Helsinki University of Technology Department of Industrial Engineering and Management

Helsinki University of Technology
Department of Industrial Engineering and Management
Institute of Strategy and International Business
Matti Jaakkola
Strategic Marketing and Its Effect on
Business Performance: Moderating
Effect of Country-specific Factors
Master’s thesis submitted in partial fulfillment of the requirements for the degree of
Master of Science in Industrial Engineering and Management.
Helsinki, 31 October 2006
Supervisor: Markku Maula, Professor, Helsinki University of Technology
Instructor: Petri Parvinen, Docent, Helsinki School of Economics

HELSINKI UNIVERSITY OF TECHNOLOGY ABSTRACT OF THE MASTER´S THESIS
Industrial Engineering and Management
Author: Matti Jaakkola
Subject of the thesis: Strategic Marketing and Its Effect on Business Performance:
Moderating Effect of Country-specific Factors
Number of pages: 112 + 17 Date: 2006-10-31 Library location: TU
Professorship: Strategy and International Business Code of professorship: TU-91
Supervisor: Professor Markku Maula
Instructor: Docent Petri Parvinen, Helsinki School of Economics
The concept of strategic marketing is relatively young and yet unestablished. Also strategic mar-
keting’s effect on business performance is considerably vague in companies. Effects are unclear
since they have not been studied very much, especially in different business environments. This
study attempts to fulfill this evident research gap in effectiveness studies and to identify best prac-
tices in strategic marketing for Finnish companies. This study offers one possible positioning for
strategic marketing relative to some more established concepts.
This study aims to answer the following problem: What kind of strategic marketing most posi-
tively and effectively relates to companies’ financial performance in different business environ-
ments? Three more specific questions – (1) What is the relationship between marketing resources
and business orientations, and financial performance of a firm? (2) How sensitive are the results to
country-specific and business environmental differences? (3) How is marketing effectiveness as-
sessed today and potentially in the future? – form a diverse but coherent research entity.
Data containing marketing and performance data of 5627 companies in 13 countries is used in
empirical part of the study. In addition to the full sample analysis, individual countries were exam-
ined and two comparison studies – “low-cost” vs. “high-cost” countries and “engineering coun-
tries” vs. each other – conducted. Statistical part of the study based largely on hypotheses derived
from literature. Structural equation modeling was the primary statistical method applied.
The full-sample results indicate that effect of inside-out marketing capabilities on financial per-
formance is the strongest, followed by innovation orientation, outside-in marketing capabilities
and market orientation. Majority of the hypotheses were supported and marketing performance
assessment tool for firm use was developed. Finnish companies were found to be among the least
effective in strategic marketing. Differences between countries and groups were identified.
The study achieved its objectives and offers a basis for subsequent quantitative studies within the
StratMark research project. Some avenues for further research were suggested.
Keywords: strategic marketing, performance, marketing re-
sources, business orientations, structural equation modeling Publishing language: English

TEKNILLINEN KORKEAKOULU DIPLOMITYÖN TIIVISTELMÄ
Tuotantotalouden osasto
Tekijä: Matti Jaakkola
Työn nimi: Strateginen markkinointi ja sen vaikuttavuus liiketoiminnan tuloksellisuuteen:
maaspesifien tekijöiden moderoiva vaikutus
Sivumäärä: 112 + 17 Päiväys: 31.10.2006 Työn sijainti: TU
Professuuri: Yritysstrategia ja kansainvälinen liiketoiminta Koodi: TU-91
Työn valvoja: Professori Markku Maula
Työn ohjaaja: Dosentti Petri Parvinen, Helsingin kauppakorkeakoulu
Strategisen markkinoinnin käsite on suhteellisen nuori ja vielä vakiintumaton. Myös sen vaikut-
tavuus liiketoiminnan tuloksellisuuteen on yrityksille huomattavan epäselvä. Vaikutussuhteet
ovat epäselviä, koska niitä ei ole tutkittu kovin paljon, etenkään erilaisissa liiketoimintaympä-
ristöissä. Tämä tutkimus pyrkii vastaamaan tähän tutkimuksellisen tarpeeseen ja tunnistamaan
strategisen markkinoinnin parhaita käytäntöjä suomalaisyrityksille. Diplomityö asemoi strategi-
sen markkinoinnin suhteessa joihinkin vakiintuneempiin käsitteisiin.
Tutkimus pyrkii vastaamaan seuraavaan ongelmaan: Minkälainen strateginen markkinointi liit-
tyy positiivisimmalla ja vaikuttavimmalla tavalla yritysten taloudelliseen tuloksellisuuteen eri-
laisissa liiketoimintaympäristöissä? Kolme spesifimpää kysymystä – (1) Mikä on markkinoin-
nin resurssien ja liiketoiminnan orientaatioiden ja yritysten tuloksellisuuden välinen suhde? (2)
Kuinka herkkiä tulokset ovat maaspesifeille ja liiketoimintaympäristön eroille? (3) Miten mark-
kinoinnin vaikuttavuutta arvioidaan nyt ja tulevaisuudessa? – muodostavat monipuolisen, mut
ta
yhtenäisen tutkimuskokonaisuuden.
Tutkimuksen empiirisessä osassa käytetään 13 maata edustavien 5627 yrityksen markkinointi-
ja tuloksellisuustiedot sisältävää dataa. Koko aineiston analysoinnin lisäksi yksittäisiä maita
tutkittiin ja kaksi ryhmävertailua – ”halpatuotantomaat” vs. ”korkeiden tuotantokustannusten
maat” ja ”insinöörimaat” – suoritettiin. Tilastollinen osa pohjautui suurelta osin kirjallisuudes-
ta johdettuihin hypoteeseihin. Rakenneyhtälömallinnus oli pääasiallisesti käytetty menetelmä.
Koko aineistoa koskevat tulokset viittaavat siihen, että sisäiset markkinointikyvykkyydet vai-
kuttavat taloudelliseen tulokseen voimakkaimmin. Seuraavana tulevat innovaatio-orientaatio,
ulkoiset markkinointikyvykkyydet ja markkinaorientaatio. Suurin osa hypoteeseista hyväksyt-
tiin ja markkinoinnin tuloksellisuuden arviointiin kehitettiin yritystyökalu. Suomalaiset yrityk-
set jäivät tulosten mukaan heikoimpien joukkoon strategisen markkinoinnin vaikuttavuudessa
mitattuna. Yrityksen kotimaan ja ryhmien välillä havaittiin eroja.
Työ saavutti sille asetetut tavoitteet ja tarjoaa lähtökohdan tuleville kvantitatiivisille tutkimuk-
sille StratMark-projektissa. Muutamia jatkotutkimuskohteita ehdotettiin.
Avainsanat: strateginen markkinointi, tuloksellisuus, markkinointi-
resurssit, liiketoiminnan orientaatiot, rakenneyhtälömallinnus Julkaisukieli: englanti

