Managing the Design Innovation–Brand Marketing Interface: Resolving the Tension between Artistic Creation and Commercial Imperatives*

The relationship between design and marketing is an uneasy one. Managing this tension is critical for luxury marketers, whose point of differentiation is a combination of design excellence and market execution. This article explores the tensions between marketing and design and the integration of design into the brand management process in luxury wine firms. The results of the investigation describe five design‐based values held by luxury winemakers: remaining true to craft, expressions of place, stylistic consistency, living up to the brand's heritage, and remaining current. Five methods of integrating design into the firm are identified. These are top leadership support and integration at the strategic level, simultaneous loose–tight coupling, being in the marketplace versus being of the marketplace, intergenerational teams, and deliberate decoupling. This last is a novel solution and involves designers walking a fine line between their commitment to their values and the ongoing evolution of the brand. Essentially, designers of luxury wine products downplay their scientific expertise, market knowledge, and responsiveness in favour of appealing to their five espoused values.     

Sales force obsolescence: Perceptions from sales and marketing executives of individual, organizational, and environmental factors

The trade and academic literature is replete with observations that many sales organizations are in the midst of a redefinition of the strategic role of their sales forces. With today's market forces, change is overdue in many sales organizations. Consequently, the issue of whether the sales force is becoming obsolete has come to the forefront in recent years. As business environments change rapidly, the relevance of the modern sales force comes into question. Data were gathered from 245 midlevel sales and marketing executives on perceived sales force obsolescence. Our findings suggest that obsolescence is a phenomenon for sales organizations to address. The main findings of our study are (1) obsolescence is a phenomenon that affects sales professionals' feelings toward the job (job satisfaction) and outcomes (performance); (2) a firm's market orientation is very important in lowering perceived obsolescence; (3) a learning orientation is important in detecting symptoms of obsolescence; (4) age and education are related to perceptions of obsolescence depending on the type of industry in which the sales force competes: high- or low-tech; and (5) organizational changes can also have a bearing on the sales force's perceptions of obsolescence.     

Winning through innovation and marketing: Lessons from Australia and Vietnam

We examine the role of innovation and marketing, two functional capabilities that have the capacity to play a major role in creating superior marketplace performance in firms. Our study of the two capabilities and firms' marketplace performance also takes into account the contribution of entrepreneurial orientation (EO) and market orientation (MO) to our focal functional capabilities and marketplace performance. The results of a study of firms in Australia and Vietnam show innovation capability, marketing capability mediate the effects of the firm's MO on its marketplace performance. The results also show that the interaction of innovation and marketing capabilities significantly influences firms' marketplace performance more than they do individually. Finally, our results show that MO partially mediates the relationship between EO and innovation and marketing capabilities.     

Market orientation,marketing capabilities,and firm performance

Drawing on traditional resource‐based theory and its recent dynamic capabilities theory extensions, we examine both the possession of a market orientation and the marketing capabilities through which resources are deployed into the marketplace as drivers of firm performance in a cross‐industry sample. Our findings indicate that market orientation and marketing capabilities are complementary assets that contribute to superior firm performance. We also find that market orientation has a direct effect on firms' return on assets (ROA), and that marketing capabilities directly impact both ROA and perceived firm performance. Copyright © 2009 John Wiley & Sons, Ltd.     

Determining the scope and impact of market orientation profiles on strategy implementation and performance

Strategy implementation and performance in organizations are influenced by its market orientation. Market orientation is the collective of employee behaviors that affects strategy implementation, how an organization interacts with its environment and adjusts to changes within that context. The relationship between market orientation, strategy implementation, and performance is robust across environmental contexts. This study identifies ideal behavioral profiles for organizations seeking to maximize performance by considering the scope and impact of market orientation on strategy implementation. This is accomplished by considering market orientation and strategy profiles in relation to performance in a holistic coalignment perspective, corresponding to competitive contexts characterized by varying degrees of market turbulence and competitive intensity. Important strategic and performance implications of this dynamic are revealed that should be considered by academics and practitioners alike. Copyright © 2003 John Wiley & Sons, Ltd.     

