Strategic Marketing

MADHU MITHA
F P M 0 2 0 0 5

Managing market relationships

Relationship spectrum

Building market relationships- Canada Pacific Hotels

First, they changed their orientation from processing

group needs to catering to individual requirements

Second, they invested in relation-specific knowledge
and skills, which were embedded in their databases,
routines, and procedures
Third, they realigned the organization around teambased processes that cut across functions.

Elements of market relating capability

Orientation: A relationship

orientation pervades all parts of the

organization's mind-set, values, and
norms and thus influences all
interactions with the customer-before, during, and after the sale.
Eg- medical equipment firms
Knowledge and Skills:
Assimilated employee experience,
Databases and transaction files,
Management systems and routines
Integration and Alignment of
Processes
Eg: United States Automobile
Association

The Role of Firm Resources in

Returns to Market Deployment

Introduction
Resource possession view: focusing on those

resources that create and sustain competitive

advantage
Market deployment- degree of action directed
towards managing organizational resources in the
workplace
Eg- advertising, distribution and promotion
Objective

Moderating effect of firm resources on the deploymentperformance relationship

Direct Effects of Firm Resources and Market

Deployment on Performance
Resource-based view of the firm emphasizes that a

key source of competitive advantage is by firmspecific, difficult-to-imitate resources

Market deployment significantly influences
performance

Moderating Role of Firm Resources on

Returns to Market Deployment
Market deployment depends on type and level of resources thus

resources play a moderating role in the deployment, performance

relationship
Null effect- deployment gives same marginal return regardless of
resources
Positive moderating effect- firms with higher level of resources
attain greater returns from market deployment

H1: The level of intangible marketing resources has a positive effect on returns to
market deployment, with diminishing marginal returns.
H2: The level of intangible technological resources has a positive effect on returns to
market deployment, with diminishing marginal returns

Negative moderating effect- firms with lower level of resources

attain greater returns from market deployment

H3: The level of financial resources has a negative effect on returns to market
deployment, with diminishing marginal returns.

Methodolgy- Data sources

Effects of market deployment on performance-

weekly scanner data from AC Nielsen

Moderating role of accumulated resources- resource
measures annually for 1997 and 1998 from multiple
sources, including Compustat, Corporate Affiliations
Plus, and the U.S. Patent and Trademark database

Measures of market deployment

Market deployment: two levels- distribution action

and coupon activity

Distribution action- the breadth and depth of a
brand's distribution coverage
Coupon activity - the degree of coupon intensity for a
brand over time

the total coupon circulation multiplied by the effective face

value of the coupons

Measure of resources
intangible marketing resources - overall score of

brand equity using four factors: the number of a

brand's line extensions, share of category
requirements, price premium, and intangible value
intangible technological resources- composite index
derived from patent citations and patent
depreciation
financial resources- level of liquid assets
accumulated by a firm

Results
Intangible marketing resources exhibit positive,

diminishing marginal effects on returns to distributionrelated market deployment and on returns to couponrelated market deployment, which is consistent with H1
Level of accumulated intangible technological resources
has a positive, diminishing marginal effect on returns to
distribution; effects for returns to coupon-related
market deployment however is insignificant
Level of financial resources has a negative, diminishing
marginal effect on returns to distribution-related and
coupon-related market deployment

Firm value creation through major

channel expansions: evidence from an
event study in the United States,
Germany and chinaINVESTIGATES
IF
THE
FIRMS
CHANNEL
EXPANSIONS INFLUENCE FIRM VALUE

Channel Expansions
Channel- A set of internal and external channel

entities that facilitate the movement of goods and

services from point of production to point of sale of
customers.
Each channel has its own process through which
customers can select and purchase goods with
specific levels of services and convenience.
Channel expansion occurs in 2 ways:
Increase in distribution intensity
Establishment of new channel

Channel Expansions
Increase in distribution intensity- expansion of

number of channel entities within an existing

channel eg: wholesales, retailers
Establishment of new channel- addition of a new
channel to the firms existing channel system

Firm value

Firm value is measured by abnormal stock returns,

i.e changes in a firms market value in response to

channel expansion
Firm value can be perceived from 2 sides,

Supply side ( firm)

Demand side ( customers)

Supply side mechanisms

Channel
Intra
Inter
Transaction
Production
expansion
channel
Adv- reduces
Search,
Economies
greater
costs
costs
contracting,
competition
ofchannel
members
scale bargaining,
efficiency
bargaining
through
monitoring
powercompetitive
& pricing
and enforcement
autonomy
pressure costs

Demand side mechanisms

Channel expansions
Enlarge a firms market coverage by targeting
additional customer segments or geographical
regions.
Add to the level and variety of channel functions a
firm provides to its customers
Methodology- Event study of 240 announcements

of Chinese, U.S and German firms from 2000 to

2010

Conceptual framework

Results
Channel expansions affect firm value. Establishment

of new channel positively influences firm value.

Increase in distribution intensity positively
influences firm value in firms with high market share
and negatively influences firm value in turbulent
conditions.

Thank you