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Cooperativismo y Desarrollo

versión On-line ISSN 2310-340X

Coodes vol.11 no.3 Pinar del Río sept.-dic. 2023  Epub 30-Dic-2023

 

Original article

Design of the functional marketing strategy in meat industry enterprises

0009-0009-3988-3115Yadaris Guerra Delgado1  *  , 0000-0002-2184-2034Diana de la Nuez Hernández2  , 0000-0002-2476-0026Luis Gustavo Marín Cuba2 

1 Empresa Cárnica Pinar del Río. Pinar del Río. Cuba.

2 Universidad de Pinar del Río "Hermanos Saíz Montes de Oca". Facultad de Ciencias Económicas. Centro de Estudios de Dirección, Desarrollo Local, Turismo y Cooperativismo. Pinar del Río, Cuba.

Abstract

The current marketing management process in the Pinar del Río Meat Enterprise, in charge of both production and marketing of fresh and processed beef and pork products, integrated to the Food Industry Business Group and, in turn, attached to the Ministry of Food Industry, is carried out on an empirical basis, which affects the decision-making process in the medium and long term and business performance with efficiency, effectiveness and efficacy, which is the research problem addressed in this article. To facilitate its solution, the objective was defined as: to design a procedure for the design of the functional marketing strategy, which contributes to the strengthening of the decision-making process and to increase the efficiency, effectiveness and efficacy of organizational performance. Among the main methods used are the systemic-structural method, to establish the interrelationships between the organization and its environment, the triangulation method to analyze the assessment links in the customer approach, which serves as the basis for the procedure proposal. In relation to the techniques used, the survey, the interview and the documentary analysis stand out. As for the main results of the research, the adoption of a progressive approach to marketing is achieved and, consequently, an improvement in the levels of customer satisfaction and other indicators based on criteria of efficiency, effectiveness and efficacy of business management in general.

Key words: meat industry enterprises; functional marketing strategy; marketing of meat products

Introduction

An analysis of the Cuban food industry reveals three fundamental problems, although they are not the only ones: production is not sufficient in any of the assortments to ensure the population's demand, the diversity of products in various formats to meet consumer demand is scarce, and food products do not reach the final consumer with the quality he or she demands, not only with the intrinsic quality of the product or its stability, but also that the product reaches the consumer at the moment it is requested, especially for meat products in the standardized family basket. Added to this is the lack of appropriate approaches and tools to develop the marketing of these products in a way that contributes to the fulfillment of organizational objectives.

Commercial management constitutes one of the basic business functions, which is embodied in the strategic marketing plan that, by its nature, can be a good substitute for the enterprise's strategic planning (Kotler & Armstrong, 2012) and, in any case, constitutes a bridging element between strategic planning and short-term plans or the annual operating plan, since it translates corporate objectives into product-market objectives that, in turn, will become short-term turnover objectives (i.e. sales quotas by areas, customers, etc.). Kotler and Armstrong (2012) state that a strategic marketing plan allows defining priorities in the allocation of resources and clarifying the enterprise's strategic thinking.

For Kotler and Armstrong (2012), marketing is the process by which enterprises create value for their customers and establish strong relationships with them to obtain value from them in return.

A detailed analysis of the definitions of these two terms (commercialization and marketing) reveals similarities between them, while the Spanish translation of the word marketing tends to be comercialización or mercadotecnia in many cases, and some authors use both terms interchangeably in the bibliography.

For Kotler and Armstrong (2012), marketing plays a key role in the strategic planning of the firm for several reasons. First, marketing provides a guiding philosophy, which suggests that the enterprise's strategy should revolve around establishing beneficial relationships with important groups of consumers. Second, marketing provides data to strategic planners, helping them to identify attractive market opportunities and assess the enterprise's potential to profit from them.

According to Kotler and Armstrong (2012), "marketing planning is the act of establishing a plan for each business, product or brand within the enterprise... In reality, it will prepare two marketing plans: a long-term plan and an annual plan". The marketing manager will first draw up a long-term plan that outlines the main factors and forces that will influence the market over the next few years, the objectives for the period, the basic strategies that will serve to obtain market share and profits, the capital required and the expected profits.