Proactive/Responsive Market Orientation and Marketing—Research and Development Integration

The level of integration between the marketing and research and development (R&D) functions may be gauged by degree of communication, information sharing, and collaboration between the functions during the new product development process. This article examines how a firm's strategic choice regarding market orientation may influence the relationship between marketing and R&D personnel, and how this relationship may affect organizational success. Under examination are both the responsive form of market orientation, in which a firm focuses on immediate customer needs and tends to be market driven, and the proactive form, in which the firm focuses on future market needs and tends to be invention driven. It is theorized that responsive market orientation will be more positively related to marketing‐R&D integration due to the market‐driven nature of the orientation. Conversely, it is theorized proactive market orientation will be more positively related to organizational success than responsive market orientation due to the innovation‐driven nature of the orientation. The study was implemented via a Web‐based survey and data analysis was performed using structural equation modeling techniques. The results of this study provide empirical evidence that both proactive and responsive market orientation exhibit a positive relationship with marketing–R&D integration, indicating that both forms of market orientation may lead to closer collaboration between the marketing and R&D functions. Despite the assumption that a proactive orientation is driven by innovation and technology in which R&D may play a more significant role, there is evidence that a high degree of synergy is developed between the groups when the focus is on future market needs. A market‐driven responsive orientation by necessity requires high integration between departments to commercialize products in a timely manner to meet current market needs. Proactive market orientation exhibits a positive relationship with market performance, whereas responsive market orientation does not. The result may show evidence of the “new product paradox," whereby developing products to address immediate market needs may result in lower market performance because the new products may be replacements for obsolete offerings or are actually cannibalizing sales of existing products.     

Commodity price inflation, retail pass-through and market power

When commodity prices rise, wholesalers and retailers of products derived from basic commodities respond by passing along at least a portion of the price increase to consumers. In this paper we examine whether firms respond differently to positive commodity price shocks than to negative commodity price shocks; that is, whether commodity price volatility alters market power. We exploit recent volatility in food commodity prices over the period 2007-2010 to investigate how commodity price shocks translate into market power in two different vertically-structured food product industries: potatoes and fluid milk. For potatoes, we find both wholesale and retail market power decreases (increases) during periods of rising (falling) commodity prices. Moreover, price-cost margins widen a substantially greater degree in response to negative shocks than margins narrow in response to positive shocks, indicating that commodity price volatility increases market power. For fluid milk, we find that market power likewise declines during periods of rising commodity prices; however, market power does not significantly change during periods of falling commodity prices, suggesting that commodity price volatility decreases market power.     

Better use of the industrial marketing concept

Customer orientation is vital in order for industrial marketers to enjoy greater profitability in the industrial marketplace, which is at present characterized by rapidly changing environmental factors. These shifts include increased computerization of the purchasing departments, greater social and legal challenges to various buying organizations, deteriorating economic conditions and the changing role of the industrial purchasing manager. This paper suggests a way by which industrial marketers may adopt the marketing concept. The first part of the paper presents evidence of industrial marketers' failure to adopt the marketing concept and highlights the consequences of this practice. In addition, emphasis is given to the manner in which industrial marketers may adapt to the changing conditions—while capitalizing upon new opportunities that become available—by adoption of the marketing concept. The second part explores the use of market segmentation as a means for adopting the marketing concept. After reviewing the approaches that are now being utilized to segment industrial markets, a more pragmatic approach is presented.     

Assessing the influence of direct payments on the rental value of agricultural land

Economic theory suggests that coupled and decoupled direct payments have different impacts on agricultural rental values because of the different production responses associated with these payments. This study investigates the impact of both coupled and decoupled EU CAP direct payments on rental values in Northern Ireland, using panel data taken from the farm business survey for the period from 1994 to 2002. Theoretically, agricultural land rents are a function of expected market returns and expected associated direct payments. The unobservable nature of expected returns means that actual market returns must be used as a proxy for the former in the empirical specification. As a consequence, the problem of bias due to expectation error arises. Using a GMM technique to take account of this problem, the results of this study show that the impact of CAP direct payments on rental values depends on the type of payment and on the nature of the production characteristics of the associated agricultural commodity.     

