Catálogo de publicaciones - libros

The overall impact of marketing activities on firm performance constitutes one of the most fundamental questions in our discipline. Naturally, marketing’s provision of demand-related information (DRI) constitutes a major pillar in this context. Almost “by default“ exists the presumption that provision and usage of DRI leads to more satisfied consumers, more products, and, subsequently, higher profits. Remarkably, very little research has investigated the overall effects of DRI. Further, few pieces of research have empirically investigated the impact of DRI on competition.

To explore the effects of DRI, I collect primary, experimental data. The results indicate that DRI indeed leads to more products, a higher primary demand and a higher satisfaction of customer preferences. Also, firms provided with DRI set prices which correspond less to a product’s quality. Surprisingly and more importantly, however, I do not find significant impacts of DRI on firms’ profitability.

These findings suggest that managers tend to over-act. By over-acting I mean that managers pursue too many new product activities that only seemingly amount to new product opportunities. Importantly, such over-acting diminishes firm profits and marketing productivity. This occurs even though those new products do have a positive profit. Furthermore, the often applauded ideal of “segment size one” may turn out to be a myth as managers may over-segment and, thus, cause marketing’s productivity to decline. The relationship between DRI and competition requires a clear definition and measure of competition. Comparing several alternative measures of competitive intensity, I find ambiguous results regarding the relationship between DRI and competition. Managerial and interesting research opportunities conclude this paper.

The degree of product differentiation of a market is diagnostic of the similarity or dissimilarity of products. It indicates whether products are substitutable or differentiated and therefore constitutes a useful measure of a market’s competitive intensity. The substitutability of products appears to be an appropriate measure of product differentiation. However, its operationalization proves rather complex, especially when it comes to the comparison of product differentiation over time or across markets.

In the present paper, I discuss and develop measures of product differentiation in a multidimensional characteristics space (or in a Hotelling-type market). After specifying the requirements a measure of product differentiation should satisfy, I investigate a number of avenues to measure product differentiation. Interestingly, I am able to illustrate that popular distance measurement functions such as the sum of Euclidean distances or the sum of City Block distances contradict basic notions of product differentiation and therefore contradict the above requirements. Further, I discuss the potential of Weitzman’s measure of diversity to validly measure product differentiation. I offer a transformation of Weitzman’s diversity measure which may turn it into a useful measure of product differentiation. Further, I apply spatial pattern analysis, a technique frequently used in botany, geostatistics, forestry and other research disciplines. From this starting point, I present several indices, functions and statistics based on nearest neighbor distances and discuss their ability to describe product differentiation in the marketing discipline.