In the process of formulating organizational strategies, Manguzzato and Renau Piqueras (1991) refer that it is customary to distinguish three levels: global, business area and functional. At the global level, decisions are made related to:

  • The definition of the organization's scope of action.

  • The selection of the businesses that are intended to own (and in which you will compete your entry and exit, expansion, purchase and sale).

  • The allocation of resources among these businesses.

  • Minimum performance standards. Appointment/removal of senior management of Strategic Business Units.

All of the above will be reflected in the definition of its mission and objectives, thus establishing the structural framework within which the strategies of the Strategic Business Units and the Functional Units must be defined, so it is proposed that the organizational strategy is the pattern of decisions of an enterprise, where the basic concepts and beliefs that guide the decisions and behavior of the organization are established (Zea Vallejo & Alonzo Manzano, 2020).

According to Manguzzato and Renau Piqueras (1991), decisions on how to compete in a specific market are made at the level of the strategic business units, giving rise to the business strategy or competitive strategy, developed relatively independently for each of the businesses into which the organization is subdivided, with its own mission and objectives, but aimed at achieving the overall objectives.

At the third level is the functional strategy. At this level, the question lies in how to use and apply the resources and skills within each functional area, of each activity or strategic business unit, in order to maximize the productivity of these resources. An analysis of the literature consulted (Arechavaleta Vázquez, 2019; Dután Loja & Ormaza Andrade, 2022; Gómez Reyes et al., 2022; Izquierdo Morán et al., 2020; Kotler & Armstrong, 2012; Manguzzato & Renau Piqueras, 1991; Peñafiel Nivela et al, 2020; Sánchez Medina & de la Nuez Hernández, 2020) suggests that the third level of strategic planning corresponds to the functional units formed by the operational and support activities, namely: production, distribution, marketing, human resources, research and development, etc., whose strategies specify how these functions should contribute to the achievement of the strategies of the different businesses and, through them, to the achievement of the global strategy.

Thus, merchandising strategies, also known as marketing strategies, consist of structured and fully planned actions that are carried out to achieve certain objectives related to this function, such as making a new product known, increasing sales or achieving a greater market share (Sánchez Medina & de la Nuez Hernández, 2020).

Authors such as Manguzzato and Renau Piqueras (1991), Pacheco Rodríguez et al. (2018) and Izquierdo Morán et al. (2021) agree that the cornerstone of marketing strategy is the product-market binomial. Its fundamental objective is to formulate various options for a business area over a certain time horizon. According to Trout (2004), a product-market strategy contains general objectives and directions, positioning of the product in the market, the tactics and programs necessary for its implementation, "...From the central strategy elaborated, strategies are then defined for each of the components of the marketing mix: product, price, distribution, promotion". The content of the strategies for each of the marketing components or variables is summarized below:

Product decisions

Strategic decisions about the product may refer to expanding the product range, introducing improved, complementary, replacement or new products, deciding on the product life cycle, brand position, etc. Enterprises must decide how many market segments to serve and how to serve them -all of them equally, only some of them individually or perhaps concentrating on a single segment (Ferrell & Hartline, 2012). This decision constitutes the problem known as segmentation strategy. The enterprise can adopt three generic segmentation strategies:

  • Undifferentiated marketing mix: it involves ignoring the differences between the various segments and serving the total market with a single market offering. It focuses on the common part of the buyers, designing a product and marketing program that makes sense for the greatest number of them, relying on mass advertising and distribution. This results in large cost savings, which translates into lower prices and a larger number of price-sensitive customers.

  • Concentrated marketing mix: the enterprise selects a single segment and targets it with a single product and a single marketing strategy. It occurs when the enterprise is guaranteed to succeed in that segment or has limited funds that prevent it from serving other segments. Through concentration, the enterprise achieves a strong position due to its greater knowledge of its customers' needs and the reputation it achieves. Concentration has the disadvantage of focusing all risk on a single segment.

  • Differentiated marketing mix: it involves operating in different market segments, designing specific products and marketing programs for each one. In general, this strategy achieves a higher sales volume than the previous one, but also increases costs (by having a less standardized product).