Market Learning and Radical Innovation: A Cross Case Comparison of Eight Radical Innovation Projects

Does customer input play the same key role in every successful new-product development (NPD) project? For incremental NPD projects, market information keeps the project team focused on customer wants and needs. Well-documented methods exist for obtaining and using market information throughout the stages of an incremental NPD project. However, the role of market learning seems less apparent if the NPD project involves a really new product—that is, a radical innovation that creates a line of business that is new not only for the firm but also for the marketplace. In all likelihood, customers will not be able to describe their requirements for a product that opens up entirely new markets and applications. To provide insight into the role that market learning plays in NPD projects involving really new products, Gina Colarelli O'Connor describes findings from case studies of eight radical innovation projects. Participants in the study come from member companies of the Industrial Research Institute, a consortium of large company R&D managers. With a focus on exploring how market learning for radical innovations differs from that of incremental NPD projects, the case studies examine the following issues: the nature and the timing of market-related inquiry; market learning methods and processes; and the scope of responsibility for market learning, and confidence in the results. Observations from the case studies suggest that the market-related questions that are asked during a radical innovation project differ by stage of development, and they differ from the questions that project teams typically ask during an incremental NPD effort. For example, assessments of market potential, size, and growth were not at issue during the early stages of the projects in this study. Such issues came into play after the innovations were proven to work under controlled conditions and attention turned to finding applications for the technology. For several projects in the study, internal data and informal networks of people throughout relevant business units provide the means for learning about the hurdles the innovation faces and about markets that are unfamiliar to the development group. The projects in this study employ various techniques for reducing market uncertainty, including offering the product to the most familiar market and using a strategic ally who is familiar with the market to act as an intermediary between the project team and the marketplace.     

The Impact of Market Experience Upon Appraisers' Energy Awareness*

This article explores the notion that appraisers respond to a very rapid change in any factor that will ultimately affect real estate values only after they witness the effects of this change in actual marketplace transactions. An analysis of 685 responses to a recent national appraiser survey suggests that a cause and effect relationship exists between their energy related market experiences and their energy awareness level. Market imperfections and the difficulty of predicting future energy prices are identified as barriers that inhibit the appraisers' ability to achieve a high level of energy awareness.     

Entrepreneurial orientation, exploitative and explorative capabilities, and performance outcomes in export markets: A resource-based approach

Innovation is critical to the growth and success of a firm. In an attempt to renew themselves and compete effectively in the global marketplace, firms must possess both technical and non-technical capabilities. Yet, the extant literature has mainly focused on technology and product development capabilities, disregarding other possible capability domains. This study investigates the role of market-related exploitative and explorative capabilities, together with product development ones, in the context of exporting. Drawing on the resource-based and organization learning theories, we examine the internal process through which entrepreneurial orientation influences performance in export markets and develop a model of entrepreneurial orientation-exploitative and explorative capabilities-advantage-performance relationships. The results indicate that entrepreneurial orientation is a precursor of exploitative and explorative product development and overseas market-related capabilities. The findings also suggest that product development explorative capabilities and overseas market-related exploitative capabilities have a positive effect on new product differentiation, which in turn enhances market effectiveness. Implications for scholars and practitioners are discussed along with suggestions for future research.     

