Carl P. ZeithamI & Valarie A. ZeithamI
Environmental
Management:
Revising the
Marketing
Perspective
D
EBATE continues in the marketing literature
concerning the substance and scope of marketing
(Anderson 1982, Amdt 1978, Bartels 1974, Hunt
1976b, Shruptine and Osmanski 1975, Webster 1981,
Wind and Robertson 1983). The debate involves several overlapping topics: (1) theoretical descriptions of
the marketing process (Bagozzi 1974, 1975; Kotler
1972); (2) integrative paradigms designed to stimulate
conceptual and empirical development (Bartels 1970,
1974; Hunt 1976a, 1976b); and (3) prescriptive works
concerned with extending the traditional boundaries
of marketing (Kotler and Levy 1969, Lazer 1969, Luck
1969, Stidsen and Schutte 1972, Wind and Robertson
1983). Despite the controversy prevalent in these theoretical works, two generally accepted conclusions
emerge from a review of the literature:
• Marketing involves facilitating the exchange relationship that exists between an organization
and its external environment; and
Carl P. ZeithamI is an Assistant Professor of Management, and Valarie
A. Zeithaml is an Assistant Professor of Marketing, Texas A&M University, This article has benefited from discussions with Frank Paine and
William Cron, and from comments by three anonymous reviewers,
46 / Journal of Marketing, Spring 1984
Environmental management argues that marke
ing strategies can be implemented to change th
context in which the organization operates, bot
in terms of constraints on the marketing functio
and limits on the organization as a whole. Th
current movement toward innovative, entrepre
neurial management—a return to the roots c
American enterprise—captures the essence of thi
perspective. The absence or, at a minimum, th
understatement of this perspective within thi
marketing literature limits the contribution of mar
keting to the management of organization-envi
ronment relationships. The paper reviews thede
velopment of environmental management in allie
disciplines, offers a typology of strategies, dis
cusses implementation issues, and presents im
plications of the perspective for marketing theory
• Marketing principles and processes are applicable to exchanges beyond those involving the
products and services of profit-oriented businesses.
Marketing's concern with the organization-envi
ronment exchange process and the broadening of thi
marketing concept have emphasized the importance o
the external environment for marketing theorists ant
managers. However, an examination of the literaturf
suggests that the traditional marketing perspeclivt
concerning this relationship is restricted. As a con
sequence, the overall contribution that marketing car
make to the management of organization-environmen
relationships is limited. Consistent with this review
a third conclusion is proposed:
• Marketing theory adopts an essentially
stance with respect to the external environment
Although many successful marketers employ
proactive, entrepreneurial philosophy in practice, I»
marketing discipline appears to be reluctant to assuiw
a similar posture. The marketing management Iitef^
ture provides support for this observation. The
widely used conceptual model of the scope of
keting, McCarthy's "4 Ps" model, views marketm!
as three concentric circles (McCarthy I960). Aroun
Journal of Marketing
Vol. 48 {Spring 1984).
the inner circle (the consumer) are the "controllable
factors" of price, place, promotion, and product, and
the "uncontrollable factors" of political and legal environment, economic environment, cultural and social
environmental, resources, etc. As conceptualized by
McCarthy, the internal aspects of the organization can
be managed, but the external environment is established and must be accepted as is. Writers such as
Holloway and Hancock (1973) and Scott and Marks
(1968) pioneered an environmental approach to marketing in the 1960s; the approach was only environmental in the sense that it emphasized that the environment (e.g,, consumers, culture, legal framework,
technology, and institutions) constrained marketing
activities. Furthermore, the marketing concept embodies the essence of this traditional view of the organization-environment relationship:
The marketing concept is a management orientation
that holds the key to achieving organizational goals
[and] consists of the organization determining the needs
and wants of target markets and adapting itself to delivering the desired satisfactions more effectively and
efficiently than its competitors (Kotler 1980, p. 22).
