Servitization in global business-to-business distribution: The central activities of manufacturers

Manufacturers' servitization development is a prevalent trend in the current business world. Companies then aim to increase customer closeness and complement product offerings with services. However, extant literature on distribution and marketing channels literature remains limited in terms of the implications of servitization for global business-to-business distribution. Therefore, this qualitative multiple case study identifies the central activities of servitizing manufacturers in global distribution. The study concludes with the following research propositions: Servitizing manufacturers develop global service portfolios and customize offerings according to local customer characteristics; build global operation models and adjust local service processes; ensure global brand coherency and design the customer experience according to local customer expectations; and create global value propositions and enhance local value co-creation with business customers. The study outlines managerial implications in terms of organizing global distribution. It also discusses new knowledge sharing and capability needs regarding solution sales, service provision and customer relationship management.     

Antecedents to and outcomes of reverse logistics metrics

Business to business reverse logistics processes are shaped in large part by a firm's strategy to meet regulatory (e.g. waste electrical and electronic equipment directive) and certification (e.g. ISO 14000) requirements. Firms adopt both recommended and internally developed reverse logistics metrics in order to monitor the performance of these processes along the entire value chain, and especially amongst both buyer and supplier marketing interactions. Unfortunately, literature regarding antecedents to and outcomes of reverse logistics metric development is scarce, leaving industrial marketing professionals with limited guidance as to how to establish and gain value from a sophisticated metric program. This study uses goal-setting theory and the knowledge-based view to conceptualize a model that examines transactions from the perspective of both the supplier (inbound reverse logistics) and customer (outbound reverse logistics) in a business to business context. This granular view reveals how actors occupying different supply chain positions manage collaborative marketing processes such as reverse logistics. Survey data were gathered from organizations affiliated with the United States Department of Defense supply chain and hypotheses were tested using partial least squares structural equation modeling. The results corroborate the assertion that information support capabilities and stated goals are antecedents to establishing metrics; however, the study uncovers outcome disparities between inbound and outbound reverse logistics processes. As the roles of both suppliers and customers in complying with take-back regulation continue to grow, the findings of this study provide marketing professionals and scholars with important insights regarding the use of reverse logistics metrics.     

Shouldn't Customers Control Customized Product Development?

Nowadays, customized product development (CPD) is increasingly prevalent in business‐to‐business settings, which has motivated manufacturers into development approaches wherein the customer plays an active role. When the customer is merely viewed as a passive receiver of the customized product, the manufacturer won't be able to truly empathize with the customer and might lack important suggestions to create and improve the customized product. It is, after all, the customer that holds pertinent development information and/or expertise. Yet, customers are not always motivated to participate and often need to be convinced about the manufacturer's ability to develop customized products in a timely and cost‐effective manner. Prior literature on interorganizational relationships suggests the use of formal control, i.e., process and/or output control, to fashion activities in line with expectations so that development goals can be attained. Thereupon, this study posits that the customer's use of such formal controls may stimulate customer participation in CPD. In addition, this study investigates whether manufacturers can indeed benefit from customer participation in CPD through improved new product performance. To accomplish the research objectives, survey‐based and accounting data are collected on 63 collaborative CPD projects between a plastics manufacturer and its industrial customers. In conjunction with an add‐on experimental study regarding the effect of formal control on customer participation, this study reveals that the customer's use of formal control significantly increases the level of customer participation in CPD. Additionally, this study confirms that customer participation positively impacts new product performance. Together, these results imply that letting the customer use process and/or output control helps the customer to believe more in the pursuit of CPD goals and successful product customization, thereby encouraging the customer to participate more actively in CPD. Besides, the findings imply that increased access to market and customer need‐related information obtained through customer participation is indeed critical for successful CPD.     

A big data driven framework for demand-driven forecasting with effects of marketing-mix variables

This study aims to investigate the contributions of promotional marketing activities, historical demand and other factors to predict, and develop a big data-driven fuzzy classifier-based framework, also called “demand-driven forecasting,” that can shape, sense and respond to real customer demands. The availability of timely information about future customer needs is a key success factor for any business. For profit maximization, manufacturers want to sense demand signals and shape future demands using price, sales, promotion and others economic factors so that they can fulfil customer's orders immediately. However, most demand forecasting systems offer limited insight to manufacturers as they fail to capture contemporary market trends, product seasonality and the impact of forecasting on the magnitude of the bullwhip effect. This paper aims to improve the accuracy of demand forecasts. In order to achieve this, a back-propagation neural network-based model is trained by fuzzy inputs and compared with benchmark forecasting methods on a time series data, by using historical demand and sales data in combination with advertising effectiveness, expenditure, promotions, and marketing events data. A statistical analysis is conducted, and the experiments show that the method used in the proposed framework outperforms in optimality, efficiency and other statistical metrics. Finally, some invaluable insights for managers are presented to improve the forecast accuracy of fuzzy neural networks, develop marketing plans for products and discuss their implications in several fields.     

