Parteisch UK attempted to reposition through a strategy of differentiation in the retail market whilst attempting to consolidate the more profitable business in the wholesale/cash and carry market using cost leadership strategies. Quality, design and style, and premium pricing were used as the major attributes of differentiation and promotional techniques such as sales literature and the redesign of an exhibition stand at major trade fairs in order to establish ‘a distinctive place in the minds of the customer’ as a unique quality product. The delivery and understanding of the organiza- tion are displayed by the behaviours of a business and reflect the ability to fulfil promises made in communications with customers. If the promises or perceptions of a company are not made tangible by the actions of that organization, if there is an event or behaviour disproves the tangibility of such an undertaking, then there is no strategic link to positioning.
Positioning has been achieved through words and images, a manipulation, a perception, a reflection of the inability to supply a perceived advantage.
Differentiation and positioning are variously considered as artificial, contrived, imagined and meaningless (Samuelson, 1976; Lancaster, 1979;
Dickson and Ginter, 1987; Carpenter, Glazer and Nakamoto, 1994). Pos- itioning is a communication of ‘cosmetic change’ in order to manipulate consumer perceptions of reality (Ries and Trout, 1981; 1986a) using advertising copy to imply competitive superiority (Lautman, 1993). The value basis and category-level price where a business competes is directly influenced by product perceptions, the combination of functional and emotional aspects of a product or service as a result of communications (Czepiel, 1992; Esslemont, 1995; Nowlis and Simonson, 1996; Kalra and Goodstein, 1998). Promotional programmes display a philosophy or cul- ture rather than provide a company with a market orientation (Shapiro, 1988; Steenkamp and Wedel, 1991; Bergstrom and Bresnahan, 1996;
Morrall, 1997) whilst differentiation through the use of design and com- munication is an enabling rather than a definitive positioning strategy (Hill, 1997). The use of differentiation is an operational tool in the pos- itioning of a product in the mind of the customer (Porter, 1979) in much the same way that Parteisch UK approached the retail markets with a new range of products. The reality was different.
Proposition 1
Strategic positioning is distinctive from operational positioning It has been observed that consumers describe a confusing, stressful, insensitive, and manipulative marketplace in which they feel trapped
and victimized (Fournier, Dobscha and Mick, 1998). They note that a relationship takes two. There is the suggestion that there is a shift away from manipulation towards credibility as a sustaining value in a com- petitive environment (McKenna, 1991). This is the essential difference between strategic positioning and operational positioning. Jan Straaten attempted to react to the needs of target segments reflected by his recognition that not all markets are the same and his attempts to meet the needs of selected markets rather than production requirements, owner preferences or past history.
The problem may be a failure to distinguish between operational effectiveness and strategy (Porter, 1996) but tactical or operational pos- itioning is insubstantial in today’s dynamic and changing markets. The notion of the segmentation of the market, the selection of target markets, and the positioning in the minds of customers does not in itself lead to a rapport or empathy with the customer. A lack of fit among activities is not a distinctive or sustainable strategy – it is merely the practice of communication techniques. This suggests that strategic positioning requires a holistic involvement of the whole organization, its activities and its beliefs rather than a heavy dependence on communication tech- niques. These are in part reflected in what have been described in the literature review as competencies and capabilities. Distinctive competencies are described as patterns of resource deployments (Hofer and Schendel, 1978), sources of competitive advantage and difficult to imitate (Prahalad and Hamel, 1990), new product concepts, strategic alliances, development programmes and long-term initiatives (Hamel and Prahalad, 1994).
Capabilities are variously seen as the portrayal of a whole picture of the organization (Smircich and Stubbart, 1985), where it has been and what it has done in the past (Teece, 1985), market sensing, customer linking, and channel bonding (Day, 1994), routines, processes and culture (Collis and Montgomery, 1995), and core ideology (Day, 1997).