The organization first attempts to discover what the
consumer wants, then structures organizational goals,
objectives, and activities to deliver the desired product, service, or idea better than competing organizations. The domain of marketing activity appears to start
at a point where a system of environmental constraints
already has been defined for the organization. These
constraints range from established wants and needs of
consumers to a variety of competitive, legal, technological, and social factors. Only in peripheral work,
such as the development of social marketing (Kotler
and Zaltman 1971), have marketers explicitly acknowledged the relevance and feasibility of less deterministic approaches to marketing. In general, marketing theory appears to assume that the organization
confronts predetermined opportunities in the environment. Marketing strategies, therefore, are viewed as
a set of adaptive responses.'
The reactive perspective is reflected in the typical
marketing manager's reliance on marketing intelli-
everal early marketing theorists acknowledge the proactive aspects
marketing^ Fox example, Paul Mazur (1953) pointed to marketing's
m siimulating demand, and later portrayed marketing as "the de, ^^'^"^^'"'l^f I'ving" (Mazur 1958). Similarly, Harry Hansen
) revealed a proactive emphasis in his definition of marketing:
Marketing is the process of discovering and translating consumer needs and wants into products and service specifia'lons. creating demand for these products and services,
""a men, m turn, expanding this demand (p.4).
authors did
ent theory development and practice by marketers.
gence, forecasting, and market research. Marketing
intelligence is gathered to identify technological innovations, appraise current performance, monitor
competitors, assess political and regulatory developments, evaluate societal changes, and predict the economic impact of these and other environmental developments on organizational goals and performance.
In other words, the marketing manager attempts to
analyze the forces operating in the environment and
implements organizational or strategic changes to adapt
to environmental demands. Similarly, forecasting
market demand trends and analyzing supply and price
conditions illustrate activities designed to anticipate
future environmental states so that production levels
and other company-controlled variables can be adjusted to optimize the fit between the environment and
the organization. In a sense, market research functions as a technique to adapt the organization to one
critical aspect of its environment, the consumer. These
marketing activities generally provide the starting point
for marketing efforts, thereby perpetuating the reactive perspective in practice. As Webster (1981) found
in a survey of top managers' views of the marketing
function, marketing managers were perceived as "not
sufficiently innovative and entrepreneurial in their
thinking and decision making" (p. 11),
While effective marketers often implement strategies designed to alter the conditions under which they
operate (see the examples contained in Table 1), this
paper holds that marketing theory should explicitly
adopt a proactive, entrepreneurial orientation to the
management of the external environment. The perspective developed in this paper, referred to as environmental management, argues that marketing stt^tegies can be implernented to change the context in
which the organization operates, both in terms of constraints on the marketing function and limits on the
organization as a whole. The current movement toward innovative, entrepreneurial management—a return to the roots of American enterprise—captures the
essence of this perspective. The absence or understatement of this perspective within the marketing literature limits the contribution of marketing to the
management of organization-environment relationships. The purpose of this paper is to supplement existing marketing theory by emphasizing that marketing is a significant force which the organization can
call upon to create change and extend its influence
over the environment.
The paper is divided into four sections. First, the
development of the environmental management perspective in allied disciplines is reviewed. Second, a
typology of environmental management strategies is
suggested with examples. Third, implementation issues that may influence the selection and application
of environmental management strategies are identi-
Environmental Management / 4 7
fied. Finally, implications of the environmental management perspective for marketing theory are discussed.
Background and
Reconceptualization of the
Organization-Environment
Relationship
By the late 1970s management theorists generally
adopted the open systems perspective of organizations
and agreed on the centra! importance of the external
environment for management (Anderson and Paine
1975, Bamard 1938, DilJ 1958, Emery and Trist 1965,
Katz and Kahn 1966, Terreberry 1968, Thompson
1967). Traditional organization theory tended to view
the environment as a deterministic influence to which
organizations adapt their strategies, structures, and
processes. This attitude was reflected particularly in
landmark empirical research such as Bums and Stalker
(1961), Duncan (1972), Lawrence and Lorsch (1967),
and Neghandi and Reimann (1973). Environmental
attributes such as turbulence, hostility, diversity,
technical complexity, and restrictiveness (Khandwalla
1977) were thought to determine both organizational
and performance variables. In summary, the traditional environmental determinism perspective conceptualized the environment as a causal variable: Organizational performance was dependent upon the efficient
and effective adaptation of organizational characteristics to environmental contingencies.
