The effect of cause-related marketing on firm value: a look at Fortune’s most admired all-stars

Companies are increasing their use of cause-related marketing as a means of communicating their commitment to corporate social responsibility while accomplishing their strategic goals. Although prior studies suggest that consumers react positively to cause-related marketing programs, understanding of their impact on financial performance remains limited. To address this gap, the authors employ an event study to examine the effects of cause-related marketing announcements on shareholder value using a sample of firms that appeared on Fortune’s Most Admired All-Star list between 2005 and 2017. Study results show that announcement of these initiatives results in a significant loss of shareholder value. These losses are most pronounced for firms making monetary-only contributions, in comparison to those that make in-kind donations. In addition, the negative effects are mitigated for firms that have stronger reputations, have greater resource slack, and operate in more dynamic industries. Moreover, low-reputation and low-slack firms benefit most from in-kind contributions.

     

When does salespeople’s customer orientation lead to customer loyalty? The differential effects of relational and functional customer orientation

Is a customer orientation universally effective for salespeople? Or does its effectiveness depend on the selling situation? While previous research has largely neglected this question, this study investigates contextual influences on the link between customer-oriented behaviors and customer loyalty. To do so, it takes a role theory perspective on salesperson customer orientation by distinguishing functional customer orientation and relational customer orientation. It then investigates which type of customer orientation is more effective with regard to establishing and maintaining customer loyalty, given the specific situation. Here, the authors analyze the moderating impact of a customer’s communication style (task orientation and interaction orientation) and specific characteristics of a supplier’s products (product individuality, importance, complexity, and brand strength). Multilevel analysis of triadic data from a cross-industry survey of 56 sales managers, 195 sales representatives, and 538 customers provides empirical support for positive, non significant, and even adverse effects of salespeople’s customer-oriented behaviors on customer loyalty, depending on contextual variables.     

The effects of supplier capabilities on industrial customers’ loyalty: the role of dependence

This research examines whether suppliers’ capabilities impact OEM customers’ dependence on the supplier and thereby generate customer loyalty. Using a sample of purchasing managers focusing on a single key component supplier, we examine three supplier capabilities, two dependence dimensions, and three aspects of customer loyalty. Core offering capability increases the customer firm’s benefit-based dependence. Operations capability has a more comprehensive effect, enhancing both benefit-based and cost-based dependence. Benefit-based dependence leads to relational loyalty and, through its effect on relational loyalty, to insensitivity to competitive offerings and future purchase expansion. Cost-based dependence motivates insensitivity to competitive offerings, but does not affect relational loyalty or purchase expansion. The supplier’s communication capability is associated with relational loyalty, but this effect does not flow through the customer firm’s dependence. The divergent pattern of antecedents and effects of benefit-based dependence and cost-based dependence may explain the inconsistent and insignificant research findings in previous research on dependence. Our results suggest that adopting a bi-dimensional model of dependence more fully captures the theoretical domain of dependence, thereby permitting researchers to better examine its role in supply chain, channel, and marketing relationships.     

The effects of perceived scarcity on consumers’ processing of price information

This research examines how perceived scarcity influences consumers’ processing of price information. To explain the effects of scarcity, a conceptual framework which incorporates both the motivational and the interference effects of scarcity on information processing is developed. The results from two studies show that under scarcity, consumers’ perceptions of quality and monetary sacrifice exhibit different response patterns, depending on the relative price level and consumers’ motivation to process information. We provide insights into how these perceptions of quality and sacrifice are integrated to form perceptions of value. Additional analyses of thought measures provided further understanding of the underlying processes that influenced the evaluation of price information under scarcity.

Market-based capabilities and financial performance of firms: insights into marketing’s contribution to firm value

While there is recognition that market-based capabilities contribute to a firm’s financial performance, the exposition is largely conceptual (Srivastava et al. Journal of Marketing 62:2–18, 1998; Journal of Marketing 63:168–179, 1999). Using a resource based view of the firm, the present study proposes that (1) market-based assets and capabilities of a firm impacts (2) performance in three market-facing business processes (new product development, supply-chain and customer management), which in turn, influence (3) the firm’s financial performance. It develops related hypotheses and tests the framework empirically. The study also examines for the first time the interrelationship among the three business processes and their impact on the market value of firms. Further, the study examines the moderating influence of two organizational variables—size and age of the firm. Overall, the major contribution of the study is that it offers a process linkage between capabilities, process performance and financial performance. The results of this research will provide strategic insights to managers on optimal customer management, product development and supply chain strategies.

