International Journal of Commerce and Management Research

International Journal of Commerce and Management Research

ISSN: 2455-1627, Impact Factor: RJIF 5.22
www.managejournal.com
Volume 3; Issue 6; June 2017; Page No. 150-154

The relationship between strategic marketing and competitive advantage: In the case of brewery
firms in Ethiopia
1
Yitbarek Seyoum Kebede, 2 D Lalitha Rani
1
Research Scholar, Department of Commerce and Management Studies, Andhra University, Visakhapatnam, Andhra Pradesh, India.
2
Professor, Department of Commerce and Management Studies, Andhra University, Visakhapatnam, Andhra Pradesh, India.

Abstract
This study is an attempt to identify and investigate the relationship between various strategic marketing subjects like (market
orientation, innovation orientation and marketing capabilities) and competitive advantage. Further, the research raised the question,
what are the significances of strategic marketing efforts to firm’s competitive advantage?, Marketing managers, Supervisors, sales
managers and distribution managers of brewery firms were the main target respondents of the study, a total of 165 questionnaires
were distributed in person and through mail to respondents found in 11 different breweries in Ethiopia and 106 fully completed
questionnaires were received back. Pearson’s product moment correlation coefficient and multiple regression analysis were
employed. The results indicate the existence of significant relationship between competitive advantage and strategic marketing in
the study area.

Keywords: strategic marketing, market orientation, innovation orientation, inside – out capability, outside – in capability,
competitive advantage