i
Acknowledgements
First of all, I want to thank Professor Kristian Möller, Professor Henrikki Tikkanen and
Docent Petri Parvinen at Helsinki School Economics (HSE) for giving me this great op-
portunity to work in an extremely interesting research project with potentially large im-
pact on Finnish business. I would also like to thank them for all the support during the
thesis writing. Working as a part of the StratMark project group has been very instruc-
tive which can surely be identified from publications yet to come. This thesis could not
have been conducted as such without enormous contribution of country representatives
in the MC21–project and its directors, Professors Graham Hooley of Aston University
and Gordon Greenley of Aston Business School.
People at the Department of Marketing and Management at HSE and the StratMark pro-
ject have indeed contributed to this study by sharing their brilliant ideas and academic
experience with me. In addition to those already mentioned, I am indebted to Matti Tuo-
minen, Arto Rajala and Sami Kajalo for always being there to help me in questions re-
lated to statistical analysis part of the study, and project coordinator Antti Vassinen for
valuable practical hints along the way. Additionally, special thanks to Erik Pöntiskoski
and Matti Santala for such an encouraging and unaffected atmosphere at our office.
I also want to greatly thank the Department of Industrial Engineering and Management
(DIEM) at Helsinki University of Technology. The supervisor of this thesis, Professor
Markku Maula, can well be considered as an embodiment of the wonderfully challeng-
ing and professional but, at the same time, flexible and relaxed atmosphere at the de-
partment. It was pleasant to work with such a brilliantly-minded and cooperative person.
Same applies to students at DIEM; especially a few of them preparing their theses con-
currently with me and thus forming my peer group are well worth special thanks.
Last, but with certainty not least importantly, I am grateful to my parents, sister and two
brothers and closest friends for always giving enormous support in everything that I
have ever done.
Helsinki, 31 October 2006
Matti Jaakkola

ii
Table of Contents
1. INTRODUCTION____________________________________________________________1
1.1. BACKGROUND ___________________________________________________________1
1.2. THE STRATMARK PROJECT __________________________________________________4
1.3. RESEARCH PROBLEM ______________________________________________________4
1.4. OBJECTIVES OF THE STUDY __________________________________________________6
1.5. METHODOLOGY __________________________________________________________7
1.6. SCOPE OF THE STUDY ______________________________________________________9
1.7. KEY CONCEPTS __________________________________________________________9
1.8. STRUCTURE OF THE THESIS _________________________________________________13
2. LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT____________________14
2.1. STRATEGIC MARKETING ___________________________________________________14
2.1.1. Market Orientation ____________________________________________________14
2.1.2. Marketing Assets and Capabilities _________________________________________18
2.1.3. Innovation Orientation _________________________________________________21
2.1.4. Positioning Strategic Marketing___________________________________________22
2.2. GAINING AND SUSTAINING COMPETITIVE ADVANTAGES ___________________________25
2.3. PERFORMANCE MEASUREMENT______________________________________________28
2.3.1. Measuring Business Performance _________________________________________28
2.3.2. Measuring Marketing Performance ________________________________________31
2.3.3. Contribution of Performance Studies _______________________________________35
2.4. CONCEPTUAL AND THEORETICAL DEVELOPMENT ________________________________36
2.4.1. Performance Impact of Strategic Marketing__________________________________36
2.4.2. Performance Impact in Different Business Environments ________________________37
2.4.3. Frame of Reference of the Study___________________________________________39
2.5. HYPOTHESES DEVELOPMENT _______________________________________________41
3. RESEARCH METHODS _____________________________________________________46
3.1. RESEARCH DATA ________________________________________________________46
3.1.1. Full Sample__________________________________________________________46
3.1.2. Sub-samples _________________________________________________________47
3.2. CONSTRUCTION AND OPERATIONALIZATION OF VARIABLES_________________________49
3.2.1. Endogenous Variables__________________________________________________49
3.2.2. Exogenous Variables___________________________________________________50
3.3. STATISTICAL ANALYSIS METHODS ___________________________________________53
3.3.1. Descriptive Analysis ___________________________________________________54
3.3.2. Factor Analyses_______________________________________________________56
3.3.3. Structural Equation Modeling ____________________________________________59
3.3.4. Statistical Tests _______________________________________________________63
4. RESULTS _________________________________________________________________66
4.1. FULL-SAMPLE ANALYSIS___________________________________________________66