The effects of customer acquisition and retention orientations on a firm’s radical and incremental innovation performance

The effect of a firm’s strategic focus on acquiring new customers and/or retaining existing customers (customer acquisition and retention orientations) on innovation performance is evaluated. With dyadic primary data collected from 225 strategic business units, the authors demonstrate that a firm’s focus on customer acquisition enhances its radical innovation performance but hinders its incremental innovation; a firm’s strategic orientation toward customer retention has the opposite effects. These effects are mediated by both customer knowledge development and the firm’s resource configuration decisions. In addition, the authors provide insight into the impact of managerial decision trade-offs when implementing customer engagement strategies. The results suggest that the effect of customer acquisition and retention orientations on customer knowledge and investment decisions, and ultimately on innovation performance, is amplified when a firm consistently implements a specific engagement strategy. Implementing a dual strategy by attempting to focus on both acquiring and retaining customers undermines resource configuration decisions, with diverse effects on both radical and incremental innovation.     

The trade-off of servicing empowerment on employees’ service performance: examining the underlying motivation and workload mechanisms

Literature on empowerment as an internal marketing practice primarily documents positive effects on employees’ job performance, though increasing evidence suggests conflicting viewpoints. This study adopts an agency theoretical perspective to propose a workload mechanism, according to which the delegation of power from supervisors (principals) to service employees (agents) (i.e., servicing empowerment) is costly to employees and increases their perceived workload, which hampers their performance to serve customers. Using a laboratory experiment and a survey, this research reveals that the perceived workload and extant motivational mechanisms have conflicting effects on employees’ service performance. The former exerts a significant negative impact on tasks that involve conflicting principal-agent interests (e.g., handling customer complaints) but not on tasks with aligned principal-agent interests (e.g., organizational citizenship behaviors). Two control systems, performance appraisal (accurate and infrequent feedback) and principal-agent service goal congruence, mitigate the dysfunctional effect of perceived workload on employees’ service performance.     

The role of leadership in salespeople’s price negotiation behavior

Salespeople assume a key role in defending firms’ price levels in price negotiations with customers. The degree to which salespeople defend prices should critically depend upon their leaders’ influence. However, the influence of leadership on salespeople’s price defense behavior is barely understood, conceptually or empirically. Therefore, building on social learning theory, the authors propose that salespeople might adopt their leaders’ price defense behavior given a transformational leadership style. Furthermore, drawing on the contingency leadership perspective, the authors argue that this adoption fundamentally depends on three variables deduced from the motivation–ability–opportunity (MAO) framework, that is, salespeople’s learning motivation, negotiation efficacy, and perceived customer lenience. Results of a multi-level model using data from 92 salespeople and 264 salesperson–customer interactions confirm these predictions. The first to explore contingencies of salespeople’s adoption of their transformational leaders’ price negotiation behaviors, this study extends marketing theory and provides actionable guidance to practitioners.     

Relational benefits in services industries: The customer’s perspective

This research examines the benefits customers receive as a result of engaging in long-term relational exchanges with service firms. Findings from two studies indicate that consumer relational benefits can be categorized into three distinct benefit types: confidence, social, and special treatment benefits. Confidence benefits are received more and rated as more important than the other relational benefits by consumers, followed by social and special treatment benefits, respectively. Responses segmented by type of service business show a consistent pattern with respect to customer rankings of benefit importance. Management implications for relational strategies and future research implications of the findings are discussed. Kevin P. Gwinner is an assistant professor of marketing in the School of Business at East Carolina University, North Carolina. His primary research interest centers on improving and managing the performance of frontline, customer-contact employees. His research has been published in theInternational Journal of Service Industry Management, International Marketing Review, and theJournal of Marketing Education. Dwayne D. Gremler is an assistant professor of marketing in the College of Business and Economics at the University of Idaho. His current research interests are in services marketing, particularly customer loyalty and retention, relationship marketing, service encounters, and word-of-mouth communication. His work has been published in theInternational Journal of Service Industry Management, theJournal of Professional Services Marketing, andAdvances in Services Marketing and Management. Mary Jo Bitner is a professor of marketing and the research director for the Center for Services Marketing and Management at Arizona State University. Her research focuses on customer evaluations of service, service quality, and service delivery issues. She has published in theJournal of Marketing, Journal of the Academy of Marketing Science, Journal of Business Research, Journal of Retailing, and theInternational Journal of Service Industry Management. She is coauthor of the textServices Marketing (McGraw-Hill, 1996).     