In contrast, recent theory and research in management and the social sciences has reconceptualized the
relationship between the organization and the external
environment (Aldrich 1979; Bourgeois 1980; Child
1972; Galbraith 1977; Kotter 1979; Miles and Snow
1978; Pfeffer 1978; Pfeffer and Salancik 1978; Porter
1979, 1980). Based on observations, research, and
extensions of the traditions found in the business policy and corporate social responsibility literatures, these
authors challenge the position that organizations are
or need to be passive-re active entities with respect to
the external environment. Instead, they argue that organizations can and do implement a variety of strategies designed to modify existing environmental conditions. Although these writings acknowledge the
impact of broad internal and external contingencies,
they maintain that organizations can become proactive
agents of change by attempting to manage their external environments.
While it is beyond the scope of this paper to review in detail all of the works listed above, several
key approaches found in this literature may facilitate
an understanding of the perspective. One major portion of the literature has focused on the resource dependence model. This theoretical approach, devel-
AO
I
IAI....AI
«<
oped by Pfeffer and Salancik (1978) and summarized
by Kotter (1979), argues that organizations have vaiying degrees of dependence on external entities, particularly for the resources they require to operate. In
many instances, the external control of these resources may reduce managerial discretion, interfere
with the achievement of organizational goals, and ultimately threaten the existence of the focal organization. Confronted with a costly situation of this nature,
management actively directs the organization to manage or alter the external dependence. Strategies suggested to achieve a reduction in dependence include
the prudent selection of operating domains (e.g., industries with limited competition and regulation coupled with ample suppliers and customers), merger, cooptation, coalition formation, contractual relationships, advertising and public relations efforts, activities designed to reduce competition, political strategies implemented to influence regulation, and structural
changes. The intent in each case is to develop countervailing power with respect to the external environment.
A second approach using this perspective is found
in the area of business policy or strategic management. The reconceptualization of the organization-environment relationship is less evident, however, since
a proactive, opportunistic management stance has been
emphasized traditionally in business poHcy theory and
research (Bourgeois 1980; Child 1972; Hatten, Schendel, and Cooper 1978; and Mintzbcrg 1972). Twoexamples from this literature are the works of Miles and
Snow (1978) and Porter (1979, 1980). Miles and Snow
develop an organizational typology based on strategic
choices concerning key managerial problems. One of
their organization types, prospectors, clearly typifies
the proactive orientation of many organizations. Based
on their research, prospectors "are the creators of
change and uncertainty to which competitors must respond" (1978, p. 29).
Porter (1979) identifies several external forces with
which strategic decision makers must contend in their
industries, including the threat of new entrants, tne
bargaining power of buyers and suppliers, the threat
of substitute products and services, and the degree of
rivalry among existing competitors. To manage these
environmental forces he suggests strategies such as the
development of barriers to entry (e.g., product differentiation, promoting favorable government policy)^
raising switching costs to buyers, eliminating switching costs with respect to suppliers, vertical integration, and focusing attention on high growth marfe'
segments. Porter also links these strategies to the evolutionary stages of industry development, h i i h t " ?
the usefulness of this construct.
A third approach, which serves to integrate n
of the literature discussed above, was developed
[iaily as an alternative to the environmental determinism perspective. Two authors representative of this
approach are Pfeffer (1978, chapter 6) and Galbraith
(1977, chapter 14). In each case, these authors develop specific sets of strategies to manage the external
environment and discuss the conditions under which
they are appropriate. Consistent with previous references, Pfeffer argues: "Rather than designing the organization to 'fit' the environment (the position of the
contingency theorists), it is more likely that first the
organization will attempt to design its environment to
fit its present structural arrangements" (1978, pp. 141142). He then outlines methods that can accomplish
this task: managing competition, promoting regulation
to reduce competition, managing symbiotic interdependence, and managing uncertainty, organizational
legitimation, and political action.
Galbraith discusses similar strategies in greater detail under a concept which he termed "environmental
management." He partitions environmental management strategies into three categories: independent
strategies, cooperative strategies, and strategic maneuvering. Independent strategies are means by which
the organization can reduce environmental uncertainty
and dependence by "drawing in its own resources and
ingenuity" (1977, p. 204). Cooperative strategies involve implicit or explicit cooperation with other elements in the environment. Strategic maneuvering includes strategies designed to change or alter the task
environment of the organization. To expedite the discussion, the remainder of this paper employs environmental management to denote the proactive perspective on organization-environment relations.
