broad definition was strategically important: Peloton’s goal was not merely to claim
that it had the best stationary bike. It aimed to make customers want to work out by
combining convenience, motivation, entertainment, community, and measurable
progress.
Distribution and retention
Because the product required customer education and demonstration, Peloton chose to
manage sales directly instead of relying fully on intermediaries. It opened company-
owned showrooms to let potential buyers try the product and understand the
experience.
The company’s business model also supported retention: customers paid for a
subscription to access live and recorded classes. This made ongoing engagement (not
only the initial bike sale) central to the strategy. The reading reports that Peloton had a
96% annual renewal rate at the time of the example, indicating strong retention, while its
large social-media community helped generate brand advocacy.
LITERATURE
, Topic 1:
Overview of development in
marketing thinking
,Framework for Marketing Strategy
Formation
Dolan (2014)
Overview
Dolan’s framework explains how companies can develop a coherent marketing strategy:
a long-term “blueprint” for competing in the marketplace. Its central purpose is to
create customers, retain them, and ideally turn them into brand ambassadors who
recommend the brand to others.
Marketing strategy is not about serving everyone. Instead, firms must choose which
customers they can serve best, create differentiated value for them, and design a
coordinated plan to reach them profitably. The reading uses Peloton as a main example
of how this works in practice.
The overall marketing process
Benson Shapiro identifies six connected components of a customer-centred marketing
process:
1. Marketing strategy formation
Defines long-term goals and the company’s fundamental market approach. It
includes deciding which customer groups to serve, which needs to address, and
how to create customer value.
2. Marketing planning
Translates strategy into plans. The time horizon depends on the industry:
dynamic industries, such as technology, need frequent revision, while stable
industries may plan two or three years ahead.
3. Programming, allocating, and budgeting
Sets short-term objectives and detailed annual plans, including the resources
assigned to marketing activities.
4. Implementation
Executes the selected programs and activities.
5. Monitoring and auditing
Measures performance against objectives and develops corrective actions when
results are below expectations.
6. Analysis and research
Collects internal and external information to support all major decisions.
Research should not be a one-time activity; it must continuously inform strategy,
planning, execution, and evaluation.
,The reading mainly focuses on the first part: marketing strategy formation.
The strategy-formation framework
Dolan’s framework has three interconnected elements:
Element Main question Key components
Analysis What is happening in the market? The 5 Cs
Decisions What does the company want to achieve, STP and the 4 Ps
and how will it do so?
Outcomes What results does the strategy produce? Customer acquisition,
retention, brand advocacy,
sales, profit, and brand
strength
A marketing strategy is not a fixed, linear process. Companies move back and forth
between analysis and decisions. For example, choosing to sell through retailers rather
than only through a website creates new questions: which retailers fit the brand, what
margins will they require, and how should the company manage those relationships?
The 5 Cs analysis
Before making strategic decisions, a company should analyse its market through the
5 Cs:
1. Customer
Customer analysis is the most important part of the framework. Companies need to
understand:
• Who is involved in the purchase decision.
• How the customer makes a decision.
• What benefits, costs, and trade-offs customers consider.
• What criteria they use to compare alternatives.
• What makes customers willing to pay for a product or service.
The people involved in a buying decision are called the decision-making unit (DMU). In
consumer markets, this may be one person or a couple. In business markets, it is often a
group with several different roles:
1. Initiators recognise a problem or opportunity and start the search.
2. Gatekeepers control information or access to decision-makers.
3. Deciders make the final choice.
4. Influencers shape the decision without making it themselves.
5. Purchasers complete the transaction.
6. Users actually use or consume the offering.
,A company must also understand the decision-making process (DMP): how customers
search for information, compare alternatives, interact with others, and weigh decision
criteria. Firms can use surveys, focus groups, interviews, social-media feedback, and
other qualitative or quantitative research methods to understand this process. The goal
is to achieve strong product–market fit: an offering that fits the needs and preferences
of the chosen market.
2. Company
Company analysis examines whether the organisation has the resources and abilities
needed to deliver its proposed value to customers. This includes:
• Financial resources.
• Research and development capabilities.
• Manufacturing capabilities.
• Technology.
• Distribution and sales capabilities.
• Brand and organisational assets.
• Skills and expertise.
A central concept is the core competency. A core competency should:
1. Make an important contribution to customers’ perceived value.
2. Be difficult for competitors to copy.
A successful strategy must fit both the market and the company. A product may appeal
to customers, but it is not a viable strategy if the company lacks (or cannot obtain) the
capabilities needed to deliver and support it.
3. Collaborators
Collaborators are external partners that provide capabilities or resources the company
does not possess itself. They can include:
• Suppliers.
• Manufacturers.
• Retailers and distributors.
• Technology partners.
• Financial investors.
• Media partners.
• Sales agents or other channel partners.
The company must identify which outside assets it needs and determine how to
motivate partners to contribute effectively. Collaborators can allow a company to focus
on the activities in which it has the strongest capabilities, rather than trying to do
everything internally.
,4. Competition
Competitive analysis means identifying all alternatives that customers may see as
substitutes, not only direct competitors selling similar products.
Companies should analyse competitors’:
• Product or service offerings.
• Target customers.
• Positioning and value proposition.
• Marketing mix and route to market.
• Strengths and weaknesses.
• Current and future capabilities.
• Likely strategic intentions.
Useful sources of competitive information include public company reports,
competitors’ communications, customer interviews, observation of marketing activities,
and product “tear-downs” to assess features and probable costs.
The key principle is that a company wins by creating more customer value than the
alternatives customers know about.
