An extensive summary of all the articles and lectures of the course strategic marketing, given at the Rijksuniversiteit Groningen.
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Montgomery, Moore & Urbany (2005)
Reasoning about competitive reactions: Evidence from executives.
Strategic competitive reasoning = whether managers attempt to predict reactions based on rival’s past
actions.
It is being perceived that managers don’t do this often, because of the high costs and the relatively low
returns. This is due to difficulty of obtaining this information and uncertainty associated with predicting
reactions.
In strategic choices: failure to anticipate to competitors and failure to recognize potential interaction
with competitors.
Competitive reasoning = the assessment and consideration of competitors that serves as an input into
the firm’s decision-making. Results can be in three ways:
o Description of the competitor
o Predictions about competitors’ behavior
o Consider how their competitors are likely to react to their firm’s own decisions (= strategic
competitive reasoning).
Study 1
- Managers were asked to describe factors that are important in decision-making: are they going to
mention competitors? (= strategic competitive reasoning)
- Interviews
- Choice: change price of a product or develop a new product.
- 44 new product developments, 57 pricing decisions.
Results
- Customer factors and competitor factors were mentioned equal
- Competitor factors greater emphasis in pricing than in product development.
- More respondents forecast they would engage in strategic competitive reasoning for future pricing
decisions than for recalled pricing decisions.
- More focus on competitors past and current situation than on their reactions.
Study 2
- Managers were asked to describe factors that are important in decision-making: are they going to
mention competitors? (= strategic competitive reasoning).
- Describe decision-making in familiar and personally relevant scenarios.
- Markstrat
- Choices to make: which market to focus on, whether to increase advertising budget, whether to cut
price.
2
,Results
- More focus on competitors past and current situation than on their reactions.
- More of the participants mentioned competitor factors.
Study 3
- Compare the results with earlier done studies.
- An explanation for the shown patterns in study 1 and 2 is been given.
- Results are being shown to 2 sets of experts and one set of generalists.
- Survey: 10-point bi-polar scale.
Results
Factors influencing the value of competitive reasoning
Factors raising the perceived costs of competitive reasoning:
- Difficulty of obtaining competitive information.
- limited opportunity to actually learn about competitors.
- Risk aversion
Factors reducing the perceived returns from competitive reasoning:
- Irresolvable uncertainty about competitor’s behavior.
- Other factors are perceived as being more important.
- The culture of the firm
- Low perceived returns vs. high perceived costs
3
, Rust, Moorman & Dickson (2002)
Getting return on quality: revenue expansion, cost reduction, or both?
Revenue expansion and cost reduction simultaneously > the effect on return on quality (financial
benefits due to quality).
Revenue expansion
- External focus
- Focus on customer perceptions and attitudes that will lead to more sales.
- Marketing, human resources
Cost reduction
- Internal focus
- Focus on defect rate, the efficiency of the firm’s processes.
- Standardization, operations, accounting
Does a dual method work?
Study
- Surveys
- 50/50 combination of sending the surveys to managers ourselves and sending the survey to the head
manager (and him sending it randomly around).
- In the survey the managers are asked how valuable a certain emphasis (or dual emphasis) is.
- To measure firm performance, also secondary data is been used.
Potential moderating factors
- Industry competitiveness
- Success of either revenue or cost emphasis may be influenced by past decisions.
- Development of systems for acquiring, disseminating, and responding to customer information.
Results
- Firms adopting a revenue emphasis, reap the greatest rewards.
- The dual emphasis has no effect on financial performance and customer relationship.
4
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