‘It's almost like taking the sales out of selling’—Towards a conceptualization of value-based selling in business markets

While the creation of superior customer value is regarded as fundamental to a firm's long-term survival and growth, little is known about the effective implementation of a firm's value orientation at sales force level. As the sales force plays a pivotal role in implementing marketing strategies, this study adopts a discovery oriented approach and conceptualizes value-based selling as an effective sales approach in business markets. Based on in-depth interviews with sales managers in a variety of industries, we identify and portray three salient dimensions of value-based selling, namely (1) understanding the customer's business model, (2) crafting the value proposition, and (3) communicating customer value. The selling behavior entails a mutual orientation and focuses on the value-in-use potential of the offering for the customer's business profits. We argue that value-based selling is a unique concept that differs from the established selling approaches and propose a conceptual model linking value-based selling to performance outcomes. To further advance our knowledge about the effective implementation of a firm's value orientation, we identify future research avenues embracing qualitative and quantitative research methodologies.     

Business solutions as market signals that facilitate product sales

Many manufacturers claim to be solution providers. However, solution business is notoriously difficult to manage and the associated profitability difficult to demonstrate. This raises the question: why should companies keep trying? We provide one possible answer by applying signaling theory to understand how engagement in solution business functions as a quality signal to a prospective buyer of products. The results of two scenario-based online experiments show that positioning oneself in the market as a solution seller has a highly significant and positive effect on the customer's purchase intention in cases where the customer is only considering the purchase of a single, product-based component. This signal functions as a risk-reduction mechanism and the observed effect is stronger if the seller can boost the credibility of the signal by citing prior reference projects. The primary theoretical contribution of the study is to provide an empirically grounded explanation of a possible outcome from engagement in solution business. For practitioners, our research suggests that a market positioning as a solution provider is strategically important because it supports the product business. Thus, it is advisable for manufacturers to consider persisting with the solution business even in cases where the direct revenues generated by this particular form of service provision in question may not offset the related costs.     

Delegating slotting allowance authority to the sales force

Slotting allowances are payments manufacturers make to retailers in exchange for product distribution. An important question manufacturers face is whether their salespeople should have the authority to allocate these payments and, if so, what are the implications of doing so. Unfortunately, although slotting allowances have been investigated in the literature, there is little guidance on these issues. Providing such guidance is important because slotting allowances are both costly to manufacturers and frequently demanded by retailers. Therefore, we introduce slotting allowance authority into the literature and suggest that it is positively related to customer loyalty toward the salesperson; however, this relationship largely depends on a customer's relationship motivation. Specifically, we offer a contemporary view of customer motivation by demonstrating that the relationship between slotting allowance authority and customer loyalty is less and more positive with increasing levels of intrinsic relationship motivation and extrinsic relationship motivation, respectively. Moreover, our results indicate a conditional process model whereby slotting allowance authority impacts sales growth through customer loyalty conditioned upon intrinsic- and extrinsic relationship motivations.     

Toward Further Understanding the Market‐sensing Capability–Value Creation Relationship

Earlier writings have speculated that the components of customer focus may have differential effects on customer value. This research is responsive to this call as it identifies the behavioral and cultural components that underlie a market‐sensing capability (i.e., customer focus), and undertakes a finer‐grained examination of the impact of the routines through which customer focus is manifested. Specifically, this research investigates the market learning activities (ML) that can affect the depth of the understanding achieved regarding the buyer's requirements and usage context, and the customer‐oriented practices (CO) that can affect the breadth of potential solutions generated to address those requirements. Given the possibility that some buyers may have more sophisticated needs, the role of a customer's performance standards is also considered as a moderating variable. Based on data collected from computer and electronics manufacturers via two separate surveys, the results support that a supplier's ML and CO, respectively, affect perceived customer value. The results also show that a customer's performance standards do not moderate the ML–customer value relationship. Regardless of whether the customer's performance standards (along the lines of product quality, defect rates, and on‐time delivery) are high or low, the seller must be adept at discerning changes in the buying firm's requirements and operational realities. Thus, market learning practices are needed across all customers in order for the supplier to remain synchronized with market changes and deliver superior value to them. Additionally, the results support that the positive association between a seller's CO and perceived customer value is stronger when buyers have more demanding performance standards. The generation of a broader array of potential solutions that is commensurate with a more outward focus is likely to be needed to satisfy customers with more stringent requirements. The disaggregated approach taken in this research contributes to theory by (1) providing greater insight into the domain of the customer focus construct, (2) tracing the mechanisms through which customer focus is reified, and (3) evaluating the possibility that the components of customer focus may have differential effects on customer value. The main practical implication stems from the proposal that market sensing can serve as a core competence and thereby provide the foundation for differential advantage.     

