Competitive marketing strategy in a volatile environment: theory, practice and research priorities

Abstract

The competitive strategy literature seems to offer two principal approaches to the problems of developing strategy in volatile environments. In this paper, these approaches are labelled as the formal and informal approaches. More recent research into managerial cognition provides promising possibilities for integrating formal and informal approaches to understanding strategy development in volatile conditions. Exploratory research by the author has shown that, in practice and in contrast to much of the strategic marketing literature, the response of organizations in volatile environments depends fundamentally on how the managers involved perceive their environment, that managerial perception can vary considerably between (and even within) rival organizations facing ostensibly similar environments, that the effectiveness of an organization's strategy can depend crucially on these managerial perceptions or paradigms and that it may be more realistic to regard competitive strategy as an organization's response to the perception of competitive 'threat', rather than the more popular emphasis on 'opportunity'. The research also suggests that organizations seem to respond initially to the perception of competitive threat by reinforcing previous behaviour patterns before later and often reluctantly adopting more innovative reforms- implying a cyclical pattern of paradigm adjustment. Implications for further research and for management practice are discussed.