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Linking strategy formulation in marketing and operations: empirical research.


The scope of this special issue embraces two of the important facets of research within manufacturing strategy--subject matter and methodology. The early recognition by Skinner(1) of the significant and critical contribution of manufacturing in strategic corporate debate was followed by a number of years in which the contributions, though high in quality, were low in number. During the last few years, however, the area of manufacturing strategy has attracted increasing attention in both the business and academic communities. This has been stimulated in part by need and also in part by a better understanding of how and what to do. The opportunity, therefore, to add to this gathering pace of activity through a special edition seemed both opportune and timely.

This special issue was designed to highlight this growing need and display the scope of some of the current work in the field of manufacturing strategy, while also underscoring the interdisciplinary and empirical characteristics essential to this applied field.

It was anticipated that the special issue would provide an invaluable forum for related research. In this way, it would not only contribute to the knowledge base, but also update the boundaries of the field, encourage a higher level of cross-fertilization between the functional areas within a firm and help fill the gap between empirical research and the conceptual developments necessary to reinforce its legitimacy and usefulness.

The special issue was expected to contribute to two important areas. First, it would identify applied research methods involving small samples, surveys, in-plant studies, and the use of secondary data both in the firm and industries. Second, it would fill in the gap between theorems and cases; thereby supporting this as a legitimate research area, increasing the cross-fertilization of research between the functional areas, and providing a forum for discussion in manufacturing that already exists in services.


In the call for papers the following key perspectives were highlighted.


There is very little emphasis in operations strategy on "how to acquire and apply market information and coordinate marketing and operations strategies." The special issue was to help shift the orientation in operations from internal to external perspectives and to test the notion "that improved competitive performance can be obtained by incorporating market analysis and marketing strategy considerations in the formulation of operations strategy."


Our purpose was to improve overall business performance by:

* Improving operations strategy formulation by considering market characteristics and marketing strategy formulation.

* Stimulating research on the links between operations and marketing in operations strategy formulation.

* Encouraging joint research in marketing and operations.

* Demonstrating the use of empirical research methods in the conduct of field research activity.


We believed that the typical papers would concern the following topics:

* Empirical analyses of market and operations strategy.

* In-depth analyses of strategy formulation in one or more firms.

* Application of conceptual frameworks and empirical analyses in actual business as part of their operations strategy formulation.

Given this orientation of the special issue, the Co-Editors expected that the papers submitted would have the following features:

* Content--an equal balance between market and operations-related perspectives and analyses.

* Operations related--business perspectives and analyses.

* Methodology--empirical methodologies involving research undertaken within one or more companies.

* Applied research--papers would reflect outputs from research which was applied in nature.


An analysis of the content of the papers actually received from the call for papers is presented in Tables 1 through 5. Although the majority of the papers were concerned with manufacturing, as Table 1 shows, 24% were directed, at least in part, toward service operations issues. A further analysis of their content revealed that the papers lacked balance between marketing and operations. Surprisingly, even though the papers were received through an operations management journal, the papers were much stronger on market analysis while the operations aspects were much more descriptive. The estimated balance between marketing and operations analysis is shown in Table 2.

The data shown in Table 3 provides an analysis of the nature of the linkage between marketing and operations that was observed in the papers received. Relatively few papers (24%) focused on the linkage at a strategic level which was the principal orientation called for in the Special Edition. On the other hand, a significant proportion of the papers (35%) were concerned with the marketing/operations linkage at an operational level. Operational linkages between marketing and operations are clearly a vital interface in companies, and this result emphasizes the fact that the operational linkage between marketing and operations needs to continue to be an important area for further research.

Table 4 concerns the principal methodology used in the papers. Most of the data analyzed in the papers resulted from survey research or secondary data (54%). Furthermore, Tables 4 and 5 indicate that substantially less data was gathered as a result of plant interviews or as a result of plant/business analysis performed by the authors (34%). A further review of the content of the papers indicated that where company-based data was used, it did not seem to be related to actual management decision-making nor based on the results of analysis.


