Market-based Assets Research Articles

Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets

Dysfunctional competition (typically involving violation of intellectual property rights) is common in emerging economies, making it difficult for innovators to profit from their innovation activities. Firms operating in emerging economies must choose appropriate strategies to address the idiosyncratic challenges of dysfunctional competition and achieve competitive advantage. The utility of competitive strategies (cost leadership and differentiation) and market-based assets (customer orientation, competitor orientation, and marketing creativity) were assessed for their ability to help an innovating firm deal with dysfunctional competition and improve the returns from innovation. Data from a survey of managers in 282 Chinese high technology companies demonstrates that an emphasis on cost leadership, a customer orientation and creative marketing predicts better product innovation performance in environments with a high level of dysfunctional competition. Differentiation and a competitor orientation were found to be less effective.

Top management attention to trade shows and firm performance: A relationship marketing perspective

B2B marketers allocate significant resources to trade shows, but often struggle to make a strong business case for these activities. Responding to calls to justify such investments, this research examines the effect that top management attention to trade shows has on firm value. Based on attention theory, this study suggests that top management's focus on trade show relationship marketing efforts results in better trade show performance. This helps develop market-based assets that in turn augment firm value. Using an event study to extrapolate the contingent effect that top management attention to trade shows has on firm value, the basic hypothesis is supported. Additionally, this research tests three top management orientations that are key to performing trade show relationship marketing activities. The findings address the absence of top management from extant trade show research and provide marketers with new insights related to maximizing their trade show investments.

Marketing spending and aftermarket performance of IPO firms

PurposeIncreasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs).Design/methodology/approachTheories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance.FindingsThe authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm.Research limitations/implicationsTheoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm.Originality/valueWhile Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.

Marketing accounts

Marketing actions frequently create long-term value yet this is often not recorded in financial accounts. The same records are typically used for internal reporting limiting both recognition of the value created by marketing, and accountability for the misuse of market-based assets. Creating comprehensive “marketing accounts” can mitigate the problems caused by financial accounting's omission of market-based assets. We explain current accounting practice, outline the idea of marketing accounts, and contrast this with current accounting practice.Marketing accounts capture the value of market-based assets, applying accounting's matching concept as consistently as possible to treat marketing as an investment where appropriate. These accounts are based upon expected value, and are feasible within accounting rules given they aim only to aid management, not investor, decision making. Marketing accounts vary between, but not within, firms, and are comprehensive and regular. Finally, they are controlled by marketers with assumptions and models recorded and approved by the chief marketing officer.We conclude by illustrating how to implement marketing accounts.

Capturing Value in the Service Economy

The benefits of specialization have been driving the rise of the service economy and pushing capability frontiers and economic growth. In service economies, almost any activity, asset, and skill can be bought on competitive markets, making it harder to build competitive advantage on those inputs. Therefore, firms have to carefully decide what to own in order to capture value, and they need to prioritize investments in those assets while outsourcing almost everything else. Service businesses capture value by connecting resource markets with service markets, and we identified three types of assets that allow a firm to connect markets and capture value in the process. They are: (1) resource-based assets shaping capabilities and capacities of services; (2) platform-based assets connecting resource owners with users, allowing to generate network effects, critical mass, volume and/or liquidity; and (3) market-based assets providing the interface for interaction with customers. We propose further three key dimensions that shape each service-asset type: Physical capital, intellectual and social capital including service climate as a framework for a typology of service assets. We identified further two domains of service management that allow firms to capture value: (1) business models for designing the architecture and “Gestalt” of value creation; and (2) the effective management of an integrated web of processes and activities. We discuss implications for management and further research.

The role and impact of firm’s strategic orientations on launch performance: significance of relationship orientation