The attempts to introduce new ranges of differentiated products to the UK market were stymied by the lack of ability to deliver on time or maintain the quality claimed by promotional support. The failure to reposition in the UK was a failure at a strategic level to recognize the inability of the company to meet the propositions suggested by promo- tion as a result of an inability to change its capabilities and competencies to meet the new position. The company did not have the essential competencies and capabilities to acquire a strategic position in the UK market against competitors who had more established and fundamental competencies and capabilities suitable for the target market. Positioning in the mind of the customer is possible as indicated by prospective sales
Conceptualization of the Case Study 173 of the new differentiated products in the UK market but it was the fundamental failure at a strategic level to match the claims of a commu- nication exercise that brought about the failure to position in the target market satisfactorily.
There is a connection between the process of segmentation and targeting and what and how the business is going to do (Cavangh and Clifford, 1986; Webster, 1992; Muhlbacher, Dreher and Gabriel-Ritter, 1994). Segmentation leads to a better understanding of the market (Sampson, 1992; Sharma and Lambert, 1990; Esslemont, 1995; Johnson, 1995; Shunglu and Sarkar, 1995), including the influence of motives and attitudes on buying behaviour (Chisnall, 1995), learning about brands and consumer desires ( Johnson, 1995), and identifying the right business, the right products and market segments, the right value-adding activities and the creation of an ever-improving fit between competencies and customers (Normann and Ramirez, 1993). Segmentation is part of an overall activity rather than a discrete strategic process, whereas strategy is about combining activities (Porter, 1996).
Positioning strategy has been described as ‘the choice of target market segments, which determines where the business competes, and the choice of differential advantage, which dictates how it competes’ (Doyle, 1998: 86). There are advantages in matching what the organization is offering with the requirements of the market (Hanson, 1972; Grant, 1991;
Hiam and Schewe, 1993) and relating the distinctive strengths of the company with the aspirations of the customers (Lovelock and Weinberg, 1984; Muhlbacher, Dreher and Gabriel-Ritter, 1994; Brooksbank, 1995).
The firm’s internal resources and skills (Hofer and Schendel, 1978), the unique core strengths and competencies of an organization (Adler, 1966;
Kardon, 1992) and the defensive use of company capabilities against competitive characteristics of an industry (Porter, 1979; Dawar and Frost, 1999) are essential aspects of a positioning programme.
Jan Straaten recognizes that the company needs to adopt a new set of competencies and capabilities. The problem is that if there is no match between the preferences of the owner, the history of the company, and the marketing programme then there is little prospect of success. This continues to be highlighted after the dismissal of Jan Straaten by the concern of Teresa Posten who is perhaps more concerned about her father and the Supervisory Board. A company cannot undertake the fulfilment of objectives that are not attainable in reality as a result of unwillingness or lack of capability. The newspaper reports demonstrate an awareness of an organization’s identity reflecting the ability to compete and even the determination of strategic direction.
Parteisch UK was unable to sustain the perceptions of positioning com- munications because of major problems with quality and delivery. This in turn reflected a lack of commitment by the company to develop these types of product for these particular customers and recognize the wider link with other aspects of the business and the value chain. Positioning through a perception of the product crumbled with the lack of substance to sustain the reality. In addition, the overall strategy and the positioning approach were undoubtedly affected by the objectives of a company that created a trading conundrum through a vision that conflicted with the aspirations of an owner or senior managers. This created opposing pressures on commercial decisions such as the need to fill production capacity at the cost of a reduced average margin as well as the likely pressure to concentrate on bulk production rather than satisfy customer need. This in turn seriously undermined profitability because the whole- sale market was driven by low margins and low prices as opposed to the higher margin and high price products of an expanding retail market.
Vision expresses identity and direction, the way a business intends to compete (Day, 1990). Vision itself depends on managerial competence and capability, something that is therefore realistic and actionable and it is formulated by explicitly identifying competitive behaviour through sources of competitive strength and resource capability (Czepiel, 1992;
El-Namaki, 1992).