Peter Drucker—the grandfather of marketing: an interview with Dr. Philip Kotler

In this interview, Professor Philip Kotler, S.C. Johnson & Son Professor of International Marketing at the Kellogg School of Management at Northwestern University, reflects on Peter Drucker’s personal and professional impact on Kotler’s work. He discusses his personal encounters with Peter Drucker and their common interests, including non-profit management and Japanese art. Dr. Philip Kotler is an S.C. Johnson & Son distinguished professor of international marketing at the Northwestern University Kellogg School of Management in Evanston, Illinois.     

Drucker’s insights on market orientation and innovation: implications for emerging areas in high-technology marketing

In 1954, Drucker boldly declared that organizations have only two basic functions, marketing and innovation. While true for any organization, this insight is particularly pertinent for technology-based businesses. The complicated environment surrounding high-tech companies creates a great need for sophisticated marketing. Yet these companies continue to have under-developed competencies in marketing and in understanding customer needs. This essay explores Drucker’s insights with respect to two particularly salient issues for high-tech companies: developing and implementing a market orientation and break-through innovations. We review Drucker’s insights and synthesize them with the scholarly research on these issues. Finally, we discuss three emerging areas in high-tech marketing where academics and managers could build on Drucker’s insights to guide future research and practice: market driving, customer co-creation, and corporate social responsibility. These illustrative examples highlight that even today, Drucker’s writings continue to offer remarkable guidance to scholars and managers who are willing to take the time to reflect, understand, and incorporate his insights in the unique context of high-tech industries. Electronic supplementary material  The online version of this article (doi:) contains supplementary material, which is available to authorized users.

It’s not easy being green: the effects of attribute tradeoffs on green product preference and choice

Despite widespread pro-green attitudes, consumers frequently purchase non-green alternatives. One possible explanation for this value–action gap is the tradeoffs that green products often force on their users: higher prices, lower quality, and/or reduced performance. The current study uses conjoint analysis to uncover the attribute preferences of car and TV buyers when green attributes are negatively correlated with conventional attributes. These attribute preferences are then used to predict choice among sets of green and less green alternatives currently sold in the marketplace. Strong preferences for green products are found when tradeoffs are not apparent, but preference shifts significantly to less green compromise alternatives when the actual attribute tradeoffs are considered. Although general preference is reduced by tradeoffs, a green product offering some compensatory advantage on a conventional attribute does attract a broader spectrum of consumers, while only “dark green” consumers are willing to pay the price to go green when the product offers few compensatory qualities. In all cases, however, predicted buyers of the greenest technologies offset some of their environmental benefits by choosing more energy-thirsty specifications on negatively correlated conventional attributes. Managerial and public policy implications of the findings are then discussed.     

The effects of extrinsic product cues on consumers’ perceptions of quality, sacrifice, and value

The authors report the results of two experiments designed to test the effects of extrinsic cues—price, brand name, store name, and country of origin—on consumers’ perceptions of quality, sacrifice, and value. The results of the experiments support hypothesized linkages between (a) each of the four experimentally manipulated extrinsic cues and perceived quality, (b) price and perceived sacrifice, (c) perceived quality and perceived value, and (d) perceived sacrifice and perceived value. The results also indicate that the linkages between the extrinsic cues and perceived value are mediated by perceived quality and sacrifice. R. Kenneth Teas is a distinguished professor of business in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from the University of Oklahoma. His areas of research include consumer behavior and decision processes, marketing research methods, services marketing, and sales force management. His articles have been published in numerous journals, including theJournal of Marketing, theJournal of Marketing Research, theJournal of Consumer Research, theJournal of the Academy of Marketing Science, theAmerican Journal of Agricultural Economics, theJournal of Retailing, theJournal of Personal Selling and Sales Management, theJournal of Occupational Psychology, andIndustrial Marketing Management. Sanjeev Agarwal is an associate professor in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from The Ohio State University. His areas of research include multinational marketing strategies, modes of foreign market entry, and sales force management. His articles have been published in theJournal of Consumer Research, theJournal of International Marketing, International Marketing Review, Industrial Marketing Management, theJournal of International Business Studies, theJournal of the Academy of Marketing Science, and theJournal of Personal Selling and Sales Management.     

The impact of a sales team’s perceived entitativity on customer satisfaction

This research investigates the impact of a sales team’s entitativity—the extent to which a group of individuals is perceived as a unified single entity—on customer satisfaction. Four studies demonstrate that a sales team entitativity cue, either based on appearance (e.g., wearing the same outfit) or based on behavior (e.g., explicit coordination in service), leads to heightened perceptions of service quality, which subsequently enhances customer satisfaction. Further, these two entitativity cues are shown to have interactive effects. Specifically, when both cues indicate high entitativity, customer satisfaction with the sales team exceeds the average evaluation of individual team members. However, if at least one cue suggests low entitativity (e.g., different outfits or no explicit coordination), the positive influence of the entitativity cue is undermined and customer satisfaction with the team’s service is mitigated. Product category is identified as an important moderator of the main effect.     