Product Change Intensity, Product Advantage, and Market Performance: An Empirical Investigation of the PC Industry

Product change decisions, such as the frequency of new product introductions, can impact product performance characteristics, sales, and market share of several generations of products and, therefore, a firm's long‐term survival and growth. The purpose of this study was to explore the impact of a firm's product change frequency, also referred to as product change intensity. A conceptual model linking a firm's product change intensity to its product advantage—and, in turn, to its market performance—with strategic product change orientation and technology competence as moderating effects, was used as a foundation for the study's hypotheses. These were tested using hierarchical and linear regressions, based on survey data collected from 55 U.S. companies in the personal computer (PC) industry. The analysis confirmed that a PC firm's product rate of change is positively associated with its product advantage and that its product advantage, in turn, is positively associated with its market share and growth performance. However, the hypothesized moderating effects were not confirmed. Rather, a firm's product change orientation and its level of technology competence are more likely to have a direct impact on product advantage. The implications of these findings are that, in general, firms that release new products frequently will have them viewed more favorably by the market than products with lower change intensities. Also, firms with higher levels of competence in the product technology domain tend to create products with greater market attraction. Finally, more radical changes to PC product architectures may pay off better than relatively minor changes. These results may not apply to other industries due to the specific design of personal computers and the nature of this fast‐paced market. Neither do the findings necessarily apply to all firms regardless of those firms' specific product and market strategies. More research is necessary to understand how a firm's adopted strategy, and the industry in which it operates, affect the relationships demonstrated in this study.     

Market Orientation and the New Product Paradox

The extant literature shows that the strength of the market orientation–performance relationship decays as the terminal measure of performance shifts from new product success to profitability to market share. As Day (1999) concluded, a broader nomological inquiry is needed to more fully understand the nature and limits of market orientation's effects. This suggests that a broader nomological inquiry is needed to fully understand the nature and limits of market orientation's effects.
Utilizing a national sample of marketing executives, the present study's purpose is to build a fuller understanding of the effects of market orientation on firm performance. Its structural equations model includes measures of new product success, profitability, and market share.
The research reinforces a strong positive relationship between market orientation and new product success. The expanded nomological network under study, however, implies barriers to market orientation's effectiveness. First, market-orientation-inspired increases in the priority firms place on "breakthrough" learning without commensurate increases in the priority placed on "breakthrough" innovation capabilities can boomerang and negatively impact new product success. Second, market-orientation-inspired new product development programs that are unable to increase market share can negatively impact profitability. These gatekeepers to the success of market orientation underscore the need for firms to coordinate a strong market orientation with resources and capabilities that increase the effectiveness of the marketing function. Without such coordination, the positive effect of market orientation on new product success may be limited to incremental innovations, and the overall effect of successful new products on profitability may be limited.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

An Exploratory Analysis of the Impact of Market Orientation on New Product Performance

For many firms, emphasizing the importance of market orientation has taken on a mantra-like quality. Mission statements and memos, policies, and procedures all highlight the importance of staying in touch with the customer. It is also widely assumed that the relationship between market orientation and new product performance depends on environmental conditions and product characteristics. To date, however, little empirical evidence has been presented to support the assumption that market orientation influences new product performance. Kwaku Atuahene-Gima addresses this research need in a study of 275 Australian firms. In addition to exploring the relationship between market orientation and new product development activities and performance, his study examines the effects of environmental conditions and product characteristics. Specifically, the study investigates whether the relationship between market orientation and new product performance depends on the degree of product newness to customers and the firm; the intensity of market competition and the hostility of the industry environment; and the stage of the product life cycle at which the new product was introduced. The survey results provide strong support for the basic proposition that market orientation influences new product performance and development activities. The results show a strong positive relationship between market orientation and a new product's market performance. Market orientation is also shown to have a strong positive effect on proficiency of predevelopment activity, proficiency of launch activity, service quality, product advantage, marketing synergy, and teamwork. Although market orientation is generally found to be an important factor in the success of new products, its influence varies depending on the type of new product—that is, radical versus incremental. Market orientation appears to have greater influence on new product performance when the product represents an incremental change to both the customers and the firm. However, this does not mean that a market-oriented approach is unnecessary in the development of radically hew products. Market orientation also has a greater effect when the perceived intensity of market competition and industry hostility are high, and during the early stage of the product life cycle. Because market competition and industry hostility typically intensify as the product life cycle progresses, these findings suggest that the effects of market orientation are pervasive. In other words, managers should not limit their expectations of market orientation to specific projects or specific stages of the development process and product life cycle.     

