Reversing the Logic: The Path to Profitability through Relationship Marketing

Many firms have experienced greater success through implementing relationship marketing strategies. This is achieved by gaining knowledge about their own customers through database marketing and about the general marketplace through marketing research. Over time, this has led firms to adopt a general framework which we call the conventional path to profitability. This conventional framework suggests that new product innovation leads to acquisition, acquisition combined with a rich experience leads to satisfaction, satisfaction leads to loyalty and customer retention, and loyalty/retention leads to profitability. However, we show that some of the links in the framework are weak based on both academic research and marketplace realities. Consequently, we reverse the logic of the conventional path to profitability. We introduce a new approach that starts the customer relationship management strategy with customer profitability and the notion that different customers should be rewarded and satisfied differently. In addition, we outline a strategy that relationship marketing firms can implement, leading to higher levels of customer profitability and offer directions for future research.     

Antecedents of cognitive age: A replication and extension

Cognitive age has been an important construct in studies of older consumers. The present study builds upon previous research by providing theory‐based antecedents of cognitive age. The results suggest that differences in cognitive age do not merely reflect differences in chronological age, and that a person's cognitive age is influenced by his or her experiences of life events that serve as markers of transitions into social roles people are expected to enact at different stages in life. In addition, the experiences of health‐related events, such as chronic conditions, make people aware of their aging, affecting their cognitive age. The influence of cognitive age on consumer‐behavior variables is also examined, and directions for future research are suggested. © 2005 Wiley Periodicals, Inc.     

The Poor and the Social Sectors during a Period of Macroeconomic Adjustment: Empirical Evidence for Jamaica

Considerable uncertainty remains about the human impact of macroeconomicadjustment. Analysis of the impact of adjustment on the poorand on the social sectors is difficult because it involves evaluatinga counterfactual situation in which households are affectedby prices, incomes, and public services with the possibilityof substantial substitutions—all within an economywideframework with complicated concurrent and lagged interactions.In this article, we utilize time-series data for Jamaica toexamine whether macroeconomic adjustment, initiated in the early1980s but intensified in 1984–85, was associated withsignificant deterioration in various indicators of health, nutritional,and welfare outcomes, particularly among the poor. Althoughwe find evidence of substantial cuts in governmental expenditureson social services, there is little confirmation of significantshort-run deterioration in human capital indicators during theadjustment period.     

ARE OUTPUT FLUCTUATIONS TRANSITORY? NEW EVIDENCE FROM 24 CHINESE PROVINCES

Abstract. The fact that an occurrence of a unit root in real output is inconsistent with the notion that business cycles are stationary fluctuations around a deterministic trend makes this an important topic for empirical investigation. We examine this issue for 24 Chinese provinces using the recently developed Lagrange multiplier panel unit root test which allows for a structural break. Our main finding is that real gross domestic product (GDP) and real GDP per capita for Chinese provinces are stationary fluctuations around a deterministic trend.     

The Analysis of Welfare Effects of an Environmental Product Tax: An Application to the Taxation of Car Tyres in Hungary

A sophisticated welfare analysis developed by Morris and Kis (1996) is presented here for the study of the effect of a product charge tax on the car tyre market in Hungary. The analysis is extended and complemented in this paper by, first, using the AIDS model and an algorithm developed by Galarraga and Markandya (2000) to estimate demand elasticities from limited data and, second, including the income effects into the analysis. The latter does not have much impact on the results but the generalisation of the model might be useful for the analysis of different goods where the proportion of income spent on them is more important.     

Organizational energy: an empirical study in Indian R&D laboratories

Analyzing the way organizations function and the processes that operate within these organizations is an important managerial responsibility. We have adopted a people–oriented approach called organizational energy to develop a simple process for diagnosing the level of satisfaction of scientists working in R&D laboratories. Psychic energy as reflected in different work activities in an organization is manifested in energy generating and energy draining activities that can be reduced to an energy count. The present study assesses the use of mental energy by scientific personnel working in three national laboratories in India with the objective of increasing the energy count for improving organizational effectiveness. We hope that the results can be used as the basis for initiating action to improve the motivation and utilization of scientists in India, to support the overall goal of self–reliance in science and technology.     

Nonlinear mapping: An alternative to multidimensional scaling for product positioning

This study tests and contrasts the ability of multidimensional scaling (MDS) and nonlinear mapping (NLM) in recovering complex data structures in attribute space, and aiding researchers and practitioners in making neighborhood interpretations. The relative merits of both MDS and NLM for product positioning are explored and discussed. A formal comparison of the performance of NLM versus MDS is presented using both simulated and actual data. The results of this study provide direction as to the conditions under which a nonlinear mapping algorithm is preferable over MDS.     

Exploring New Product Development Project Review Practices*

Most organizations use new product development (NPD) processes that consist of activities and review points. Activities basically solve problems and gather and produce information about the viability of successfully completing the project. Interspersed between the development activities are review points where project information is reviewed and a decision is made to either go on to the next stage of the process, stop it prior to completion, or hold it until more information is gathered and a better decision can be made. The review points are for controlling risk, prioritizing projects, and allocating resources, and the review team typically is cross‐disciplinary, comprising senior managers from marketing, finance, research and development (R&D), or manufacturing. Over the past four decades, research has greatly advanced knowledge with respect to NPD activities; however, much less is known about review practices. For this reason, the present paper reports findings of a study on NPD project review practices from 425 Product Development & Management Association (PDMA) members. The focus is on three decision points in the NPD process common across organizations (i.e., initial screen, prior to development and testing, and prior to commercialization). In this paper, the number of (1) review points used, (2) review criteria, (3) decision makers on review committees and the proficiency with which various evaluation criteria are used are compared across incremental and radical projects and across functional areas (i.e., marketing, technical, financial). Furthermore, the associations between these NPD review practices and new product performance are examined. Selected results show that more review points are used for radical NPD projects than incremental ones, and this is related to a relatively lower rate of survival for radical projects. The findings also show that the number of criteria used to evaluate NPD projects increases as NPD projects progress and that the number of review team members grows over the stages, too. Surprisingly, the results reveal that more criteria are used to evaluate incremental NPD projects than radical ones. As expected, managers appear to more proficiently use evaluation criteria when making project continuation/termination decisions for incremental projects; they use these criteria less proficiently during the development of radical projects, precisely when proficiency is most critical. At each review point, technical criteria were found to be the most frequently used type for incremental projects, and financial criteria were the most commonly used type for radical ones. Importantly, only review proficiency is significantly associated with performance; the number of review points, review team size, and number of review criteria are not associated with new product performance. Furthermore, only the coefficient for proficiently using marketing criteria was significantly related to new product program performance; the proficiency of using financial and technical information has no association with performance. Finally, across the three focal review points of the NPD process in this study, only the coefficient for proficiency at the first review point, (i.e., the initial screen) is significantly greater than zero. The results are discussed with respect to research and managerial practice, and future research directions are offered.     

Interpartner Legitimacy in the Alliance Development Process*

abstract We propose a framework to understand interpartner legitimacy in strategic alliances. Interpartner legitimacy is the mutual acknowledgment by the alliance partners that their actions are proper in the developmental processes of the alliance. We argue that interpartner legitimacy is needed for cooperation to achieve alliance objectives. We propose three types of interpartner legitimacy – pragmatic, moral, and cognitive legitimacy – and discuss the dynamics of these three types in the formation, operation, and outcome stages of alliance development. Further, we discuss the salience of interpartner legitimacy in different alliance types. Finally, we derive propositions for further research, and discuss strategies that alliance managers can adopt to develop interpartner legitimacy.