Table 6 has been constructed to illustrate the principal issues addressed by the papers selected for the special issue, the predominant research methodology applied and the unit of analysis. The issues concern marketing decisions such as market definition, segmentation, and selection, as well as operations issues such as factory focus and process choice. However, the dominant issue in most papers is the linkage between strategic marketing and manufacturing/operations decisions.

Key Issues

These papers demonstrate that the interdependence of the marketing and operations functions is real in businesses. The Deane, McDougall and Gargeya paper, for example, hypothesizes that "the synergy between manufacturing and marketing strategy decisions should more closely relate to firm success than either manufacturing or marketing strategy decisions alone." In a survey of 93 new venture firms, their regression results indicate that variables reflecting the interdependency of manufacturing and marketing strategy are the best predictor of firm success. These results provide important support for further work on the analysis of joint decision making by marketing and operations, and its effect on company performance.

The papers indicate that cooperation between marketing and operations is enlightening and exciting. For example, Roth and van der Velde present a new conceptual framework called the Customer/Account Base Matrix that provides an empirical way to evaluate operations' role in building competitive advantage. It relates marketing positioning decisions and entry barriers to the deployment of different operations strategy choices for service delivery system design. In this way the strategic role of operations can be mapped into different stages of capability development using value-added and critical success factor concepts. Therefore, the paper provides a specific agenda for joint decision making in formulating marketing and operations strategy that should stimulate further research on the marketing/operations interface.

The papers suggest that many new and interesting approaches can be tried in the joint development of marketing and operations strategy. For example, the Berry, Bozarth, Hill and Klompmaker paper provides an approach to market segmentation that differs from the approach traditionally taken by marketing. Here customer requirements and buyer behavior are expressed in terms of manufacturing capabilities, and cluster analysis is used to determine market segments requiring different operations capabilities, using data gathered through plant-based business analyses. These segments are then used to define organizational units in manufacturing having highly focused manufacturing tasks. In this way, market analysis is used to define strategic investments in manufacturing units to provide superior support for marketing efforts. This work points the way to further research linking market analysis to the development of operations strategy.

There are important linkages between design, marketing and manufacturing. Fitzsimmons, Kouvelis and Mallick emphasize the fact that the design process is one of the key joint efforts that must work if the needs of the customer are to be met. Designers may think themselves independent operators, while both marketing and operations consider design as part of their individual territories as well. Here customer requirements are represented in terms of design order winning criteria, and a number of techniques are outlined that can be used to integrate the design, marketing, and manufacturing functions. Both art and science are represented in the design process and both must be respected, if the end result is to be competitive in both function, taste and costs. One might lump design into "infrastructure" and move on, but all the functions must be aware of its present-day importance.

Principle Conclusions

The work reported by these papers indicates four main conclusions regarding the linkage between marketing and operations in strategy formulation.

First, market analysis is viewed as an important prerequisite for strategy formulation in marketing and operations. Roth and van der Velde conclude that no algorithm exists that will enable a manager to develop an optimal delivery system in services. However, the assessment of critical business success factors is essential in determining the role to be played by operations. This step enables managers to better understand their markets, to organize their strategic planning so that operations and marketing efforts can be linked, and to develop superior delivery system designs.

The market segmentation analysis by Berry et al. provides an operational way of characterizing differences in the operations task required by different market segments, enabling operations managers to debate the effectiveness of different strategic options. Gaining this level of insight is an important prerequisite to the implementation of the focused factory approach. Likewise, the work by Lindsley, Blackburn and Elrod illustrates how market analysis can reveal important customer requirements in different segments (such as delivery speed and product variety on the part of independent retailers in the book industry) that can be exploited by firms that have developed these operations capabilities.

Second, a variety of functional perspectives (in addition to those of marketing and operations) is critical in strategic debate. Deane, McDougall, and Gargeya conclude that consistency among manufacturing decisions alone (or marketing decisions alone) may be insufficient to predict corporate success. A more complete model for predicting firm success should incorporate other strategic, interdependent relationships with manufacturing and marketing decisions, e.g.--the firm's human resource, financial, or research and development strategies.

