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1 Introduction

The phenomenon of liberalization, privatization, and globalization (LPG) has literally changed the way business is being done. As a result of LPG, boundaries are now eroded, competition has become fierce, and customers have become the real king. The very basic assumptions of somewhat stable environment has almost become irrational now as things are changing at a very fast pace, so fast that sometimes it becomes almost impossible to predict what next will happen in the marketplace. In the backdrop of all these uncertainties, flexibility has taken a center stage on the horizons of business environment. The importance of flexibility as a strategic tool has been well recognized by practitioners as well as academicians. Flexibility in organizations not only improves the performance but also helps to adapt early according to newly evolved paradigm. According to Drucker (1980), a business needs to be able to both ride out sudden hard blows and avail itself to unexpected opportunities in turbulent times. This implies that business should be flexible enough to handle both the unexpected threats and opportunities posed by an uncertain future and unstable environment.

In 1980s and 1990s, Indian companies like Royal Enfield’s – Bullet Motorcycle and Hindustan Motor’s – Ambassador Car could not understand the benefits of flexibility and lost market share and profits to companies like Hero MotoCorp (erstwhile Hero Honda) and Maruti Suzuki, as they believed on the importance of being flexible.

The role and importance of flexibility in the survival and success of organizations, in the fast-changing environment, has been well recognized by several authors in management theory. Peter (1991) in his 45 prescriptions of successful business mentions the relevance of flexibility. Pasmore (1994) maintains that flexible organizations can respond to change in a much better way as compared to rigid or non-flexible organizations.

Majority of them have focused on giving the classification framework for the construct of flexibility. The purpose was to identify how flexibility can be created, implemented, utilized, and measured in the organization. From the literature, it is evident that a large number of experts have talked on creation of flexibility, but implementation, utilization, and measurement are still left to be touched.

Flexibility in marketing has also been discussed from strategic angle, but the implementation part has not been explored due to the complexity of the issue. This chapter tries to delve into the details of marketing flexibility and its construct by taking examples/cases of successful organizations, being more flexible than their competitors.

2 Literature Review on Flexibility

The construct for flexibility is given in the pioneer work of Ansoff (1965). He defined the concept of flexibility in the context of its external and internal aspects. He described external flexibility by the maxim of not putting all of one’s eggs in a single basket, while internal flexibility, according to him, seeks to provide a cushion for response to catastrophe. Bahrami (1992) defined the flexibility as a multidimensional concept – demanding agility and versatility; associated with change, innovation, and novelty; coupled with robustness and resilience: and implying stability, sustainable advantage, and capabilities that may evolve over time. One of the most comprehensive definitions of flexibility was provided by Volberda (1996) which says that flexibility is the degree to which organizations have a variety of managerial capabilities and the speed at which they can be activated, to increase the control capacity of management and improve the controllability of the organization.

Aaker and Mascarenhas (1984) propose a framework that is based on the approaches available to companies for the creation of flexibility. They identified six functions in which flexibility can be created, namely, R&D, finance, operation, marketing, international, and managerial/structural areas. Three methods for increasing flexibility are identified, namely, diversification, investment in underutilized resources, and reducing commitment of resources to specialized use.

Ansari and Bell (1997) suggested three strategic aspects, namely, quality, cost, and time. Slack (1983) identified another strategic aspect, namely, range. In majority of the work on flexibility a functional approach is adopted, like Aaker and Mascarenhas (1984), but Hamel and Prahalad (1989) noted that creating labor flexibility by adjusting the size of the workforce may not lead to the creation of flexibility at all, rather serve to maintain inflexibility. It is therefore important not to view the flexibility process as being restricted to only certain aspects or functions of an organization.