Pricing decisions

An enterprise's pricing decisions are affected by both internal and external environmental factors. Internal factors include: marketing objectives, marketing mix strategy, costs and other organizational considerations. External factors include: the nature of the market and demand, competitors' costs, prices and supply, and other environmental factors. According to Philip Kotler (2001), enterprises price their products by choosing a pricing technique that emphasizes one of three factors: costs, perceived value and competitors' prices.

Distribution decisions

Distribution, as a marketing tool, is the function that links production with consumption, and involves carrying out a series of information, promotion and product presentation activities at the point of sale in order to encourage the final consumer to purchase the product. The distribution strategy has multiple purposes, since it should make it possible, among others, to ensure effective coordination among all the members of the marketing/distribution network or channel, define the performance standards at all levels of the channel and determine the tasks of each one (Sánchez Medina & de la Nuez Hernández, 2020).

These long-term strategic decisions include the following:

  • Design and selection of the distribution channel (basic way to distribute the product).

  • Location and size of points of sale (number, location, size and characteristics).

  • Distribution logistics or physical distribution (order processing, warehousing, stock management and transportation activities).

  • Management of the internal relations of the distribution channel (establishing and improving cooperative relations, harmony among members and resolving conflicts).

Promotion decisions

As a marketing tool, promotion, also understood as communication, aims to inform about the existence of the product, making known its characteristics, advantages and the needs it satisfies (Kotler & Armstrong, 2012). At the same time, communication should act both on current customers, reminding them of the existence of the product and its advantages, and on potential customers, persuading them to provoke a positive stimulus that leads them to try it. Promotion decisions are essential in the communication variable and are based on the product-market mix to support the overall strategy of the enterprise (Sánchez Medina & de la Nuez Hernández, 2020). Decisions on promotion include the establishment of an adequate sales force, determining its size, forms of action, remuneration systems, etc. Among the main promotional or communication instruments to be used by the enterprise are: advertising, sales promotion, public relations, personal selling or sales force and direct marketing.

The Cuban meat industry works intensively in various aspects: slaughterhouses, cutting plants and, certainly, in the most important and most visible part, that of processed meat or sausages and food safety. The Pinar del Río Meat Enterprise is no exception to this imperative, since it does not have a functional commercialization/marketing strategy and therefore lacks an appropriate approach for fulfilling the organizational mission, while privileging a philosophy based on empiricism that affects the fulfillment of its organizational objectives.

The analysis of the marketing management process allowed formulating the following research problem: the predominant management approach in the Pinar del Río Meat Enterprise is carried out on an empirical basis, which affects the decision-making process in the medium and long term and the organizational performance with efficiency, effectiveness and efficacy. In order to contribute to the solution of the research problem, the objective was defined as: to design a procedure for the design of the functional marketing strategy in the Pinar del Río Meat Enterprise that contributes to the strengthening of the decision-making process in the medium and long term and to the improvement of its organizational performance with efficiency, effectiveness and efficacy.

Materials and methods

In order to contribute to the solution of the problems identified during the research, theoretical methods were used, among which the historical-logical method was used to analyze the evolution and development of marketing over time and to identify regularities in the process of its management as a business subsystem and analysis and synthesis, which made it possible to reveal the essential relations and more general characteristics of marketing and meat industry enterprises. The empirical procedures employed included measurement in the qualitative diagnosis of the situation to be studied, using techniques that included documentary analysis, interviews and surveys. In carrying out the empirical diagnosis of the research, a methodology consisting of the following phases was used:

  1. Determination of information needs: it includes the identification of regularities in terms of the predominance of different management approaches to conducting business management in the organization under study, namely: what is the predominant business philosophy in terms of market orientation (production, product, sales, marketing or social marketing), what are the bases of the merchandising/marketing planning process, how the analysis of market opportunities is carried out, how the positioning strategy is defined, whether it is conceived or not, what precepts are taken into account for the design of the marketing mix and how the administration of the marketing effort is organized), aspects that allow characterizing the marketing/marketing management process in the entity.