Haynes and Thies argue that without marketing, operations, and behavioral inputs, the strategic implementation of new technology can lead to the failure to achieve desired results. It is important to identify common purpose in the organization, to focus the functional area resources toward a singular goal, and to match strategic goals and tactical capabilities to known market demand and customer needs.

Third, the concept of manufacturing focus needs to be carefully defined in the development of manufacturing strategy. Dean, McDougall and Gargeya conclude that when the concept of manufacturing focus is too narrowly defined, (i.e. simply in terms of product range), research fails to support the "conventional wisdom" that a business must strive for a narrow manufacturing and marketing focus if it is to be successful. Instead, manufacturing focus needs to be defined in terms of a limited but consistent set of objectives. Such an objective may well include a focus on providing high product variety.

Finally, methodologies that have not been traditionally applied in operations can provide new insights into the formulation of operations and marketing strategy. Lindsley, Blackburn and Elrod show that conjoint analysis confirms specific trade-offs that retailers in the book industry are willing to make for increased product variety and reduced delivery times. Such information is useful in developing appropriate pricing for changing customer services, or in determining the likely effects of competitive actions and better cost-benefit analysis of strategic decisions.

The results reported by Berry et al. demonstrate the feasibility of using market segmentation techniques to characterize the market served by a company in terms of the requirements placed on operations. Such analysis enables the consideration of a large number of conceptually different operations variables, and can provide information on a regular basis indicating focus regression in operating units.


There are a number of important issues in manufacturing strategy which were not covered by the papers in the special issue. Quality management is a critical strategic issue in many companies, and has not been treated here. Judging by the recent plea for research in this area that was issued by CEO's of six major manufacturing firms in the November-December 1991 issue of the Harvard Business Review,(2) as well as in our own discussions with companies, substantial research remains to be accomplished in the treatment of quality as a strategic factor in the development of marketing and manufacturing strategy.

Although several of the papers addressed the strategic issues of process choice, technology, and factory focus, none of the work concerned strategic infrastructure issues in operations. For example, while substantial research has been reported elsewhere on technical issues concerning manufacturing planning and control, strategic issues regarding the design of systems to support market requirements are not addressed here. Further, while important work has been reported elsewhere on performance measurement, strategic issues such as the fit between the performance review system and the manufacturing task were not addressed here.

Roth and van der Velde suggest that further work address the fit between the operations choices, critical success factors, and business performance. Such research would enable operations managers to clearly link particular market requirements, expressed for example as order winning criteria or critical success factors, with specific investments in processes or infrastructure. This problem is not unlike the problem faced by a marketing manager in determining the relevance of different advertising media options to customer buying behavior in a particular market segment. While the problem of choosing process and infrastructure options that best support a market segment is a basic one in formulating manufacturing strategy, very little attention has been devoted to it.


While a number of researchable issues have not been stressed in the special issue papers, neither have the papers addressed the potential impact of manufacturing strategy research on operations managers or the teaching of operations management. Issues such as "How does an understanding of the linkages to markets influence the operations manager?" have not been addressed. What impact would the existence of such information have on the operations manager's role in the organization, his working relationships with other managers, and the organization of factories?

Likewise, what impact would the need for a better understanding of the linkages to markets have on the design of educational programs for executives, MBAs, undergraduate and graduate students, if any? If such information has relevance, to what extent would this influence the need for cross-functional teaching and course development activities? While the papers here have addressed interesting issues concerning the need for different perspectives in the formulation of marketing and manufacturing strategy, such research has not been placed in the context of professional development for managers.


An analysis of all the papers submitted for the special issue indicates another area that is relatively unexplored in manufacturing strategy research. Much of the research on manufacturing strategy is based on questionnaire or secondary data. The use of this type of data places the researcher at quite a distance from the actual plant/business environment in which manufacturing strategy decisions are made. The problem is that greater emphasis needs to be placed on using the factory and the firm as the unit of analysis, and on collecting data based on an actual business review of a plant. The operating data typically considered in such a review includes sales invoice information that is representative of the market segments served, actual production records from the shop floor, product cost information, product/process quality results and lead time information.

