Managing trade promotions in the context of market power

The use of trade promotions as a channel-programming tool has increased substantially in the past decade. In focusing on the tactical implications of trade promotions, some firms appear to have underestimated the tendency of poorly planned trade promotions to interfere with the implementation of a marketing strategy. In this article, the authors examine the complex issue of trade promotion use from both long-term and short-term perspectives. Different trade promotions can produce dissimilar types of channel cooperation, consumer responses, and postpromotion channel member behavior, resulting in differences in distribution-programming preferences between suppliers and retailers. The authors argue that the adjudication of these different preference structures is addressed through the market power of the channel participants. Based on an assessment of these channel relationships, an approach for suggested courses of action is forwarded. Jack J. Kasulis is an associate professor of marketing at the University of Oklahoma. He obtained his Ph.D. in marketing from Northwestern University in Evanston, Illinois, and has research interests in marketing channels, retailing, and consumer behavior. His articles have appeared in such journals as theJournal of Consumer Research, Journal of the Academy of Marketing Science, European Journal of Marketing, Journal of Business Research, Journal of Advertising Research, and various other journals and proceedings. Fred W. Morgan is the Ashland Professor of Marketing at the University of Kentucky. He obtained his Ph.D. in marketing from Michigan State University in East Lansing and has research interests in legal issues in marketing, sales management, and marketing channels. His articles have appeared in such journals as theJournal of Marketing, Journal of Marketing and Public Policy, Journal of the Academy of Marketing Science, Journal of Marketing Channels, and various other journals and proceedings. David E. Griffith is an associate professor and the Harvey Jones Chair of Marketing at Ouachita Baptist University. He obtained his Ph.D. in marketing from the University of Texas in Austin and has research interests in marketing channels, marketing strategy, and ethics. His research has appeared inMarketing Letters, Journal of the Academy of Marketing Science, Journal of Marketing Channels, and various other journals and proceedings. James M. Kenderdine is an associate professor and director of the Distribution Research Program at the University of Oklahoma. He obtained his D.B.A. from Indiana University in Bloomington. His research interests are in wholesaling, retailing, and marketing channels. His publications have includedThe Changing Economics of Wholesaling: A North American Chart Book, Wholesaling in Transition: An Executive Chart Book, and articles in various journals and proceedings.     

Price behavior of deep discount bonds

With rising interest rate trends, deep discount bonds are more commonly observed. The traditional view has been that, for a given yield change, the changes in bond prices are larger, the longer the maturity. This note shows that, for a deep discount bond, there is a switchover point beyond which the traditional view no longer holds. This is true for percentage as well as for dollar price changes. The traditional view should be corrected to avoid misleading effects on the management of bond portfolios.     

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.     

How to communicate sustainable tourism products to customers: results from a choice experiment

This multiphase and empirical study explores the best communication style for reaching different international tourism markets and provides an understanding of how purchase decisions could be better influenced in travel brochures. A pre-test experiment evaluated the perceived emotionality and rationality of communication elements in a fictional travel brochure designed for a typical beach holiday but managed according to sustainability principles. In phase two, a choice experiment was conducted to test how Swiss, German, British and US travellers could be influenced by varying visual and textual communication elements in the fictional brochure (based on Mexico for US respondents and Menorca for all others). The choice experiment produced 3006 responses from an online survey in the four countries. Results confirm a general preference for emotionally laden communication styles for sustainable tourism products, while respondents were indifferent to the emotionality of standard product feature communications. Respondents did not show a preference for the inclusion of a graph explaining the product's sustainability attributes.     

Revisiting the European Horsemeat Scandal: The Role of Power Asymmetry in the Food Supply Chain Crisis

This study explores the role of power asymmetry in the food supply chain, especially in relation to the channel conflict, and ultimate breakdown that culminated in the infamous European horsemeat scandal across Europe. Drawing upon the power‐dependency, and to some extent, social exchange theory, the study posits that mutual dependence between single supplier–multiple buyer relationships where major retailers are the weaker partners, may require a revisitation of risk management practices in that sector. In addition to the fraudulent and unethical practices established from media reporting on the horsemeat scandal, the study argues that the power asymmetry/imbalance may have contributed to a supplier culture that tolerated the unethical decision making leading to the horsemeat scandal. Based on an extensive review of secondary data sources comprising media reports on the scandal and a review of the academic literature on power dependency and social exchange theories, the study attempts to map out the root of the crisis, how to forestall future recurrence, and the managerial and policy implications of these. © 2016 Wiley Periodicals, Inc.     

THE FISCAL CHALLENGE OF COMPETITIVE MARKETS

Competition maximises consumer satisfaction but creates a financial problem for enterprises. When prices are competed down to just cover marginal costs, part of the value added by the enterprise is externalised. Government has not been efficient at recycling that value back into the economy, which is why infrastructure is severely underfunded.