Johnson (1992) defines flexibility from the perspective of customer satisfaction, by adopting a functional perspective and identifying the concept of flexibility as producing immediately or within a period that satisfies the customers, exactly what the customer requests. He perceives that the flexibility in the long run can be achieved by changing lifestyles and ways of thinking. Harrigan (1985) used the term strategic flexibility to define flexibility from market perspective. Strategic flexibility refers to firm’s ability to reposition itself in market, change its game plan, or dismantle its current strategies. Eppink (1978) used the term competitive flexibility and defined it as the ability of the enterprise to read to competitive changes caused by a major transformation of the market position, through the introduction of a new market or the entry of new competition. According to Rich Freeman, finance teams and sales and marketing organizations rely on the IT department to make them more efficient and keep their companies flexible.

Flexibility is not to do as you like, but freedom of choice within a framework. It refers to options, change mechanisms, and freedom of choice (Sushil 1999, 2000). One of the key characteristic of flexibility is the continuity. It is not a onetime change but the process of continuous change as per the changing needs (Singh and Sushil 1997). A comprehensive review of literature on flexibility is reported by Sharma et al. (2010).

3 Literature Review on Marketing Flexibility

Though the roots of the concept of flexibility can be traced back to 1921 when Lavington established connection between variability and flexibility, its application in the context of marketing system is not addressed comprehensively (Lavington 1921). Literature says that marketing flexibility refers to the ability of an organization to enter and leave markets and to position itself within existing and new markets. An organization with marketing flexibility gains competitive advantage as a result of its ability to change and reposition itself rapidly within competitive global markets.

Prahlad and Hamel (1990) maintain that such organizations search new markets quickly, penetrate emerging markets, and are also able to change patterns of customer choice. It is said that such capability allows them to do so (enter or leave market) as customer preferences, cost barriers, compositions, attributes, and competition within the industry. Second capability which creates marketing flexibility originates from the competitive strategies adopted within existing markets like overall cost leadership, differentiation, and focus (Porters – 3 Generic Strategies). The four strategic elements of time, cost, quality, and range (Ansari and Bell 1997; Slack 1983) also apply to marketing flexibility. The wider the range of options (size, feasibility) available to respond to market changes, the more flexible it is deemed to be.

Another concept of mobility barrier was given by Porter (1977), which was referred as a constraint to marketing flexibility. Harrigan (1985) argues that barriers to entry and exit of markets represent mental baggage of managers, and therefore, marketing flexibility can also be achieved by overcoming physical and mental constraints.

4 Concept

Marketing has inherent relation with the market which in turn is characterized by the buyers and sellers involved in the transaction process. Sellers offer the products at some price to cater the need of the buyers. Though the ultimate transaction phenomenon looks simple, there is a complex web of interrelated activities that make this transaction possible. Grewal and Transtutaj (2001) related marketing flexibility with the ability of transnational corporations to recalibrate the marketing efforts in a short-changing environment context, while Abbot and Bannerji (2003) described marketing flexibility as the ability to have a high market share/strong market presence. Flexibility, in the context of marketing, refers to the ability of the company to meet the challenge of globalization as well as varying needs of the customers within the overall framework of its business strategy (Sharma et al. 2010).

Marketing flexibility, thus, has been broadly explained from strategic point of view. This chapter tries to delve into the details of marketing flexibility, by taking lessons from select successful organizations which are much more flexible than their competitors. Apart from the 4 Ps of marketing, it also includes areas like consumer satisfaction, employees (sales people), organizational structure (structural design), R&D, New Product Development (NPD), information technology, logistics and operations, competition, marketing research, and branding and training. It is imperative to understand the pressures created by them for the purpose of flexibility. The major areas that create pressures for flexibility are shown in Table 20.1.

Table 20.1 Pressure for flexibility by marketing domains
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Therefore, in order to balance all these pressures amid the newly evolving business paradigm, there is a need of a more holistic and complete approach to the marketing – Systems of System (SoS) approach. A system with its inherent capability to produce whole which is greater than the sum of individual contributions has been widely accepted as a solution of many complex problems. Systems perspective to marketing is the key to remain competitive amid all this environmental dynamism. Lee Adler talked explicitly about the benefits related to systems approach to marketing in 1967. The advantage of considering the marketing as a system is that it allows the analysis of the various cross impacts that affect their subsystems and vice versa. As customer satisfaction is the ultimate aim of any organization, considering of only four Ps of marketing is not enough, especially keeping in view today’s competitive environment. Singh and Kumar (2011) argued that the rationale behind these arguments is that successful organizations (discussed here) do not have narrow functional approach of marketing as 4 Ps, but follow SoS approach, to have flexible marketing system in their organization.

