Abstract
The overall impact of marketing activities on firm performance constitutes one of the most fundamental questions in our discipline. Naturally, marketing’s provision of demand-related information (DRI) constitutes a major pillar in this context. Almost “by default“ exists the presumption that provision and usage of DRI leads to more satisfied consumers, more products, and, subsequently, higher profits. Remarkably, very little research has investigated the overall effects of DRI. Further, few pieces of research have empirically investigated the impact of DRI on competition.
To explore the effects of DRI, I collect primary, experimental data. The results indicate that DRI indeed leads to more products, a higher primary demand and a higher satisfaction of customer preferences. Also, firms provided with DRI set prices which correspond less to a product’s quality. Surprisingly and more importantly, however, I do not find significant impacts of DRI on firms’ profitability.
These findings suggest that managers tend to over-act. By over-acting I mean that managers pursue too many new product activities that only seemingly amount to new product opportunities. Importantly, such over-acting diminishes firm profits and marketing productivity. This occurs even though those new products do have a positive profit. Furthermore, the often applauded ideal of “segment size one” may turn out to be a myth as managers may over-segment and, thus, cause marketing’s productivity to decline. The relationship between DRI and competition requires a clear definition and measure of competition. Comparing several alternative measures of competitive intensity, I find ambiguous results regarding the relationship between DRI and competition. Managerial and interesting research opportunities conclude this paper.
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(2006). Essay I: Managerial Over-Acting. In: Competition in Marketing. DUV. https://doi.org/10.1007/978-3-8350-9277-8_1
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