Purpose This study examines the role and relative impact of market orientation, product orientation and relationship orientation on new product launch performance, investigating product advantage and market-based assets as alternative mediating mechanisms, which link these strategic orientations to launch performance. Design/methodology/approach Survey data from the pharmaceutical industry are used to test hypotheses in the research model using partial least squares modeling. Findings Findings show that while each examined strategic orientation relates positively to launch performance, their performance effects and related mechanisms vary significantly. Results demonstrate a firm’s relationship orientation is the strongest predictor of launch performance, and accumulated market-based assets represent an alternative relational mediator besides product advantage linking firms’ orientations and launch performance. Research limitations/implications The empirical study is based on cross-sectional data collected in one specific industry sector. The authors encourage researchers to confirm the key findings in different industry and other contextual settings. Practical implications New product launch can be effectively managed as a relational activity. Firms benefit from paying explicit attention to strategic orientations and relationships. Especially, top management should foster a relationship-oriented organizational culture, develop relational competences and fully use the firm’s accumulated market-based assets for increased launch performance. Originality/value The study extends knowledge on the role of strategic orientations in launch performance by highlighting the significance of relationship orientations and providing novel knowledge on the key mediating mechanisms between strategic orientations and launch performance.

Investing in Buyer–Seller Relationships in Transitional Markets: A Market–Based Assets Perspective

In this study, the authors explore whether investments in market-based assets outside of a market economy can be an effective tool for influencing buyer behavior. Using data from a sample of Russian physicians, along with both primary and secondary information on foreign pharmaceutical producers operating in Russia, they demonstrate that firms’ investments in market-based assets—which are positively associated with prescription behavior—are associated with physician perceptions of relationship quality. They further find that these investments are most effective when marketers and buyers reside in culturally similar markets. The results also indicate that relationship quality becomes less important for buyer behavior in the presence of authoritative mechanisms—a feature of market transition—and under conditions of low product complexity. In addition, the link between relationship quality and prescription behavior is stronger when manufacturers reside in countries that are politically similar to Russia. These findings demonstrate that the concept of “market”-based assets and their influence on buyer behavior and potentially firm performance may depend on the existence of at least certain characteristics of a market context.

The impact of market-based assets on innovativeness and business performance

This study examines the influence of market-based assets on innovativeness and business performance. The concept of market-based assets builds on the resource-based view (RBV) of the firm. Despite several recent studies, empirical evidence of the dependencies between market-based assets and innovativeness remains scarce. Based on existing literature, this paper identifies three distinct market-based assets: customer-based assets, channel-based assets and partner-based assets. In particular, the study investigates the effects of these assets on both product innovativeness and business process innovativeness, and on business performance in terms of effectiveness and efficiency. The data are from 5,627 firms from 13 countries analysed using structural equation modelling. The results show that the three market-based assets affect product innovativeness more strongly than business process innovativeness. The results show that market-based assets and innovativeness are key drivers of business performance.

The impact of market-based assets on innovativeness and business performance

This study examines the influence of market-based assets on innovativeness and business performance. The concept of market-based assets builds on the resource-based view (RBV) of the firm. Despite several recent studies, empirical evidence of the dependencies between market-based assets and innovativeness remains scarce. Based on existing literature, this paper identifies three distinct market-based assets: customer-based assets, channel-based assets and partner-based assets. In particular, the study investigates the effects of these assets on both product innovativeness and business process innovativeness, and on business performance in terms of effectiveness and efficiency. The data are from 5,627 firms from 13 countries analysed using structural equation modelling. The results show that the three market-based assets affect product innovativeness more strongly than business process innovativeness. The results show that market-based assets and innovativeness are key drivers of business performance.

Driving shareholder value with customer asset management: Moving beyond customer lifetime value

Customer relationships can be conceptualized as market-based assets. Links have been shown between management of these assets and the creation of shareholder value. However, the business-to-business applications of customer asset management seem to lag behind the applications suggested in a business-to-consumer context. This occurrence is possibly related to an over-emphasis on customer lifetime value-based approaches that do not cover the complexities of business-to-business relationships. The authors posit that customer asset management applications should pay attention to all four drivers of shareholder value: revenue, cost, assets, and risk. Using as their basis a review of literature and the findings of an empirical research process consisting of three longitudinal case studies, the authors develop a conceptual framework, identify four research propositions, and outline 11 ways of managing business-to-business customer relationships for increased shareholder value. The findings from the case studies suggest that B2B firms are able to acknowledge all suggested shareholder value drivers. Findings also suggest that firms should develop customer portfolio models and differentiate their customer management concepts in order to move customer asset management beyond traditional acquisition–retention optimization.