The influence of brand image and company reputation where manufacturers market to small firms: A customer value perspective

Branding research has largely focused on consumer goods markets and only recently has attention been given to business markets. In many business markets the company's reputation has a strong influence on buying decisions which may differ from the more specific product related influence of the brand's image. In this paper we investigate these differences by testing the hypotheses about the influences of brand image and company reputation on customers' perceptions of product and service quality, customer value, and customer loyalty in a business market where there are three manufacturers marketing their brands directly to a large number of small firms. The results indicate that the brand's image has a more specific influence on the customers' perceptions of product and service quality while the company's reputation has a broader influence on perceptions of customer value and customer loyalty.     

The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market‐driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross‐functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer's perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can, therefore, change as product experience and learning increase. From a firm's perspective, it is unclear how to be customer‐oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics. A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm's strategic decisions in developing and launching really new products. The framework is based on in‐depth interviews with high‐tech product managers across several sectors, focusing on the business‐to‐business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm's product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers' customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.     

Developing business customer engagement through social media engagement-platforms: An integrative S-D logic/RBV-informed model

While the service-dominant logic-informed nature of customer engagement in social media has been recognized in business-to-consumer contexts, little is known regarding this theoretical interface in business-to-business (B2B) settings. Insight into business customer engagement (BCE), as expressed through social media and/or other B2B engagement-platforms (e.g. trade shows) and its S-D logic-based antecedents and consequences thus remains limited. Based on the observed gap, this paper integrates the theoretical entities of BCE, B2B social media engagement-platforms, and S-D logic and through its analyses, uncovers the related importance of the resource-based view (RBV) in affecting this association. An integrative S-D logic/RBV-informed model is developed, where BCE denotes an industrial customer's investment of operant/operand resources in supplier interactions via particular B2B engagement-platforms, including social media. The model considers business customer actors and resources in driving business customer resource integration, business customer resource integration effectiveness, and business customer resource integration efficiency, which act as BCE antecedents that extend to coincide with BCE. BCE, in turn, triggers business customer cocreation and relationship productivity, which subsequently, contribute to business customer relationship quality and ultimately, supplier performance. A set of research propositions is derived from the model, which serves as a useful guide for further research. Managerial implications focused on B2B social media marketing are discussed, before we conclude with an overview of research limitations and future research directions.     

A hub-and-spoke model for multi-dimensional integration of green marketing and sustainable supply chain management

Since the concept of sustainability was transformed into business mainstream, both sustainable supply chain management and green marketing have become key topics of academic research and managerial practices. Great advances have been made in the two areas in parallel. It has been recognized that green marketing and sustainable supply chain management should be seamlessly integrated so that green customer's needs can be better met by the supply chain capabilities. Existing research has explored point-to-point integration approach. This paper proposes a new hub-and-spoke integration model to integrate green marketing and sustainable supply chain management from six dimensions: product, promotion, planning, process, people and project (called the 6Ps). Empirical study has been undertaken with industries to test the 6Ps integration model. Results from the empirical study on integration dimensions, integration strategies, and drivers and obstacles for multi-dimensional integration are presented together with managerial implications. The new integration model allows the flows of resources such as information, materials and funds between green marketing and sustainable supply chain management through multiple direct pathways. It has the potential to achieve better overall business performance against the triple bottom line objectives.     

Outsourcing reverse logistics of high-tech manufacturing firms by using a systematic decision-making approach: TFT-LCD sector in Taiwan

Reverse logistics are increasingly crucial for the supply chain strategy of global high-tech manufacturing firms. As reverse logistics operations are significantly more complex than traditional manufacturing supply chains, many high-tech manufacturers are examining the feasibility of outsourcing reverse logistics activities to third party logistics providers (3PLs) from a strategic planning perspective. Internal resources and capabilities are thus examined from a resource-based perspective to identify which reverse logistics service requirements could be fulfilled in-house or outsourced. Therefore, this work presents a systematic approach using the analytical network process (ANP) not only to investigate the relative importance of reverse logistics service requirements, but also to select an appropriate 3PL. Empirical results based on the case of the TFT-LCD sector in Taiwan indicate that information technology management is of priority concern in reverse logistics services. In addition to providing a valuable reference for manufacturers concerned with service requirements for outsourcing, results of this study significantly contribute to the efforts of 3PLs in evaluating whether they comply with potential customer requirements based on their service capabilities.     

