Business strategy type, marketing organization design, product-market growth strategies, and relative marketing effort: An empirical investigation of underlying relationships in service businesses

This study investigated the underlying relationships between business strategy type, the design of the marketing function, product-market growth strategies, and relative marketing effort. Business strategy type was operationalized by using the Miles and Snow (1978) typology which characterizes businesses as defenders, prospectors, analyzers, or reactors based on their product-market scope. Organization of the marketing department by function, product/service, market, or matrix was examined, along with the structural dimensions of formalization, centralization, and specialization. Product-market growth strategies of market penetration, market development, and product development were examined. Finally, marketing effort relative to major competitors was also examined.;A mail survey of 1000 firms in the banking, brokerage, hospital, hotel, insurance, and transportation (air and trucking) industries was conducted. Three sets of hypotheses were tested to examine the relationships between business strategy type, marketing organization design, product-market growth strategies, and relative marketing effort.;All the four business strategy types were found in every one of the six service industries that were surveyed. There were no significant differences between the four business strategy types with respect to formalization, emphasis on market development strategies, and organization of the marketing department by product/service and matrix structures. The marketing department in prospector organizations was found to be more specialized than the marketing departments in defender and reactor organizations. Prospector organizations were also found to place greater emphasis on product development strategies, least emphasis on market penetration strategies, and expend greater marketing effort relative to major competitors than defender, analyzer and reactor organizations.;The marketing department in reactor organizations was found to be more centralized, and more frequently organized by a functional structure than the marketing departments in defender, prospector, and analyzer organizations. Reactor organizations were also found to perform poorly when compared to the other three business strategy types.;Few significant differences were found between analyzer and prospector organizations, and between analyzer and defender organizations thereby supporting the Miles and Snow (1978) proposition that analyzer organizations have characteristics of both defender and prospector organizations. In general, the findings from this study provide empirical support to the Miles and Snow (1978) typology from a cross-section of service industries.