The use of plant data enables the opinions and judgments of managers gathered in the interviews and surveys to be checked against actual operating results. In-depth case analysis also offers one approach for the collection of such data. While case development is normally considered as a teaching activity, the development of cases as a research tool is an approach that has not been widely used in manufacturing strategy research. The development of this type of research methodology may well provide the vehicle that will enable the development of high quality data bases against which concepts and theories on manufacturing strategy can be tested.


This special issue clearly breaks new ground. The papers indicate the importance of linking the strategic planning efforts of marketing and operations in both manufacturing and the service industries. They demonstrate how market analysis can provide valuable inputs into strategic decisions in operations, and provide illustrations of such work. Further, new concepts are proposed for further testing, old concepts are refined, and new methodological approaches are suggested for use in strategic decisions in operations.

However, the papers in the special issue also highlight the fact that research linking strategic planning in marketing and operations is still at a very early stage. For example, there is little in common in the literature cited in the papers. An analysis of the 160 references shows that only fourteen sets of authors are cited in two papers and four in three papers--Hayes and Wheelwright, Hill, Porter, and Skinner. Thus, the literature used is highly varied and eclectic. While not a major problem, it does show the early nature of the research in this area.

Another issue is that the factory is still weakly addressed in this field. Much of the previous literature in manufacturing strategy has noted the lack of field research. The fact that this remains an issue is of concern. Is it a question of revealed preference of today's researchers, perceived barriers to access, or are there real barriers? In our opinion there is a critical need to test the growing body of research based on methodologies that can be undertaken at a distance against actual events and outcomes in plants, and also to develop sound data bases that can be utilized by researchers.

There is clearly a need to identify more numerous viable alternatives for doing research which is truly applied, more effective research methods, more theories to test, more experience with managers applying current theories, and more analytical approaches. If we were to have another special issue in five years, we would hope to see a more coherent body of literature, more balanced cooperation across disciplines, more in-plant research, and a greater stress on the inherent applied nature of this field. So, let's pick up the challenge.


1 Skinner, Wickham, Manufacturing in the Corporate Strategy. New York: John Wiley and Sons, 1978.

2 "An Open Letter: TQM on Campus," Harvard Business Review, November-December 1991, 94-95.
Sector Number % Total
Manufacturing 22 76
Service 5 17
Both 2 7
Total: 29 100
 Number % Total Split
 1 4 80 / 20
 3 10 70 / 30
 3 10 60 / 40
 5 17 50 / 50
 2 7 40 / 60
 1 4 30 / 70
 2 7 20 / 70
 12 41 Unclassifiable
Total: 29 100
 Number % Total
Links at strategy level
* Based on empirical work 6 21
* Theoretical exposure 1 3
Links at operational level 10 35
Superficial/little attempt to make links 12 41
Total: 29 100
 Number % Total
Theory paper using no data analysis 1 3
Analysis of derived/made-up data 3 9
Data analyzed provided by global
questionnaire 8 25
Data analyzed provided by interviews
conducted at two or more plants 2 6
Source of data used was drawn
from existing case studies or
other types of non-author sources 9 29
Data analyzed was the result of
plant/business analysis by the authors
* One plant 7 22
* Two or more plants 2 6
 Total: 32(*) 100
* Number exceeds the total papers received due to instances of
 % Total
Analysis based on authors' investigations
* Plant review 28
* Interviews 6
 = 34
Analysis of data from a distance
* Questionnaire based 25
* Existing data (e.g., case studies) 29
* Fictitious 9
* No data used 3
 = 66
Total: 100

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Title Annotation:Special Issue on Linking Strategy and Formulation in Marketing and Operations: Empirical Research
Author:Berry, William L.; Hill, Terry; Klompmaker, Jay E.; McLaughlin, Curtis P.
Publication:Journal of Operations Management
Date:Jul 1, 1991
Previous Article:On apportioning costs to customers in centralized continuous review inventory systems.
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