Competitive advantage and superior value is distinguished by the distinctive competencies rather than any attempt to be something else (Ghemawat, 1986; Czepiel, 1992) and competencies allow a business to adapt quickly to changing opportunities and provide competitive advantage (Prahalad and Hamel, 1990). The match between resources or distinctive competencies and external environment is fundamental to an organization achieving the purposes that it wishes to accomplish (Webster, 1992). Hooley, Cox and Adams (1992) suggest five elements that are important to the effective mission statement: strategic intent or vision; company values; distinctive competencies; market definition;
and competitive positioning. Organizational capabilities, accumulation of knowledge and experience, and unique combinations of people and skills are not so easy to imitate (Collis and Montgomery, 1995) and provide long-term competitive advantage.
Long-term connections require consistent messages and consistency between the interests and competencies of the business and the target market segment is the possible source of strategic positioning. The role of strategic positioning is to bring the two elements of segmentation and differentiation together through a symbiosis of interests and
Conceptualization of the Case Study 175 competencies. Whilst the role of customer relationship in the overall marketing strategy should be defined (Copulsky and Wolf, 1990), Czepiel (1992: 129) says in respect of positioning and the use of competencies and capabilities: ‘Play your own game and resist tempta- tions to try to be all things to all people.’ There is a need to know yourself as well as to know the customer. Positioning is a dialogue between competencies and customers by making a better fit between knowledge and relationships with the goal of creating an ever-improving fit between competencies and customers (Normann and Ramirez, 1993).
There is an almost constant need for adjustment or regeneration of competencies, skills and capabilities (Hamel and Prahalad, 1994). The transformation of competencies into customer values requires a constant matching of competencies to target markets. This might imply the need for either target segments to change accordingly and as neces- sary, or more likely, the adjustment or change of competencies within the organization.
Proposition 2
Positioning that attempts to match the capabilities and competencies of an organization, rather than a cosmetic approach or manipulation of the mind, is strategic rather than tactical or operational
There is little to be gained from choosing strategies that are ill fitted to the capabilities of the firm (Hill, 1997) and the positioning decision cannot be taken in isolation from the distinctive competencies of the business because it represents the firm’s decision of how and where to gain competitive advantage (Czepiel, 1992). The choice of market and position is likely to be influenced by the capability of the business perhaps as much as the needs of the customer. A link exists between company resources, culture and the relatedness of strategy (Collis and Montgomery, 1998; Homburg, Workman and Krohmer, 1999). Stra- tegic thinking and planning is influenced by the psyche of the organiza- tion (Mintzberg, 1994; Porter, 1996; Heracleous, 1998) and unique history (Ansoff, 1984; Porter, 1996; Homburg, Workman and Krohmer, 1999).
Organizational capabilities are not restricted to physical resources, but may be embedded in a company’s routines, processes and culture and exhibited by operational activities (Heskett, 1971; Treacy and Wiersema, 1993; Collis and Montgomery, 1995). A definition in terms of capability may therefore offer a more durable approach than one based upon the needs that the business seeks to satisfy (Grant, 1991).
This suggests that positioning is as much a function of corporate need
as a reflection of market need. If positioning is as much a function of corporate need as a reflection of market need, then all elements of a company’s capabilities and behaviours can affect its position in the market including the choice of where to compete (Day and Wensley, 1988; Brooksbank, 1994). In that case a positioning statement should precede all other decisions and dictate the strategic thinking and decisions of the business. This suggests that positioning is a concept of predominant strategic relevance and its role should be defined in the overall corporate strategy.
The owner of the company had clear personal preferences and these were undoubtedly formed by his experiences. His preference for production, the ‘plain vanilla’ products and associated customers were all familiar. Christoph Posten clearly believed that past success was an indicator for future success. His daughter adopted similar pref- erences based on ‘what we know best’ and her approach reflected her earlier production experience in the company. These preferences reflected the type of competencies and capabilities of the company that drove the positioning decisions and the type of customers that the company would serve. Interestingly, the personal preferences and background history of the former UK Managing Director, as well as the German and Scandinavian, have all reflected positioning in their markets and indeed the choice of target markets. This suggests that a closer examination of the principal actors of the case study would be helpful.