The Augmented Service Offering: A Conceptualization and Study of Its Impact on New Service Success

Unlike companies that produce tangible goods, service firms typically cannot rely on product advantage as a means for ensuring the success of a new service. Developing a competitive response to a tangible product may require significant investments of time and effort. In many cases, however, competitors can easily duplicate the core elements of a firm's new service. This fundamental difference between new products and new services means that managers who hope to find the keys to new-service success must look to factors other than sustainable product advantage. Chris Storey and Christopher Easingwood suggest that managers must understand the totality of the service offering from the customer's perspective. They explain that the purchase of a service is influenced not only by the service itself, but also by such factors as the service firm's reputation and the quality of the customer's interaction with the firm's systems and staff—in other words, by the augmented service offering (ASO). Using the results of a study they conducted in the consumer financial services industry in the U.K., they identify the components of the ASO, and they examine the relative contributions of these components to the success of new services. In their model, the ASO comprises three elements: the service product, service augmentation, and marketing support. The core of the ASO—the service product—includes such dimensions as product quality, product distinctiveness, and perceived risk. The study's results suggest that improvements in the service product open up new opportunities for the firm, but have only modest effects on sales and profitability. Rounding out the ASO model are service augmentation and marketing support. Service augmentation encompasses such dimensions as distribution strength, staff-customer interactions, and reputation. The customer recognizes and responds to these elements of the ASO, but they are not part of the product core. Marketing support involves those marketing and management actions that affect the quality of the product and its augmentation, even though customers typically are not aware of them. These elements include knowledge of the marketplace, training of contact staff, and internal marketing. Enhanced service augmentation has significant effects on profitability and sales for the firms in this study, but it does not offer enhanced opportunities. The marketing support elements contribute significantly to all aspects of performance for the firms in this study.     

The external effect of marketing accountability in business relationships: Exploring the role of customer perceived value

This paper explores where and how marketing accountability of a supplier meets customer perceived value in a business relationship setting. If the supplier's firm implements marketing accountability processes, marketing activities are improved, as well as the communication of the value proposition to customers. The supplier's value proposition is in turn reflected through the creation of superior customer perceived value, which triggers attitudinal and behavioral value outcomes. Hence, the marketing accountability of the supplier, through its external manifestation with customers, ultimately influences the supplier's financial results. The aim of the paper is to discuss the external effect of marketing accountability in a business relationship context, which is often suppressed by the prevailing focus on the internal manifestations of marketing accountability, or the inside-out approach. As marketing accountability is an evolving field, bibliometric co-citation analysis is carried out to gain a better understanding of the marketing accountability's domain and scope. On the grounds of the relationship marketing theory and resource-based view, qualitative research was carried out and insights from interviews with marketing managers from different industries were analyzed. The paper concludes by suggesting the operationalization of the marketing accountability construct and pointing out the need for a multilevel and dyadic design of further empirical studies for testing the proposed external effect of marketing accountability.     

Product Design Innovation and Customer Value: Cross‐Cultural Research in the United States and Korea

Innovation is one of the key drivers of success that a firm must utilize to develop a competitive advantage. The ability to innovate is especially important for a firm's survival in dynamic, changing environments. Customer demands are constantly changing, and more purchases are made when a firm's product design incorporates what customers perceive as cutting‐edge innovations. Satisfying customer demands is a distinct challenge for product designers because firms must develop a clear understanding of what aspects of design the customer wants. Although the importance of design has increased, very little research has been done to explain the relationship between product innovation and product design. Studies indicate that design innovation may create greater customer value through improvements in design value. Previous research has been limited and has not provided a clear concept of design innovation or defined the relationship between design innovation and marketing competencies. This paper seeks to offer a conceptual definition of design innovation, and to define the link between design innovation and marketing competencies. This paper utilizes cross‐cultural research to discover how these concepts differ due to cultural differences between the United States and Korea. This research contributes substantially to our understanding of the relationship between design innovation and customer value.     

