What are the implications for a marketing strategist of this trend towards virtualisa-
tion? Initially it may appear that outsourcing does not have direct relevance to market
orientation. However, an example shows the relevance. Michael Dell relates (in
Magretta, 1998) that Dell does not see outsourcing as getting rid of a process that does
not add value, rather it sees it as a way of ‘coordinating their activity to create the most
value for customers’. Dell has improved customer service by changing the way it works
with both its suppliers and its distributors to build a computer to the customer’s specific
order within just six days. This vertical integrationhas been achieved by creating a con-
tractual vertical marketing system in which members of a channel retain their
independence, but work together by sharing contracts.
So, one aspect of virtualisation is that companies should identify opportunities for
providing new services and products to customers that are looking to outsource their
external processes. The corollary of this is that it may offer companies opportunities to
outsource some marketing activities that were previously conducted in-house. For exam-
ple, marketing research to assess the impact of a web site can now be conducted in a
virtual environment by an outside company rather than by having employees conduct a
focus group.
Marshall et al. (2001) provide useful examples of different structures for the virtual
organisation. These are:1 Co-alliance model. Effort and risk are shared equally by partners.
2 Star alliance model. Here the effort and risk are centred on one organisation that sub-
contracts other virtual partners as required.
3 Value alliance model. This is a partnership where elements are contributed across a
supply chain for a particular industry. This is effectively the value network of Chapter 2.
4 Market alliance model. This is similar to the value alliance, but is more likely to serve
several different marketplaces.Using the Internet to facilitate such alliances can provide competitive advantage to
organisations operating in business-to-business markets since their core competences
can be complemented by partnerships with third parties. This can potentially help
organisations broaden their range of services or compete for work which on their own,
they may be unable to deliver. Such approaches can also be used to support business-to-
consumer markets. For example, Dell can compete on price and quality in its consumer
markets through its use of a star alliance model where other organisations are responsi-
ble for peripherals such as monitors or printers or distribution.The promotionelement of the marketing mix refers to how marketing communications
are used to inform customers and other stakeholders about an organisation and its prod-
ucts. This topic is discussed in more detail in Chapter 8 – it is only introduced here.
Promotion is the element of the marketing mix that is concerned with communicat-
ing the existence of products or services to a target market. Burnett (1993) defines it as:the marketing function concerned with persuasively communicating to target audiences
the components of the marketing program in order to facilitate exchange.Promotion
Promotion
Promotion variable
The element of the
marketing mix that
involves
communication with
customers and other
stakeholders to inform
them about the product
and the organisation.