Determinants of New Product Launch Success in the Pharmaceutical Industry

This study identifies key determinants of new product launch success, examines their role and impact on launch performance and links them to the different stages of product life cycle in the pharmaceutical new product launch context. Survey data from pharmaceutical industry was analysed with multivariate data analysis using latent variable regression modelling followed by the calculation of selectivity ratios to reveal the most informative determinants. The results distinguish between the determinants driving financial new product launch success and those driving customer acceptance. Whereas financial success is driven by strategic choices and tactical decisions, the relationship approach is vital in fostering customer acceptance at different phases of the innovation diffusion. Product advantage and relationship marketing activities contribute to achieving key opinion leaders’ acceptance in the early phase, while the accumulated market-based assets largely determine acceptance of a majority of other target customers in the later phase. Furthermore, launch performance is enhanced by a relationship-oriented company culture. The study emphasises the significance of relational aspects in new product launches and provides both important theoretical insights and managerial implications for commercialising new pharmaceutical products.

Service quality, cash flow volatility, and moderating environmental factors

Purpose– Service quality is a critical factor leading to firm returns. However, its benefit on the firm risk side metric is not clear. The purpose of this paper is to link firm service quality and firm cash flow volatility (CFV) and further investigates this relationship by incorporating the moderating effects from three environmental variables: munificence, dynamism, and complexity.Design/methodology/approach– This study is based on a secondary data approach. The data are collected from multiple sources such as AMAC and COMPUSTAT. Robust regressions with a panel data approach are adopted to analyze the data.Findings– Corporate service quality level has a strong effect in reducing firm CFV. Its impact is found to have a varied strength when the relationship is moderated by the environmental factors. In particular, it functions more strongly in high dynamism and high complexity environments.Practical implications– Service quality has effects beyond the previous thinking that is mainly concentrated on firm profits. Managers now should know that it is also effective in smoothing cash flow and thus yields benefits for future corporate planning. This is particularly meaningful for companies that operate in a turbulent industry as well as in a highly competitive market.Originality/value– This study is the first attempt that links firm service quality and firm risk factor represented by the volatility of income flow. It extends the role of service quality to an area that is increasingly emphasized by marketing researchers, e.g. the risk aspect of firm market-based assets.

The value relevance of brand equity, intellectual capital and intellectual capital management capability

Building upon the marketing literature of brand equity (BA), marketing–finance interface, strategy literature regarding intellectual capital (IC), and resource-based theories, this research develops a conceptual framework which links various assets, capabilities and firm value. This research studies three types of market-based assets and capability: BA, IC and intellectual capital management capability (ICMC). Various statistical techniques were used to measure the constructs in the research model, such as data envelopment analysis, structural equation modeling and factor explanatory financial model. Stock return response modeling was used to test the research hypotheses. On the basis of a sample of US semiconductor companies, this study shows that IC and ICMC capability are associated with firm value. The findings offer a variety of theoretical contributions to marketing–finance interface research stream, and provide actionable insights on management resource-allocation decisions.

Interfirm marketing alliance: understanding the influences of complementarity, compatibility, and combinative capacity on success

Firms seek interfirm marketing alliances as a source of critical information and resources in the development of new products and services, achieving and sustaining competitive advantage, and as a means of realising returns that would be unachievable operating individually. When these linkages are strategic and take the form of a highly collaborative alliance, firms are compelled to contribute firm specific assets, make alliance specific investments, and construct alliance specific governance in an effort to leverage each other and develop new alliance specific assets that may be used to establish and maintain competitive advantage. This article provides an alliance framework that helps to explicate the interactive relationships that occur in strategic marketing alliances. It further delineates the necessity for complementarity, compatibility, and combinative capacity in the context of assets, investments, and governance. Finally, it offers seven propositions in the context of market-based assets that demonstrate the framework's potential use in future empirical research.