A Typology of Environmental
Management Strategies
Table 1 outlines and defines broad categories of environmental management strategies using Galbraith's
three-part framework, and provides examples of specific strategies within each category. As appropriate.
It has been modified or supplemented with strategies
discussed by other authors. Table 1 neither proposes
new strategies nor constructs an exhaustive list of all
possible strategic options; rather, the typology is intended to develop a strategic perspective through which
niarketmg theory can develop the more entrepreneurial proactive orientation described above. Under appropriate conditions, many of the strategies may be
used together in an integrated program of environn^ental management.
Nine independent environmental management
ategies are contained in Table 1. These strategies
l^ 'Implemented regularly by individual firms in an
^ empt to modify their competitive environments. One
ent example of competitive aggression, which typ-
ically involves activities designed to differentiate the
firm or its products, is the use of videotapes by the
record industry. These promotional tapes played on
cable television (e.g., MTV) and in nightclubs have
revived a slumping industry and dramatically altered
the competitive environment. Kellogg's advertising
campaign promoting the cereal industry (competitive
pacification), Weyerhauser's reforesting advertising
campaign (public relations), Heinz's suit against
Campbell Soup (legal action), and Arco's corporate
constituency program with shareholders (political action) are other specific examples of independent strategies.
In some situations two or more organizations may
implement cooperative environmental management
strategies. The naming of Douglas Fraser of the UAW
to the Chrysler board (co-optation) and the political
initiatives of industry associations and other special
interest groups (coalition) are recent examples of these
collective efforts. Cooperative strategies are selected
by many firms on the assumption that combined action reduces risks and costs to individual organizations while increasing their power.
The third category of environmental management
strategies included in Table 1 is termed strategic maneuvering. These strategies represent conscious efforts by an organization to change the task environment in which it operates. In a recent article, Zoltners
and Dodson (1983) discuss a form of strategic maneuvering which involves proactively seeking segments of buyers who possess the least power to Influence the organization adversely. As an additional
example, the availability of products such as pocket
calculators, feminine hygiene deodorants, and personal computers radically altered the environments of
organizations which offered them.
As the typology is reviewed, it is important to note
that many of the strategies are strictly within the marketer's domain, while others have been supported by
marketing activities. Marketing theory, however, has
tended to view them as tactical reactions to existing
conditions rather than as strategic actions designed to
modify organizational contexts. For example, competitive aggression includes pricing, product distribution, and promotion. Voluntary action is essentially
synonymous with "social responsibility marketing."
Smoothing is consistent with "synchromarketing."
Political action (e.g., through corporate constituency
programs or grass roots lobbying) involves the marketing of ideas to employees, shareholders, community leaders, and politicians to influence the regulatory context of the organization.
Although all of these strategies can be classified
as environmental management strategies, certain factors may influence their selection and implementation. The following section offers some guidance con-
Environmental Management / 4 9
TABLE 1
A Framework of Environmentai Management Strategies
Environmental
Management
Strategy
Examples
Definition
Independent Strategies
Competitive
aggression
Competitive
pacification
Public relations
Voluntary action
Dependence
development
<
Legal action
Political action
Smoothing
Demarketing
Implicit
cooperation
Contracting
Co-optation
<
Coalition
Domain
selection
Diversification
Focal organization exploits a distinctive
competence or improves internal efficiency
of resources for competitive advantage.
Independent action to improve relations with
competitors.
Product differentiation.
Aggressive pricing.
Comparative advertising.
Helping competitors find raw materials.
Advertising campaigns which promote entire
industry.
Price umbrellas.
Establishing and maintaining favorable
images in the minds of those making up
the environment.
Voluntary management of and commitment to
various interest groups, causes, and social
problems.
Creating or modifying relationships such that
external groups become dependent on the
focal organization.
Corporate advertising campaigns.
Company engages in private legal battle with
competitor on antitrust, deceptive
advertising, or other grounds.
Efforts to influence elected representatives to
create a more favorable business
environment or limit competition.