  2. Definition of the objective and scope of the diagnosis: the purpose of the diagnosis was to identify the limitations in the marketing management process at the Pinar del Río Meat Enterprise (scope).

  3. Definition of the sources of information: includes documents containing minutes of the Board of Directors, balance sheets of the economic-financial management of the last two years, sales reports, communication manual and global strategy of the enterprise, etc. as secondary sources; as for the primary sources of information, current customers, employees and managers of the organization under study were considered.

  4. Design of formats for data collection: among the techniques used for data collection were the survey, the interview, and a guide for documentary analysis.

  5. Sample design: the sample exe program was used to determine the sample size for the survey of clients and employees of the entity, which offers a reliability of 95 % and a minimum permissible margin of error of 0.10. In the case of the interview to managers, it is carried out to 100 % of the population (20).

  6. Data collection, analysis and processing of information: automated procedures and the expertise of specialists in research techniques are combined.

  7. Finally, the report of the results is presented.

Results and discussion

Using triangulation within methods as a combination of two or more data collections, with similar approaches in the same study to measure the same variable, which in this case turned out to be the perception held by the different primary sources of information used (customers, workers, and managers). On the enterprise's performance in the marketing area, together with the inclusion of two or more qualitative approaches such as the interview and the survey to evaluate the same phenomenon and the fact that the data obtained in the documentary analysis and those from the interview were coded and analyzed separately, then compared, as a way of validating the findings. All this made it possible to identify the main regularities that corroborate the existence of the problem in the reality under research, which is identified with the following:

  • The marketing planning process is carried out on an empirical basis, as evidenced by the lack of analysis of market opportunities.

  • No market positioning strategy is defined or communicated.

  • Scientific precepts are rarely taken into consideration when designing the marketing mix for each product-market.

  • It is found that the management of the marketing effort is based on a distorted assumption of the discipline, since the sales function is perceived as independent of marketing, when the latter is part of the fourth marketing variable (promotion). Similarly, business communication is subordinated to human capital management, thus confusing or distorting its objective as a marketing variable. All this contrasts with the available bibliography on this subject.

As a result of the above findings, a procedure is proposed for the design of the functional marketing strategy that contributes to the improvement of medium- and long-term decision making and organizational performance with efficiency, effectiveness and efficacy.

In this sense, the authors adhere to the concept defined by Ponjuán Dante et al. (2005) when they state that procedure can be understood as "a set of steps or activities performed by a person to obtain a specific result".

The procedure starts by considering the sequence of activities included in the marketing management process, which comprises the following stages: 1) Analysis of marketing opportunities, 2) Research and selection of target markets and positioning of the offer, 3) Design of marketing strategies, 4) Planning of marketing programs and 5) Organization, implementation and control of the marketing effort (Kotler, 2001).

The process of designing a functional marketing strategy is carried out through a procedure comprising seven steps (Figure 1). Its objective is to guide the enterprise towards economic opportunities that are attractive to it, i.e., adapted to its resources and know-how.

Source: Prepared by the authors

Figure 1 Procedure for the design of the functional marketing strategy  

The following is a description of the steps to be taken to carry out the procedure:

Step 1: Identification of market opportunities

Objective: to maintain an updated competitive intelligence system.

Responsible: Director and specialists of the marketing and sales department.

Activities:

  • Conducting formal research, by seeking information from different sources to gather significant and continuous information on both the micro-environment, composed of suppliers, customers, competitors, etc., and the macro-environment, composed of demographic, economic, technological, socio-cultural, etc. forces.

  • Conducting studies to understand consumer markets, how they work.

  • Monitoring of competitors' activities.

  • Market and marketing studies.

Techniques to be used: Benchmarking (Boxwell, 1995); relationship matrices; expert evaluation method (Delphi methodology).

Step 2: Estimation of total market size, growth and profitability

Objective: to decide which markets and new products to focus on, while defining the product positioning strategy in the market.

Responsible: Director, specialists from the Marketing and Sales Department and an external consultant if deemed appropriate.

Activities:

  • Market research.

  • Product research and development or product innovations.