Market orientation and new-to-the-world products: Exploring the moderating effects of innovativeness, competitive strength, and environmental forces

Recently, there has been a keen research interest in exploring the relationship between market orientation and new product development. The empirical results, however, are mixed, and this means that we do not fully understand these linkages. Furthermore, research concerning the antecedents of new-to-the-world products has focused on the study of a single product. However, it is of obvious interest for organizations to understand what drives a firm's overall performance in the exercise of developing very innovative products. In this empirical study, the authors take a component-wise approach to investigate the effects of market orientation in new-to-the-world product innovation, and examine how other variables interplay with market orientation to affect product development. Firstly, the findings show that both customer and competitor orientations, together with interfunctional coordination, are important drivers of a firm's new-to-the-world product innovation. Secondly, the results indicate that the components of market orientation are differentially moderated by a firm's innovativeness, competitive strength, and also by environmental forces.     

Evaluation of a mining project under the joint effect of commodity price and exchange rate uncertainties using real options valuation

Cash flows generated by mining projects tend to be volatile and are extensively influenced by exogenous variables, notably commodity prices and exchange rates. The traditional discounted cash flow (DCF) method, which is normally used for economic feasibility studies and mining project evaluations, presents inconsistencies because the method fails to adequately address uncertainties and operational flexibilities and often ignores certain specific market conditions. Numerous studies have been carried out for mining project evaluations using the real options valuation (ROV) technique for assessing commodity price uncertainty, but there is no research on the combined effects of price and exchange rate uncertainties. Therefore, in order to assess the economic viability of a mining project more accurately, the commodity price and its inherent volatility, the exchange rate and its inherent volatility, and the correlation parameters between them have been incorporated into the model and used in the evaluation process. One of the interesting findings revealed in the study is that project values are overestimated if only commodity price uncertainty is considered in evaluating the project value instead of the joint effect of commodity price and exchange rate uncertainties. This new ROV technique will explore the opportunity to utilize an alternative methodology for approximating project values and to identify valuation opportunities to enhance economic gains or to mitigate economic losses, where the DCF valuation method does not.     

Farmer organization,collective action and market access in Meso-America

Farmer organization and collective action are often seen as key factors in enhancing farmers’ access to markets. Often, too little attention is directed at (a) the most appropriate types of organization; (b) whether organization makes less or more sense in the case of producers of an undifferentiated commodity or a higher value product; (c) whether the public or private sector is best placed to support farmer organizations; and (d) the conditions necessary for ensuring their economic viability. Research in Mexico and Central America explored these issues for commodity maize and high value vegetables, respectively. The benefits of farmer organization are more evident in the vegetable sector, characterized by high transaction costs associated with market access. However, horticultural farmer organizations in Honduras and El Salvador include less than 5% of total horticultural producers. This is possibly due to farmer organizations’ limited business skills and non-replicable organizational models. There is less incentive for maize farmers to organize to access output markets as the transaction costs are relatively low. The benefits of maize farmer organization are clearer when it comes to accessing inputs such as credit, seed and fertilizer. Farmer organization is a critical factor in making markets work for the poor, but the role and timing of public and private investment in these organizations is poorly understood.     

Effect of time on a marketing strategy

A firm that had enjoyed considerable success in the marketplace during the early stages of the product life cycle found itself losing market share. The firm and its competitors had not changed their marketing strategies since the introduction of the product. This article describes the results of research examining possible causes for the market reversal. It Was discovered that the nature of the organizational buyer and his buyer behavior changed in a predictable manner since product introduction progressed. These changes made the competitors' marketing strategy more effective and probably caused the market reversal. The implications for this firm and for firms marketing innovative products in general are discussed.