Attempting to resolve irregular demand.
Attempts to discourage customers in general
or a certain class of customers in particular,
on either a temporary or a permanent
basis.
McGraw-Hill's efforts to prevent sexist
stereotypes.
3M's energy conservation program.
Raising switching costs for suppliers.
Production of critical defense-related
commodities.
Providing vital information to regulators.
Private antitrust suits brought against
competitors.
Corporate constituency programs.
Issue advertising.
Direct lobbying.
Telephone company's lower weekend rates.
Inexpensive airline fares on off-peak times.
Shorter bours of operation by gasoline
service stations.
Cooperative Strategies
Patterned, predictable, and coordinated
Price leadership.
behaviors.
Negotiation of an agreement between the
Contractual vertical and horizontal marketing
organization and another group to exchange
systems.
goods, services, information, patents, etc.
Process of absorbing new elements into the
Consumer representatives, women, and
leadership or pollcymaking structure of an
bankers on boards of directors.
organization as a means of averting threats
to its stability or existence,
Two or more groups coalesce and act jointly
Industry association.
with respect to some set of issues for some Political initiatives of the Business RoundtaWe
period of time.
and the U.S. Chamber of Commerce.
Strategic Maneuvering
Entering industries or markets with limited
IBM's entry into the personal computer
competition or regulation coupled with
market.
ample suppliers and customers; entering
Miller Brewing Company's entry into the
high growth markets.
beer market.
Investing in different types of businesses,
Marriott's investment in different forms of
manufacturing different types of products,
restaurants.
vertical integration, or geographic
General Electric's wide product mix.
expansion to reduce dependence on single
product, service, market, or technology.
50 / Journal of Marketing, Spring 1984
TABLE 1 (continued)
A Framework of Environmental Management Strategies
Environmental
Management
Strategy
Merger &
acquisition
Definition
Examples
Combining two or more firms into a single
enterprise; gaining possession of an
ongoing enterprise.
^_^^__^^_
ceming the conditions under which particular strategies
may be most beneficial.
Environmental Management
Strategies: Selection and
Implementation Issues
Once the environmental management perspective is
adopted by a marketer, consideration must then be given
to selection and implementation of appropriate strategies. Some strategies are obvious choices based on
their ability to focus on a particular component of the
external environment. For example, competitive
aggression may be selected to deal with the competitive/market envirormient, while political action would
be chosen in situations where the external political environment is the focus. Beyond this simple matching
of strategies to components of the environment, two
other considerations may be helpful during the strategy selection and implementation process. First, the
costs and benefits associated with the implementation
of alternative strategies should be evaluated. Second,
contingency approaches emphasized by theory and research in strategic management may provide guidance
in the selection and implementation of strategies.
The selection of an environmental management
strategy may depend on an analysis of costs versus
benefits captured in the return on investment calculations commonly used by strategic decision makers.
As marketers become involved more explicitly in
managing the external environment, they may assume
a major role in evaluating the financial consequences
of strategy decisions. Since marketers have traditionally been isolated from such concerns (Webster 1981,
wmd and Robertson 1983), familiarization with the
joncept of return on investment may be necessary.
"iplicit in the return on investment calculation are estates of the probability that a particular environmental management strategy will result in a more faorable environment for the firm. The calculation must
"Corporate the traditional, short-term financial view
f "^ ^"^ ^osts as well as the long-term impact
ind and Robertson 1983 for a discussion of this
)• Clearly, the marketer's expertise with adver-
Merger between Pan American and National
Airlines.
Phillip Morris's acquisition of Miller Beer.
tising, promotion, pricing, and market segmentation
strategies could be a valuable contribution to the evaluation of potential effectiveness.
Broad environmental contingencies also may influence the feasibility and timing of strategy implementation. The selective application of these strategies under certain conditions, called contingencies by
strategic decision makers, should enhance the performance and overall effectiveness of the organization.
Research focusing on the relationships between contingencies, environmental management strategies, and
performance should prove useful to marketing strategists. Two contingencies are proposed for purposes
of illustration: stage of the product/market/issue life
cycle and relative competitive position. Although other
contingencies are relevant, these factors should serve
to illustrate the value of incorporating contingency
factors in the strategy selection process.