  • Promotion and sales.

Techniques to be used: Porter's five competitive forces analysis (2010); demand forecasting studies; positioning maps.

Step 3: Formulation of the different alternative strategies for each product

Objective: to identify the various alternatives with respect to the marketing strategies to be followed by the entity for the product-market binomial.

Responsible: Director and specialists of the Marketing and Sales Directorate.

Activities:

  • Development of a positioning strategy through differentiation, whether in terms of price, quality, etc.

  • Development of a product-positioning diagram, describing the position of competitors with respect to the organization.

  • Development of product positioning (before this, verify whether you have the technology to make the product, whether you have a market for the product and, finally, convince buyers that your quality and service are comparable to those offered by the competitor).

  • Product testing and launch.

  • Modification of the product strategy in the different stages of its life cycle, taking into account the changing opportunities and challenges of global marketing.

Techniques to be used: undifferentiated marketing mix; concentrated marketing mix; differentiated marketing mix.

Step 4: Development of the marketing mix and budget allocation

Objective: to decide what level of marketing expenditure is required to achieve the marketing objectives.

Responsible: Director and specialists from the Marketing and Sales Department and external consultants if deemed necessary.

Activities:

  • Determination of the marketing budget/sales ratio of competitors.

  • Distribution of the total marketing budget among the marketing tools (marketing mix). The classification of these tools refers to the four "P's":

    • Product: what type of products/services (offer) will be offered and in what quantity. It represents the tangible offer of the enterprise to the market, including quality, design, features, brand and product packaging.

    • Price: what prices to set for the products. The amount of money customers have to pay for the product.

    • Place (distribution): comprises the various activities that the entity must undertake to make the product accessible and available to target consumers.

    • Promotion: includes the different variables or instruments of the promotional mix, and is related to the best way to publicize the product.

Finally, decide on the distribution of funds allocated to marketing among the various products, channels, promotional media and sales areas, as conceived in Sánchez Medina and de la Nuez Hernández (2020).

Techniques to be used: to make strategic allocations, the notion of sales-response functions will be used to show how sales can be affected by the money allocated to each possible application.

Step 5: Formulation of the annual marketing plan

Objective: to define the marketing policies that can be implemented to achieve the objectives set by the enterprise.

Responsible: Director, specialists from the Marketing and Sales Department and consultants, if deemed appropriate.

Activities:

  • Situation analysis: summary of environmental trends, analysis of the internal and external situation (products, markets, past performance, competitors, other environmental factors).

  • Selection of the target audience: presentation of segmentation decisions, selection of target markets and positioning, as well as analysis of the market and segments to be reached through the marketing strategy.

  • Formulation of objectives: outline of the specific marketing objectives to be achieved and identification of aspects that may affect their attainment.

  • Strategy formulation: definition of the strategy to be developed to achieve the marketing objectives.

  • Implementation: delimitation and definition of the programs to carry out the chosen strategy, including specific activities, their timing, budget and assignment of responsibilities for: product, price, distribution and communication.

  • Control: indicate how progress toward objectives will be measured and how adjustments will be made to keep programs on schedule.

Techniques to be used: SWOT analysis (weaknesses, threats, strengths and opportunities); annual marketing plan according to Kotler and Armstrong (2012).

Step 6: Redefinition of the organizational structure

Objective: to redefine the structure that should coordinate the entire marketing effort.

Responsible: Director, specialists from the Marketing and Sales Department, Human Capital Department and external consultants, if deemed necessary.

Activities:

  • Analysis of the current organizational structure in order to organize marketing resources and manage the corresponding plan.

  • Coordination of the work of all marketing staff.

  • Coordination of the work of the marketing staff and other functional departments.

  • Participation in the selection and training of personnel.

  • Execution of marketing activities control through three channels:

    • Control of the annual plan: to ensure that sales, profits and other goals that were set are being achieved.

    • Profitability control: measure or quantify the actual profitability of products, customer groups, commercial channels and order sizes.

    • Strategic control: to assess whether the entity's merchandising/marketing strategy is still adequate to market conditions.