Systems approach, in contrast to functional one, will help the organizations not only to understand the customer requirements in a better way (including NPD and information system) but also to satisfy them in a better way by acting speedily on the distribution and logistics aspects of value proposition. This holistic approach will help the organizations to multiply their growth prospects as a result of the increased customer satisfaction.

5 Marketing Flexibility Construct

As marketing flexibility is an intangible concept, its measurement can be done with the help of a construct. The concept of marketing flexibility is embedded in various subsystems of marketing. As these subsystems collectively constitute the marketing system of an organization, measurement of their individual flexibility will lead to the overall flexibility of marketing system. The intensity or the degree of flexibility of the marketing system of any organization can be assessed with the help of the dimensions and their attributes. Lee Adler (1967) gave the model of marketing subsystems and total system, which has been adapted to further the study on marketing flexibility (Fig. 20.1). From the existing literature and corporate/business case studies, there is an effort to find out the dimensions of such a marketing system to be developed into a construct. In a recent work of the author (2011), a scale named FLEXMARK is provided for measuring the marketing flexibility in any organization for sustained profitability, which was possible using the construct mentioned in this chapter.

Fig. 20.1
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Marketing flexibility construct (Adapted from: “Systems Approach to Marketing,” Alder (1967))

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Importance of marketing flexibility can be assessed from the corporate cases as discussed below (in “Lessons from the Corporate”). It is clearly visible from these cases how organizations use different types of marketing flexibilities strategically which are derived from one of the constructs/dimensions of marketing flexibility. Organizations having flexibility in its marketing system are more successful than its competitors because of its ability to adapt quickly to changing circumstances. It can satisfy its target customers in a much better manner by equipping itself with better combating power in order to deal with the competition.

6 Lessons from the Corporate

Nokia vs Micromax (Developmental (NPD), Distribution, and Price Flexibility): Although Nokia is still a major player of Indian mobile handset segment, it has lost its tremendous share to competitors because of inflexibility like developmental (NPD), distribution, price, logistics, and IT flexibilities in developing new products (NPD). Due to this flexibility or rigidity, Nokia lost touch of its market, which gave the competition enough space to seize the market share of low-income consumer segment. Micromax, which is currently ranked third in the mobile handset industry, took a large chunk of market share away from Nokia because of the developmental flexibility. New innovative features like dual sim and wireless radio were offered by Micromax in its products. Nokia, however, failed to arrest its market share, because it could not add such innovative features in its handsets. Due to this, Micromax zoomed to third position in the market, while it started as a small trader/dealer of Nokia products in India.

Although Nokia has lost some of its share to its rivals, it still enjoys the market share to the tune of 30 % in 2011 quarter of October–December (Report on). Along with other factors, what has also contributed to the success of Nokia is its price and distribution flexibility. Various authors Ariga and Okusha 1998 give the essence of price flexibility. Price flexibility relates to the number of price points companies have on offer according to the customer preferences. Distribution flexibility is another success factor that proved crucial in the case of Nokia. Ron Ashkenas (2000) has talked about the place flexibility which is closely associated with the Nokia’s success. Study reveals that the success of the firm is related to its ability to add or subtract the place according to opportunity or threat arising out of the environmental conditions. It is estimated that there are about 90,000 mobile sales outlets in India, and out of which 50,000 have only one brand to sell, i.e., Nokia. Further distribution flexibility of Nokia endowed company to include some other non-traditional formats for mobile-handset sales like Mom & Pop stores, stationary shops, STD booth owners and cloth merchants (India Knowledge@Wharton 2007).