More is not always better: The impact of relationship functions on customer-perceived relationship value

Customer–supplier relationships have been promoted as a source of value for customers and as a way for suppliers to differentiate. Customer-perceived relationship value (i.e., a customer's overall assessment of the benefits and sacrifices of a given relationship with a supplier) is driven by relationship functions (i.e., the co\ntributions a supplier makes to a customer's value-creation processes). Earlier research categorizes relationship functions into two groups: direct, operation-related functions and indirect, change-related functions. This research finds that indirect functions have less impact than direct functions. Given the widely discussed advantages of supplier involvement in customer innovation, and the importance of information, access to market actors and motivation, this study analyzes why change-related functions have less of an impact than operation-related functions. The empirical results reveal that change-related relationship functions have a non-linear, inverted u-shaped impact on relationship value, and that the degree of customer innovativeness moderates this impact. Thus, while an analysis of all relationship functions is necessary, suppliers wishing to optimize business relationships should pay particular attention to customer innovativeness. The non-linear impact of change-related relationship functions gives rise to several interesting avenues for further research.     

Customer reference marketing: Conceptualization,measurement and link to selling performance

The use of customer references to facilitate marketing and sales in business markets has received growing interest among practitioners and academics. The importance of references has been highlighted in a wide range of contexts, such as customer relationship management, customer value management, sales, and marketing communications. Yet knowledge about the effective application of references in business remains scant, and studies have not addressed in-depth what constitutes customer reference marketing or studied its relation to firm performance. This study contributes to this important but underdeveloped business marketing topic by 1) conceptualizing customer reference marketing based on theory and an extensive qualitative field study, 2) building a measure for the construct using survey data, and 3) demonstrating its relevance by linking the construct to firms' selling performance with additional collected data. The results broaden and specify the current understanding of how to effectively deploy references in business markets and provide evidence of the hypothesized performance, as well as contingency effects. The established conceptual foundations for the phenomenon provide substantial opportunities for practitioners and theory-testing oriented business marketing research.     

Responsive and Proactive Market Orientation and New‐Product Success*

What is the relationship between market orientation and new‐product success? This important question has not been examined adequately to date because the concept of market orientation has been measured too narrowly. The concept of market orientation implies both responsive market orientation, which addresses the expressed needs of customers, and proactive market orientation, which addresses the latent needs of customers—that is, opportunities for customer value of which the customer is unaware. In the numerous market orientation–performance studies to date, the measure of market orientation has consisted virtually entirely of behaviors related to satisfying customers' expressed needs rather than satisfying their latent needs as well. The present study extends the measurement of market orientation to match the full scope of the concept—to measure both responsive market orientation and proactive market orientation. Using data from a sample of technologically diverse businesses, the present study develops a measure of proactive market orientation, refines the extant measure of responsive market orientation, and analyzes the relationship of a business's responsive and proactive market orientation to its new‐product success. The study findings imply that for any business to create and to sustain new‐product success, a responsive market orientation is not sufficient and, thus, that a proactive market orientation plays a very important positive role in a business's new‐product success. These findings make intuitive sense. For if in developing its new products a business relies solely on what customers state as their new product needs, the business is very vulnerable economically. Such a business is vulnerable not only for relying on customers' best guesses for new products, many or most of which may have little long‐term economic value for either party, but also to competitors' parallel new product responses and the inevitable resulting price competition. A business that relies solely on customers' expressed needs to develop its new products creates no new insights into value‐adding opportunities for the customer and thereby creates little or no customer dependence and foundation for customer loyalty. The important role for proactive market orientation in new‐product success is intuitively obvious—and is supported empirically in this study.     

Customer information resources advantage,marketing strategy and business performance: A market resources based view

Chief among a firm's market-based resources are its relational resources such as brand equity, customer equity and channel equity that result from its interactions with customers and marketing intermediaries, and intellectual resources – accumulated knowledge about entities in the market environment such as consumers, end use and intermediate customers and competitors. In the evolving digital data rich market environment, customer-based resources, a subset of a firm's market-based resources, are becoming increasingly important as potential sources of competitive advantage. Customer information assets refer to information of economic value about customers owned by a firm. Information analysis capabilities are complex bundles of skills and knowledge embedded in a firm's organizational processes employed to generate customer knowledge from customer information assets. Customer insights or knowledge is a firm's extent of understanding of customers that informs its business decisions. Building on the resource-based, capabilities-based and knowledge-based views of the firm, resource advantage theory of competition, and the outside-in and inside-out approaches to strategy, this article presents a market resources-based view of strategy, competitive advantage and performance. The article presents a framework delineating the relationship between a firm's customer information based resources, marketing strategy and performance, and discusses implications for theory, research and practice.