중국 진출 한국 기업의 시장기반자산 - 시장성과 간의 관계에 관한 실증 연구

중국 진출 한국 기업의 시장기반자산 - 시장성과 간의 관계에 관한 실증 연구

There’s Something in a Name: Value Relevance of Congruent Ticker Symbols

Choosing assets for their portfolios is a complex decision, and investors, endowed with limited information processing capacity are influenced by various psychological factors. One such factor is investors’ processing fluency with the firm’s stock. In this paper, we introduce the idea of congruent ticker symbol, defined as whether or not the firm’s ticker symbol is similar to its corporate name (e.g., DELL for Dell, Inc.) Further, we propose that a firm’s congruent ticker symbol, in conjunction with other firm characteristics, will increase investors’ processing fluency with its stock and, therefore, affect its intangible value. We consider the firm’s size, performance, advertising, and distribution presence as firm characteristics that will interact with congruent ticker symbol to affect its intangible value. Data from 181 publicly listed US retailers between 1994 and 2006 strongly support the hypotheses relating the contingent effects of congruent ticker symbols to intangible value. While, firms’ congruent ticker symbols do not independently increase their intangible values, they do so, in conjunction with their performance, advertising, and distribution presence. For marketing theory, congruent ticker symbols emerge as contingent intangible market-based assets that create enduring shareholder value with other firm characteristics. For managerial practice, the findings offer guidance on ticker symbol-naming strategies that can increase shareholder value.

Firm web visibility and its business value

Purpose – The purpose of this paper is to theoretically analyze and empirically test the business value of firm web visibility, including its relationship to advertising efficiency and long-term financial performance (i.e. shareholder value). Design/methodology/approach – A conceptual framework is established to analyze firm value of web visibility through its market effects. Hypotheses on the associations between firm web visibility and advertising efficiency and shareholder value are tested by cross-sectional analysis of 1,331 firms in six industries and four industry sectors. The authors control for several firm- and industry-level factors. Findings – The results consistently support the two hypotheses, i.e., first, a positive and significant relationship between firm web visibility and advertising efficiency; and second, a positive and significant relationship between firm web visibility and shareholder value. Practical implications – In addition to increasing web traffic, firm web visibility has business value and helps to enhance advertising efficiency and shareholder value. Managers can use the web references as a valuable tool for marketing success when the use of traditional advertising reaches saturation. Managers should actively monitor and use web visibility as a web management measure in practice. Originality/value – This research provides convincing evidence to support both short-term and long-term business value of web visibility and suggests that web visibility be recognized and managed as a market-based asset.

Market-based Assets. Building Value through Marketing Investments

The goal of the company is to deliver value to investors. According to the resource-based view theory, companies need to develop a differential advantage in order to maintain earnings in excess of the cost of capital. Resources which are valuable, rare, inimitable and non-substitutable make it possible for businesses to develop and maintain competitive advantages. Companies may create differential advantages by building market-based assets. Emerging trends suggest that the purpose of marketing is creating and managing market-based assets in order to derive shareholder value. In these conditions, the resources allocated to marketing strategies should be viewed as investments which create assets. This paper highlights the way marketing activities and marketing expenditures contribute to creating market-based assets and, implicitly, to creating the value at the level of the companies.

Destination marketing and the service-dominant logic: A resource-based operationalization of strategic marketing assets

Despite the popularity of the resource-based view of the firm as a theoretical mechanism for the explanation of organizational performance, this framework has received surprisingly little attention within the context of destination marketing organizations (DMOs). The purpose of this research is to enhance extant perspectives of destination competitiveness by considering the destination marketing function from the dual theoretical lenses of the resource-based view of the firm and the service-dominant logic of marketing. In particular, this research focuses on the resource classification schemas underpinning these two frameworks and proposes a conceptual extension of their core phenomena to the domain of destination marketing. Within this discussion, a conceptual and operational definition of competitive market-based assets is proposed. This multifaceted construct is discussed as a potential outcome of market-oriented destination marketing and as an antecedent to DMO performance.

Wholly owned foreign subsidiary relation-based strategies in volatile environments

Drawing from dynamic capability, institutional, nonmarket strategy, and social-network literatures, we detail wholly owned subsidiary (WOFSs) relation-based strategies (RBSs). We explain how deploying RBSs with key nonmarket and market actors will create competitive advantages for WOFSs operating in volatile emerging market environments. We posit that dynamic capabilities will drive the deployment of RBSs by WOFSs, and argue that the positive relationship between dynamic capabilities and RBS deployment will strengthen as perceived institutional uncertainty increases. We further suggest that the greater the strength and frequency of RBS deployment, the more likely that a WOFS will establish a combination of nonmarket-based and market-based embedded assets. Also, our theory proposes that greater integration of nonmarket-based and market-based assets will enhance WOFS financial performance outcomes. Implications for future research are discussed.