Wal-Mart/Big Bazaar vs Subhiksha (Promotional, Distribution, Logistics, and IT Flexibility): Wal-Mart, founded in 1962, is the world’s largest public corporation, in terms of revenue. The company employs 2.2 million people for its 8,970 locations (Wal-Mart/wiki). One of the critical success factors of Wal-Mart is its IT flexibility. MacKinnon et al. (2008) talked about the importance of information flexibility in providing the competitive edge to the firms. EDI system has been implemented by Wal-Mart which has made it possible for the company to connect to its thousands of partners on real-time basis (Wal-Mart/Cisco). No wonder Wal-Mart is reaping rich benefits due to its IT flexibility.

Similarly in Indian context, biggest retailer Big Bazaar of the future group has reaped the benefit by using IT flexibility and promotional flexibility. Raju et al. (1990) observed that the companies use the promotion tool in order to get the larger share of the market. Promotion can also be a very useful tool in spurring up the demand, and this is exactly what Big Bazaar does. Founded in 2001, Big Bazaar is the largest chain of hypermarket in India. It has 214 stores in 90 cities and towns covering around 16 million sq. feet of retail space (Big Bazaar/wiki). Along with its humongous size and depth of assortment, promotional flexibility has played a crucial role in ensuring the success of this hypermarket chain in India. Every Wednesday, as well as end of season, and festival sales are used as special promotional campaigns for low price of its merchandise. The company usually clears all the backlog of the inventory that is piled up in the stock of the company. Big Bazaar is able to lower its prices also due to its ability to negotiate special prices from its vendors, use of effective methods of supply chain, and efficient utilization of its other resources like distribution and logistics. As a result of this constellation of measures, it has been able to promote and offer the low prices to its customers.

In contrast, Subhiksha, another Indian retailer, also started very well with its first store in Chennai in 1997. Initially, everyday-low-price strategy in its food and grocery stores went well, but IT inflexibility proved fatal for the company. The company went on the expansion spree from 2006. Just in a short span of 2 years, the numbers of stores went from 150 to 1,600 with a humongous growth rate of 1,100 % (subhiksha-retail-phenomenon-which.htm). But it failed miserably to effectively integrate and manage the stores with no proper information system in place and was out of the business in 2009 (Subhiksha/retailbrains).

Bajaj, Kinetic Honda vs Honda (Developmental and Pricing Flexibility): Way back in the 1970s and 1980s Bajaj was the leader in scooter market. Bajaj met with phenomenal success with its geared scooter. Kinetic Honda entered Indian market with gearless scooters. However, with the changing aspirations and technical efficiency, scooter market started losing to motorcycle/bike market. With average of around 50–55 km/l, motorcycles came in sync with the customer expectations. Both Bajaj and Kinetic could not keep pace with the changes and failed to upgrade the scooter technology to make it more efficient in order to get the customers’ faith back in scooter segment. As a result, Bajaj added motorcycles to their business, while Kinetic kept struggling for its existence. Also, even after the split between Honda and Kinetic in 1998 (Kinetic Honda Case-Study), Kinetic continued to price its products ambitiously, which added to its debacle. As a result, today the company is struggling to get the things back on track. Honda, on the other hand, with its world-class four-stroke technology entered the gearless scooter market in 2000. With its ultrarefined engine and continuous improvement in technology, Activa today dominates the gearless scooter category in India. Developmental flexibility has emerged as one of the critical success factors for Activa as the new model claims even 15 % more mileage than the previous one (honda2wheelersindia.com).

Zee TV vs Star TV (Customer Satisfaction and Positioning Flexibility): In contrast to early foundation of Zee TV in 1993, Star TV was born in 2001. Initially, Star Plus was not able to cater a wide customer base simply because it could not relate to customer expectations. So the company finally decided to change its positioning strategy and repositioned itself with viewer-oriented soaps and dramas (The-Failure-of-Zee). This positioning flexibility is at the root of the success of channel that it is enjoying today. Similarly, Star launched a new reality game show “Kaun Banega Crorepati” hosted by the legendary Amitabh Bachhan, while Zee failed miserably with its reply in the form of “Sawaal Dus Crore Ka” hosted by another Bollywood actor Govinda. Thus, Star showed better understanding of viewers’ interest (customer satisfaction flexibility) with domestic soap operas and garnering the highest television rating points.