1. Introduction  Market orientation and competitive advantage

The resource based view entails that in order to have a  Innovation orientation and competitive advantage
competitive edge over competitors, a firm should have  Inside-out capabilities and competitive advantage
resources and capabilities which are not owned by others,  Outside-in capabilities and competitive advantage
therefore, marketing assets and capabilities are meant to have
a great role in determining a firm’s competitiveness and 1. 2. Literature Review
performance. 2.1 Strategic Marketing
In today’s competitive business environment, it is a must to Jain (2000) said “Strategic marketing means looking at the
identify and define one’s own source of competitive advantage whole of a company’s portfolio of products and markets, and
so as to stay alive. Strategic marketing efforts like market managing the portfolio to achieve the company’s overall
orientation, innovation orientation and marketing capabilities goals”. According to Osuagwu (2004) Strategic marketing was
has been presented as a potential sources of competitive viewed as a disciplined effort to produce basic decisions and
advantage by different authors. actions that shape and guide what an organization is, what it
The literature suggests that the goal of any strategic marketing does, and why it does it, with a focus on the future. It is said to
effort should focus on bringing long term success and be something that gives a direction to what a firm has intended
profitability to a business. Long term success in a business to do and in which way the firm want to achieve its goals.
requires building a sustainable competitive advantage. Finding Market orientation entails building a competitive advantage
and nurturing a competitive advantage can mean increased through a customer-focused venture in which the customer is
profit and a venture that is sustainable and successful over the taken as a center of attention and a focal point. Slater & Narver,
long term (Cole E, 2008). 1998, argue that market-oriented firms look out to understand
Ethiopia has become the ground of fierce competition among customers’ expressed and latent needs, and build up greater
local and multinational beverage companies running for a solutions to those needs.
superior share of an expanding market. The companies’ Innovative thinking has become a must for success in today's
survival and performance in this intense competition requires global environment. Innovation orientation has been defined
gaining and sustaining a competitive advantage through proper by Siguaw et al. (2006) cited in Adrian and Cornel, as “A
implementation of strategic marketing. multidimensional structure composed of knowledge learning
Hence, it will be helpful to study and identify the various philosophy, strategic directions and trans– functional beliefs of
strategic marketing subjects like market orientation, innovation a company that guides and directs all actions and
orientation and marketing capabilities, and determine the cause organizational strategies”. Innovation can be manifest in
and effect relationship among those strategic marketing product modifications, new marketing and distribution
variables, competitive advantage. strategies, process changes, and new conceptions of scope
The main aim of this study is to investigating the relationship (Porter 1990). All types of innovations can lead to sustained
between strategic marketing and competitive advantage and competitive advantage
more specifically, the relationship between: The capability-based theory suggests that a firm can achieve
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competitive advantage through distinctive capabilities that companies acting in a market-oriented method construct
possessed by the firm and that the firm must constantly re- an advantage with high barriers for competitors to match.
invest to maintain and expand existing capabilities in order to Literature indicates the relationship between innovation
inhibit imitability. Marketing capability of a firm is reflected orientation and competitive advantage as positive. It is
in its ability to differentiate products and services from suggested that the basic logic of the RBV starts with the theory
competitors and build successful brands and firms with strong that a company has a unique resources or distinctive
brand names can charge premium prices in foreign markets to competencies and it has to create a sustainable competitive
enhance their profitability (Weerawardena, 2003). advantage by lowering prices, cutting costs and providing
better services based on these distinctive competencies.
2.2 Competitive Advantage Similarly Jakkoola stated “Competitive advantages can be
It is noted that several studies investigating firm performance achieved by possessing and effectively using certain
have drawn interest to the need for understanding the sources resources”. Barney (1991) [3] stated that resources have to be
of sustainable competitive advantage and the main challenge valuable, rare, imperfectly imitable and substitutable to lead to
of organizations in today’s dynamic business environment is to such a position at marketplace. Therefore, it can be
gaining and sustaining it. Such need is fundamental to most hypothesized that good outside-in and inside-out capabilities
firms’ mission, and has become a major area of research in the are likely to lead to a position of competitive advantage.
field of marketing and strategic management. Competitive Based on the results and findings of various previous
advantage has been defined by various authors; some of the researches the following hypothesis could be developed:
definitions are presented and discussed below.
Competitive advantage is said to be the extent to which an
organization is able to create a defensible position over its 3. Methodology
competitors or a competitive advantage is a competitive edge Marketing managers, Supervisors, sales managers and
that cannot be quickly or easily imitated by competitors. distribution managers of the firms were the main target
Besanko et al. (2000), in their study stated that “When a firm respondents of the study. A total of 165 questionnaires were
earns higher rate of economic profit than the average rate of administered to respondents found in 11 different breweries in
economic profit of other firms competing within the same the country. While 75 questionnaires were distributed
market, the firm has a competitive advantage in that market” physically, the rest 90 were mailed to the respondents due to
Barney (1991) said that “a firm is said to have a competitive the scattered geographical location of the factories and
advantage when it is implementing a value-crating strategy not respondents. 106 fully completed questionnaires were received
simultaneously being implemented by any current or potential back and 64.2% of response rate was achieved. Therefore, the
competitor” analysis was made on those 106 completed questionnaires.
The questionnaire regarding strategic marketing components
2.3 Strategic Marketing and Competitive Advantage were composed of (38) questions which are designed to
The literatures in marketing strategy reveal the relationship establish information about strategic marketing issues based on
between strategy and competitive advantage as mutual. In one the constructs used by many authors on the study area. The
hand it is said that competitive advantage is a foundation for constructs contains: market orientation (14), innovation
formulating strategy, on the other hand, strategy is formulated orientation (4), inside-out capabilities (10) and outside-in
to create and sustain competitive advantage. Market capabilities (10). Competitive advantage was measured with
orientation, can be understood as raw materials of competitive (18) constructs.
advantage according to Fahy and Smithee, (1999) resources
which are enabling value creation to be considered as a 4. Results
potential sources of competitive advantage. Others also argue

Table 1: Correlation between strategic marketing and competitive advantage

Competitive Advantage
Market Orientation Pearson Correlation .382**
Sig. (2-tailed) .000
Innovation Orientation Pearson Correlation .557**
Sig. (2-tailed) .000
Inside Out Capabilities Pearson Correlation .452**
Sig. (2-tailed) .000
Outside In Capabilities Pearson Correlation .571**
Sig. (2-tailed) .000
Overall Strategic Marketing Pearson Correlation .587**
Sig. (2-tailed) .000
**. Correlation is significant at the 0.01 level (2-tailed).
Source: developed for this research, 2017