➔ Value can be understood as benefits minus the customer’s monetary, time,
effort, and psychological costs.
5. Context
Context refers to the external environment that shapes what is possible and what may
change. Important contextual forces include:
• Cultural trends.
• Technology.
• Social media and online communities.
• Political developments.
• Laws and regulation.
• Social norms.
• Economic conditions.
Context is dynamic, so firms should not take it for granted. Technological and cultural
changes can quickly make an existing strategy less relevant. Companies that identify
emerging trends early can create opportunities, whereas companies that ignore
regulation, culture, or technological disruption can face serious risks.
,The aspiration decision: STP
After analysing the market, the company makes its aspiration decision:
➔ what it wants to achieve in the market and what value it intends to represent for a
particular type of customer.
This decision consists of STP:
• Segmentation
- Dividing a broad market into meaningful groups of customers with different
needs, preferences, behaviours, or willingness to pay.
- The purpose is to recognise that customers are not all the same. They may
value different product benefits, prefer different channels, or make different
price–benefit trade-offs.
• Targeting
- choosing the segment or segments the company will serve.
- A firm often improves its chances of success by deliberately not serving
certain customers. Focus enables it to tailor its offering, communication,
distribution, and price to the group it can serve especially well.
• Positioning
- deciding how the product or service should be perceived in the minds of
target customers relative to competing alternatives.
- A good positioning answer explains:
Who the target customer is.
What need the offering solves.
What value it delivers.
Why it is different from or better than alternatives.
- For example, some brands position themselves around low price and
accessibility, while others target customers who value premium quality,
performance, design, exclusivity, or convenience.
The action plan: the 4 Ps
Once STP is clear, the company develops its action plan: the marketing mix, commonly
known as the 4 Ps.
Marketing-mix Main role
element
Product Creates value through the offering itself
Promotion Communicates the value to customers
Place Makes the offering available and accessible
Price Captures part of the value through revenue
,Product
Product: the physical good or service, but also the full customer experience around it:
• features,
• quality,
• design,
• performance,
• brand,
• service,
• content,
• supporting elements.
The product should be designed around the needs of the target market and should
support the intended positioning.
Promotion
Promotion: how the company communicates with customers. It can include:
• advertising,
• salespeople,
• social media,
• public relations,
• direct marketing,
• content,
• reviews,
• word-of-mouth.
Promotion must do more than inform customers. It should:
• explain the product’s value,
• distinguish it from alternatives,
• reduce uncertainty,
• encourage purchase, retention, and advocacy.
Place
Place: the mechanisms through which the company distributes its offering to
customers. This may include:
• a company website,
• physical stores,
• showrooms,
• retailers,
• wholesalers,
, • salespeople,
• other intermediaries.
Distribution decisions affect:
• customer convenience,
• customer experience,
• costs,
• margins,
• company’s control over the brand.
A company may choose direct sales when education, demonstration, or service is
important.
Price
Price: the the main way a company captures the value it creates. The first three Ps
(product, promotion, and place) create customer value; price turns some of that value
into revenue.
The maximum price a firm can charge is limited by the value customers perceive. To be
financially viable, the company should create enough customer value that:
➔ Customer willingness to pay > unit cost of producing and delivering the offering
Price is therefore not just a number. It reflects positioning, customer value, target-
market affordability, and the company’s profit model.
Peloton example
Peloton illustrates the full framework. The company did not simply sell an exercise bike;
it aimed to create a convenient, technology-enabled at-home fitness experience.
Customer insight
Peloton’s founder recognised a problem among busy people who liked high-energy
indoor cycling classes but found it difficult to travel to studios or secure places in
popular classes. The company identified demand for a product that would provide the
energy, instruction, and community of a studio class from home.
Initially, Peloton targeted affluent suburban consumers who could afford the
approximately $2,000 bike and monthly subscription. Customer research later showed
demand beyond this original segment, including urban consumers and people who saw
the bike as a worthwhile long-term investment. Peloton reframed the cost using
instalment financing, presenting the purchase as a monthly payment rather than a large
upfront expense.
,Company capabilities
Peloton’s competitive advantage depended on more than manufacturing a stationary
bike. Its value proposition required technology, live and on-demand content, engaging
instructors, music, performance tracking, and an online community.
The company’s ambition was to use technology to transform the fitness industry, not
merely to compete as a traditional exercise-equipment manufacturer. It therefore built
capabilities that matched this broader vision, including content development and a
strong member experience.
Collaborators
Peloton used external collaborators to fill capability gaps. It raised early funding through
Kickstarter and later attracted venture-capital investment. It also worked with
manufacturing partners for the bike and tablet components, allowing Peloton to focus
more on content, instructors, technology, and market education.
Competition
Peloton defined competition broadly. It competed not only with fitness-equipment
brands and studios such as SoulCycle, but also with the alternative of not exercising
regularly.
This broad definition was strategically important: Peloton’s goal was not merely to claim
that it had the best stationary bike. It aimed to make customers want to work out by
combining convenience, motivation, entertainment, community, and measurable
progress.
Distribution and retention
Because the product required customer education and demonstration, Peloton chose to
manage sales directly instead of relying fully on intermediaries. It opened company-
owned showrooms to let potential buyers try the product and understand the
experience.
The company’s business model also supported retention: customers paid for a
subscription to access live and recorded classes. This made ongoing engagement (not
only the initial bike sale) central to the strategy. The reading reports that Peloton had a
96% annual renewal rate at the time of the example, indicating strong retention, while its
large social-media community helped generate brand advocacy.