Hindustan Motors – Ambassador vs Maruti Suzuki – 800 (Product Flexibility): Till the 1980s, more than 70 % of the market share was with the Ambassador, while 30 % remained with the Fiat’s Premier Padmini. Until the advent of Maruti, Hindustan Motors ruled the market with its Ambassador. The car was built tough and sturdy in nature. However, the situation changed after Maruti Suzuki launched its 800 car in the market. In order to arrest the falling market share, the company approached McKinsey & Co. to provide them with consultancy about how to get out of the problem situation. One of the major loopholes McKinsey found was inflexible product proposition, as there existed little margin for product up-gradation. (Hindustan Motors/marketingpractice.blogspot). Ambassador underwent some upgrades between 1958 and 2000, named Mark II, Mark III, and Mark IV. These were cosmetic in nature with no real value addition (ambassador-marketing-myopia.html). This inflexibility is due to the constraints led by shop floor or production units. Consultancy report in its recommendations gave the suggestion to reengineer the shop floor in order to increase the product flexibility. Maruti, on the other hand, continuously upgraded the technological as well as aesthetic aspects of the car. Many value additions were done, and all these value additions were perceived very well by the customers. No wonder Maruti Suzuki still holds nearly 40 % share in Indian four-wheeler market.

McDonald’s vs Pizza Hut (Developmental (NPD) and Customer Satisfaction Flexibility): Though both the companies belong to the category of fast-food restaurants, McDonald’s insights about the customer preferences have made it a leader in the fast-food market with its product development ability according to tastes and preferences of the customers across the geographical regions. Along with the new product development (NPD), flexibility and price flexibility also added to the volume of sales. Happy price menu starting from as low as Rs. 20 is an example of price flexibility that stemmed from the efficient and effective operational capabilities of organization. In contrast to McDonald’s, Pizza Hut is not doing very well because of the high pricing and non-customized offerings. Also the pricing strategy of Pizza Hut is not as flexible as that of McDonald’s.

Ford Motor Company (Product Flexibility): Product flexibility equips the manufacturer with the ability to make multiple products on same capacity and the ability to relocate the capacity between different products in response to realized demand as observed by Goyal and Netessine (2011). With the investment of the tune of $550 million, Ford has achieved wonderful product flexibility. This huge investment led the Michigan assembly plant to become one of the most flexible plants of the company capable of producing gasoline-powered, battery-electric, hybrid, and plug-in hybrid electric vehicle on the same production line (Ford Motor Company, News Center). It can now readily adjust the production of the vehicles according to increase or decrease in the overall demand of the product. This product flexibility is sure to hedge Ford against the ill effects of demand–supply fluctuation on the health of automobile industry.

Apple’s iPhone (Developmental Flexibility): Unveiled by Steve Jobs in 2007, iPhone has met with unprecedented success all over the world. After its inauguration till now, Apple has added numerous features as well as applications to iPhone. The continuous upgradation of the features on iPhone made iPhone one of the biggest players in smartphone industry. Sales of around 35.10 million units in the second quarter of 2012 (iPhone/wiki) was achieved due to distinctive competence.

Harley-Davidson (Information System Flexibility): Flexibility in information system not only helps to disseminate the information in a quick way but also helps in finding the correct relevance of this information in changed scenario. For this, a seamless integration of the components is required. Service-oriented architecture (SOA) is one such technique that helps in integrating the primary resources of organization in a seamless way (Erol et al. 2009). HD is one such company which implemented the SOA and reaping rich benefits due to its implementation. With the help of SOA, the company is able to make its credit and loan facility more flexible and adaptable especially in the peak season of its demand. New system implemented has the SOA in middle, and with the help of key changing indicators, which takes care of rest of the system automatically, HD is now more responsive to change and sell motorcycles more than before (Harley-Davidson/service-oriented/born-to-be-service-oriented).