Relative deprivation and labour conflict during Spain’s industrialization: the Bilbao estuary, 1914–1936

What drove social conflict in Spain’s industrial areas in the period before the Spanish Civil War? This paper is concerned with contrasting the determinants of working-class conflict in northern Spain at the beginning of the twentieth century. Our hypothesis is that the key determinant of conflicts in emerging industrial areas during the interwar period was the struggle to obtain satisfactory family income in a context of combined high price fluctuation, unemployment and economic boom and bust. We suggest two new ways to decipher how economic factors interact with labour conflict. We introduce the family as the relevant income unit when considering wage struggles and relative deprivation. And secondly, we study the reactions to short-term variations of income on families by using monthly rather than quarterly or annual data.     

Marketers’ use of alternative front-of-package nutrition symbols: An examination of effects on product evaluations

How front-of-package (FOP) nutrition icon systems affect product evaluations for more and less healthful objective nutrition profiles is a critical question facing food marketers, consumers, and the public health community. We propose a conceptually-based hierarchical continuum to guide predictions regarding the effectiveness of several FOP systems currently used in the marketplace. In Studies 1a and 1b, we compare the effects of a broad set of FOP icons on nutrition evaluations linked to health, accuracy of evaluations, and purchase intentions for a single product. Based on these findings, Studies 2 and 3 test the effects of two conceptually-different FOP icon systems in a retail laboratory in which consumers make comparative evaluations of multiple products at the retail shelf. While there are favorable effects of each system beyond control conditions with no FOP icons, results show that icons with an evaluative component that aid consumers’ interpretations generally provide greater benefits (particularly in product comparison contexts). We offer implications for consumer packaged goods marketers, retailers, and the public policy and consumer health communities.     

The effect of investment in children’s education on fertility in 1816 Prussia

The interaction between investment in children’s education and parental fertility is crucial in recent theories of the transition from Malthusian stagnation to modern economic growth. This paper contributes to the literature on the child quantity–quality trade-off with new county-level evidence for Prussia in 1816, several decades before the demographic transition. We find a significant negative causal effect of education on fertility, which is robust to accounting for spatial autocorrelation. The causal effect of education is identified through exogenous variation in enrollment rates due to differences in landownership inequality. A comparison with estimates for 1849 suggests that the preference for quality relative to quantity might have increased during the first half of the nineteenth century.     

The structure of sustainability research in marketing, 1958–2008: a basis for future research opportunities

Recent changes in the business environment have prompted marketing scholars to pay particular attention to sustainability as a topic of inquiry. Despite the progress made in the study of sustainability, there is a paucity of research on the topic in premier marketing journals. To address this issue, we focus on marketing-related journals and assess the intellectual structure of sustainability research in detail. Drawing on social network theory, we perform an extensive co-citation analysis using multidimensional scaling to examine 76,342 citations made in 1,320 sustainability-focused articles from 36 journals over 51 years (1958–2008). This study specifies that the topics of citizenship behavior, stakeholder theory, corporate performance, and the triple bottom line are integral sustainability research areas. In addition, the results indicate five required topics for examining sustainability in the marketing context: external-internal focus, social-environmental emphasis, legal-ethical-discretionary intent, marketing assets, and financial performance. Supported by the capabilities-based resource perspective, the sustainability-focused typology and framework advanced provide directed structure for future research.     

The dual role of price: decomposing consumers’ reactions to price

Price plays two distinct roles in consumers’ evaluations of product alternatives: as a measure of sacrifice and as an informational cue. This article merges two streams of empirical research into the effects of price on consumers’ product evaluations by combining stated preferences, obtained from conjoint measurement, with data on self-reported measures in the form of beliefs or attitudes. It thus offers new, substantive insights into the dual role of price. Specifically, it differentiates between the informational and sacrifice effects of price using a choice-based conjoint approach and differentiates further among different subcomponents of these two main effects by combining choice-based measures with self-reported measures that pertain to potential sources of the dual role of price (price response drivers) and underlying consumer characteristics. Thus, this article presents a general procedure to quantify the impact of the dual role of price on choice shares for product alternatives within a market simulation. This procedure enables managers to simulate the choice share effects of changes in price response drivers, as well as modifications in segmentation and targeting strategies that involve changes in the levels of the price response drivers and thus the levels of the informational and sacrifice components of the price response of demand.