As indicated on table 4.1, a medium (moderate) positive and inside- out capabilities ()r=0.452, p<0.01) which is
relationship was found between three strategic marketing statistically significant at 99% confidence level. In addition,
factors and competitive advantage i.e. Outside- in capabilities the above table shows that there is a low, positive and
(r=0.571, p<0.01), Innovation orientation (r=0.557, p<0.01) statistically significant relationship between market orientation
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and competitive advantage (r= 0.382, p<0.01). variables or explanatory variables in order to test the following
The results on table 4.1 above shows that there is still a positive hypothesis.
and statistically significant medium or moderate relationship
between overall strategic marketing and competitive advantage Hypothesis 1
of the sample firms (r = 0.587, P< 0.01) statistically significant Ho: Strategic Marketing Will Not Significantly Explain the
at 99% level of confidence Variance in Competitive Advantage
Therefore, it can be concluded there is significant relationship Ha: Strategic Marketing Will Significantly Explain the
between components of strategic marketing (Market Variance in Competitive Advantage
orientation, Innovation orientation, Inside-out capabilities, and H1a: Market orientation will significantly explain the variance
Outside-in capabilities) and competitive advantage. in competitive advantage
H1b: Innovation orientation will significantly explain the
Multiple Regressions variance in and competitive advantage
In order to find out the best and poor predictors of the H1c: Inside-out capability will significantly explain the
dependent variable i.e. competitive advantage, multiple variance in competitive advantage
regression analysis was performed. H1d: Outside-in capabilities will significantly explain the
This analysis was performed by taking competitive advantage variance in competitive advantage
as a dependent variable and the factors of strategic marketing
(market orientation, innovation orientation, inside- out Regress competitive advantage on the selected strategic
capabilities and outside-in capabilities) as an independent marketing factors (Market orientation, Innovation orientation,
inside-out capabilities, and outside-in capabilities
Table 2: Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .593a .352 .326 .48864
a. Predictors: (Constant), Outside In Capabilities, Market Orientation, Inside Out
Capabilities, and Innovation Orientation

Table 3: ANOVAb
Model 1 Sum of Squares Df Mean Square F Sig.
Regression 13.089 4 3.272 13.704 .000a
Residual 24.116 101 .239
Total 37.205 105
a. Predictors: (Constant), Outside In Capabilities, Market Orientation, Inside Out Capabilities,
Innovation Orientation
b. Dependent Variable: Competitive Advantage

Table 4: Coefficients association between the independent variables (components of

Unstandardized Standardized
strategic marketing) and the dependent variable (competitive
Coefficients Coefficient advantage) are explained in the form of the following equation.
Std. Predicted competitive advantage score = .610+ (.141 market
Model 1 B Beta t Sig. orientation) + .044 (innovation orientation) + .107 (inside- out
Error
Constant .610 .369 1.652 .102 capability) + (.261 outside – in capability) as shown in Table
Market 4.2c.
.141 .095 .149 1.485 .141
Orientation The equation further indicates that:
Innovation
.044 .148 .074 .296 .768  .610 is the intercept term – it can be interpreted as the
Orientation average value of the company’s competitive advantage
Inside Out when the stated independent variables (components of
.107 .109 .151 .982 .328
Cap strategic marketing: market orientation, innovation
Outside In
.261 .156 .325 1.669 .098 orientation, inside- out capability and outside – in
Cap
a. Dependent Variable: Competitive Advantage
capability) are set equal to zero.
 .141 units is an estimate of the expected increase in the
The coefficient of multiple correlations which is the degree of company’s competitive advantage corresponding to an
association between competitive advantage and strategic increase of one unit in market orientation when all other
marketing factors, as indicated by R in Table 4.2a above, is independent variables are held constant.
0.593.  .044 units is an estimate of the expected increase in the
Given the R Square value of 0.352 and adjusted R square of company’s competitive advantage corresponding to an
.326, the model summary revealed that the proportion of the increase of one unit in innovation orientation when all
variation in competitive advantage explained by the four other independent variables are held constant.
predictors jointly is 35.2%. The remaining 64.8 % of the  .107 units is an estimate of the expected increase in the
variance is explained by other variables not included on this company’s competitive advantage corresponding to an
study. increase of one unit in inside – out capability when all
The unstandardized regression coefficients of the bivariate other independent variables are held constant.

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