MARKETING PLANNING

Implications of Porter's Value chain and the Holistic Marketing Orientation Model on Marketing Planning

Implications of Porter's Value chain and the Holistic Marketing Orientation Model on Marketing Planning

Introduction

The role of marketing and the firm has been evolving for almost a century, ever since marketing was first recognized as a distinct activity. Putting marketing within the context of the firm is a fairly recent development from an historical perspective. Prior to that, it was regarded as a socioeconomic process taking place within markets, not firms. It was identified as a distinct management function in the 1920s, and since then has experienced continued elaboration as both management practice and academic discipline.

Most recently, the idea of marketing as a separate management function is being challenged and modified dramatically by a new conceptualization of marketing as a set of organizational processes that pervades the whole firm, and is not the sole responsibility of marketing managers. Our field is very much a field in intellectual and practical transition, as evidenced by the changing role of marketing in the firm (Armstrong, 2003, 85)

Porter's Value Chain

The term value chain is used in two distinct contexts. The concept has developed into a well-known notion within global business and management theory since it was launched by Michael Porter in 1985. Meanwhile, Raphael Kaplinsky's reinterpretation of the concept is much used within developmental economics.

The concept of a value chain was originally promoted by Michael Porter in the book Competitive Advantage: Creating and Sustaining Superior Performance, in which he explores the underpinnings of competitive advantage in the individual firm. A value chain describes the sequence of activities that firms perform to add value to a certain product or service. The difference between the total added value and the total costs to operate the chain results in a profit margin. The success of a company in managing a profitable value chain, maximizing value creation while minimizing costs, is an important aspect of competitive advantage.

Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or supply of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. These primary activities are linked to support activities that help to improve efficiency such as procurement, technology development, human resource management, and strategic planning.

Porter showed that a company's competitive strategy should not be aimed at fine-tuning one activity of the chain, nor does it suffice to improve all the different activities. Although these value activities are the building blocks of competitive advantage, the value chain is more than a mere collection of independent activities. Value activities are linked within the value chain and these linkages determine competitive advantage or disadvantage. For Porter, streamlining the value chain is not enough; he puts the competitive logic of cost leadership and diversification up front.

Porter's insights on competition and the concept of the value chain have gained much attention in academia and management. Numerous empirical analyses have made use of the ...