7 Conclusion

With the cut-throat competition and uncertainties in the market, flexibility, as a strategy for sustained profitability, has gained wide acceptance in the corporate. With its three underlying principles of options, change, and freedom of choice in the corporate, flexibility helps organizations to remain competitive in the long run. Flexibility ensures quick adaptation to the changing environmental conditions and helps companies in gaining competitive edge over its competitors. In normal situation, flexibility ensures competitive edge to the firm, while in case of turbulent times, it ensures sustainability.

Similarly, realization of marketing as the backbone of any organization and its role in increasing profitability and overall revenue generation, successful corporates do not view it as mere function. SoS approach with its essence of whole is definitely far better in order to satisfy the customers too. Holistic view and the ability to better analyze the interrelations that exist among various subsystems are distinctive competencies of the systemic approach. Hence, considering marketing as a system will bring necessary competence in the organization to sustain and survive in the long run.

Marketing system of the organization with the attributes of flexibility embedded within will help organizations by equipping them with ability to quickly learn and adapt according to changing conditions. This directly means that a flexible marketing system helps the company by ensuring sustainability aspect of growth and competitiveness by satisfying both customers and stakeholders in a much better way. A case example of Punjab National Bank, which started operations for long hours, can be taken in this regard. Flexibility in this example is achieved by two ways: first by providing the service/product to customer for long hours and second by use of technology, i.e., Internet. Similarly, movie theaters offer tickets at lower price during low rush hours, i.e., in mornings to attract more people during low peak time. Therefore, flexibility here is achieved by discounted price methods. Example of flexibility in terms of extended hours of working can be quoted by taking the case of retailers who work for extended time period during festive seasons. Pantaloons India Ltd., Shoppers Stop, and Spencer’s follow this strategy. Also by employing extra human resources or paying increased wages to the existing employees, companies meet the demand of human resources in peak seasons. Offering variable products or customizing preferences is another method of achieving flexibility. Credit card companies like American Express or Barclays offer more than one type of card (variable products), while GM produces cars for various purposes and personalities (customization); a similar strategy has been adopted by GE. Through the Internet, customers can put their specifications at the design stage along with recommendations about the materials. GE plants then adjust their manufacturing operations quickly as the customer makes a change in their choice of design. Eureka Forbes with its general pattern of meeting the clients individually creates the flexibility by overcoming the location constraint (meeting at customer’s desired location) as well as risk perceptions of customers (explaining about the product).

Managerial implication of marketing flexibility is to have enhanced understanding of the business even at the basic levels. With the increased competition, marketing system flexibility has become an inevitable strategy today. Diversifications of strengths and developing capabilities along with maintaining presence in several markets can be used in order to develop the flexibility of marketing system. This requires to perceive the holistic view of marketing as a system in any organization, and also it entails to study the relationships with other subsystems for customer satisfaction. Marketing flexibility, once created, is sure to increase the market share of the organizations by positively affecting its brand equity. This will also help in evolving all the entities in such a way that maximizes the satisfaction proposition for all the stakeholders involved.

The managerial implication of the marketing flexibility is to enhance understanding and importance of flexibility in day-to-day business practices. With the fast-changing business models and standardization of the products, it is detrimental for any business to skip marketing as an integral part of their strategy. Diversifications of strengths like participating in multiple product markets, developing capability of using multiple distribution channels, and maintaining a presence in several countries, and investment in underutilized resources like developing “excess” customers’ loyalty to buffer competitive actions, and designing operating procedures to handle environmental change can be used to increase marketing flexibility in the organizations.

The chapter is based on the literature available in this field, which itself is not sufficient to do comprehensive analysis. Therefore, for further study, empirical data especially taking live cases may be considered. Limitation of adopting functional approach only in a classification framework (previous studies) is that the functions may be viewed as discrete parts, rather than a whole – the organization. It is also observed from the literature survey and the corporate examples that there is a need to understand the flexibilities in functional areas, especially to highlight the implementation and utilization of these flexibilities in the organization. At the same time, specific study on particular industries and sectors may be considered for better understanding of the concept, also generic model may not be applicable to all organizations in different sectors.