The product life cycle has been a widely used construct in both the strategic management and marketing
literatures {Catry and Chevalier 1974, Fox 1973, Hofer
1975, Levitt 1965, Rink and Swan 1979, Wasson
1974). Recent empirical research employing the PIMS
data base has supported stage of the product life cycle
as a key strategic contingency variable (Anderson and
Zeithaml 1984). Relative competitive position (or
market share) also has received considerable theoretical and empirical attention, emphasizing in particular
its relationship to profitability (Buzzell, Gale, and
Sultan 1975; Hatten 1974; Patton 1976; Rumelt and
Wensley 1981; and Schoeffler, Buzzell, and Heany
1974). Several analytical tools have combined portions of the product life cycle with various levels of
market share to create aids to strategy formulation.
One such aid is the Boston Consulting Group's matrix. Once again, recent empirical research using the
PIMS data base has demonstrated the usefulness of
the BCG matrix for strategy formulation (Hambrick,
MacMillan, and Day 1982; MacMillan, Hambrick, and
Day 1982).
While it is beyond the scope of this paper to link
all of the environmental management strategies to particular stages and competitive positions, cooperative
strategies would seem to be appropriate for firms in
Environmental Management / 51
a mature stage of the product life cycle that also hold
a strong competitive position. Such strategies would
diminish the dysfunctional competitive rivalry among
entrenched competitors, thereby promoting higher
profitability within the industry. Second, the selection
of a specific competitive aggression strategy may be
dependent on stage of the product life cyc'e and competitive position. The return associated with product
differentiation may be greatest for a firm in a mature
market with a moderate to strong competitive position. Conversely, comparative advertising may benefit businesses in a weaker position during the growth
or shake-out stages. As a final illustration, social and
political issues may experience a life cycle similar to
products. Assuming such a phenomenon, the educational portion of a corporate constituency program may
be appropriate during earlier stages of the issue life
cycle, while grass roots and direct lobbying efforts
become necessary as the issue matures and legislative
action is imminent.
Our purpose in citing these examples is to suggest
^ approach which marketers and general managers
can use to operationalize the perspective discussed in
this paper. Substantial conceptual development and
empirical testing is required to yield a comprehensive
contingency approach for the application of the environmental management strategies listed earlier.
The Environmental Management
Perspective: Implications for
Marketing Theory
Discussion of the environmental management perspective by marketers may rekindle the controversy
over the broadening of the marketing concept. Critics
of the broadened view have argued that such efforts
tum the attention of marketers from existing problems, increase the level of abstraction in the marketing literature, and impede marketing scholars from
engaging in clear thinking about their own discipline
(Bartels 1970, 1974; Luck 1969). It is our view, how-
ever, that the environmental management perspective
allows marketers and marketing scholars to assume a
vantage point that minimizes these disadvantages. The
perspective encourages marketers to approach the issues facing their organizations with an increased level
of practicality and potential impact. It could also provide marketing scholars with a conceptual framework
that enables them to direct marketing toward a more
comprehensive partnership in the management of organization-environment relationships.
Environmental management fits comfortably into
much of the marketing theory literature. The perspective is consistent with theoretical schema developed
by Hunt (1976a). The strategies outlined in this paper
fit into all eight cells of the schema (i.e., combination
of the profit sector/nonprofit sector, micro/macro,
positive/normative categorical dichotomies). Environmental management strategies can be used by profit
sector firms as well as nonprofit sector firms. For example, coalitions, political action, and public relations strategies are appropriate in achieving the objectives of many nonprofit firms. The environmental
management perspective can fit into the micro cell when
used by individual organizations and the macro cell
when cooperative strategies involving marketing systems or groups of firms are implemented. The positive
and normative dimensions would also be represented;
the normative approach is illustrated by the prescriptions concerning selection and implementation made
in the previous section of this paper.
Marketing is a significant force which the organization can call upon to create change and extend its
influence over the environment. The environmental
management perspective is an initial step in this direction, one that may encourage marketers to assume
a more integral role in corporate strategy. As emphasized by Wind and Robertson (1983), "the strategy
perspective holds the promise of enriching, expanding, and increasing the relevance of the [marketing]
field" (p. 13).
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