Techniques to be used: marketing profitability analysis will be used to measure the profitability of different activities of this function, marketing efficiency studies are also required, evaluation through the marketing audit in which the formal structure, the functional efficiency and the efficiency achieved between departments are analyzed.

Step 7: Feedback

Objective: to measure the efficiency, effectiveness and efficacy of the application of the procedure as feedback for its improvement.

Responsible: Director and specialists of the Marketing Department.

Activities:

  • Planning of the way in which the activities to measure the efficiency, effectiveness and efficiency of the procedure are intended to be carried out.

The evaluation system of the procedure comprises three criteria:

  1. Efficacy measurement: this refers to the measurement of the impact on the satisfaction of customers and other stakeholders. The following indicators are proposed:

    • Customer satisfaction index.

    • Notoriety of the brands marketed by the enterprise.

  2. Efficiency measurement: refers to the measurement of the rational use (exploitation) of the resources involved in the merchandising/marketing management process. The following indicators are proposed:

    • Compliance with the consumption plan for energy carriers involved in the production and marketing of meat products (%).

    • Compliance with the budget allocated to the promotion activity (%).

  3. Effectiveness measurement: refers to the measurement of the results (outputs) obtained after the application of the procedure. The following indicators are proposed:

    • Compliance with the sales plan by assortment (%).

    • Compliance with assortment revenue plan (%).

    • Development of marketing capabilities in marketing and sales management and in the basic enterprise units where a sales manager is available.

Techniques to be used: customer satisfaction index measurement survey, enterprise image studies, marketing audits.

In the definition of the procedure evaluation system, studies conducted by different authors in the national and international context were taken into account, such as Covarrubias Casco et al. (2017), Izquierdo Morán et al. (2020), López Boudet et al. (2020), Sánchez Medina and de la Nuez Hernández (2020).

Although the Pinar del Río Meat Enterprise operates in the wholesale market, i.e., its customers are organizations, the segmentation of this type of market was prioritized, whose bases also include some of those used in the segmentation of consumer markets (geographical variables, benefit sought and usage or consumption index). In this case, demographic variables are important, followed by operating variables (under the buyer's personal characteristics). This finding coincides with experiences obtained in other studies carried out in Cuba (Rizo Mustelier et al., 2019). The main product differentiation variables to be highlighted were: color, odor, PH, texture and flavor, as suggested also by the authors cited above.

Based on the information obtained in the previous step (Step 2), it was recommended to the Pinar del Río Meat Enterprise that the alternative strategy for serving the total market should be a differentiated marketing mix, so different mixes were designed for each segment. Despite the advantages of this strategy, it is recognized that inventory and promotion costs will probably increase. This situation is reaffirmed in other experiences analyzed in the international context.

The procedure for the design of the functional marketing strategy is based on the deployment of the marketing management process comprising five stages. The implementation of the proposed procedure contributed to the improvement of decision making and organizational performance with efficiency, effectiveness and efficacy. This is reflected in the impact caused in the improvement of the marketing skills of the specialists involved in the marketing activity and in the performance indicators that are manifested, in turn, in the establishment of a new policy of visits according to the specialization by type of client. In addition, in the improved use of electronic means of communication (telephone, e-mail and internet) by the marketing and sales management, in the deployment of an extensive program of merchandising techniques at the points of sale of the enterprise's customers. Finally, in the progressive adoption of a strategic marketing approach, which will help marketing and sales management to identify opportunities, solutions and even actions in the face of potential difficulties so that the enterprise can anticipate, resolve and achieve better results.

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Received: October 12, 2023; Accepted: November 21, 2023

*Autor para correspondencia: yadaris.guerra@carnepr.alinet.cu

Los autores declaran no tener conflictos de intereses.

Yadaris Guerra Delgado, Diana de la Nuez Hernández y Luis Gustavo Marín Cuba diseñaron el estudio, analizaron los datos y elaboraron el borrador.

Yadaris Guerra Delgado estuvo implicada en la recogida, el análisis e interpretación de los datos.

Todos los autores revisaron la redacción del manuscrito y aprueban la versión finalmente remitida.

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