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Market-Sensing Capabilities, Profitability Within Stagnant Industries And Crafting Of Customer Value Propositions

Author

Listed:
  • JEFFREY YI-LIN FORREST

    (Department of Accounting, Economics and Finance, Slippery Rock University, Slippery Rock, PA 16057, USA)

  • ZAIWU GONG

    (College of Management Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China)

  • EDWARD SCOTT

    (Department of Accounting, Economics and Finance, Slippery Rock University, Slippery Rock, PA 16057, USA)

  • GERARDO ELOY SOTO RUIZ

    (Marketing Department, Autonomous University of the West, Blvd. Lola Beltrán and Blvd. Mario Lopez Valdes, CP 80020, Culiacán, Sinaloa, Mexico)

Abstract

From the perspective of market competition, this paper investigates the impact of market-sensing capability on a company, and sources profits within a slow growth industry. As an example, our results are applied to demonstrate how effective customer value propositions can be formulated. Among others, it is shown that market-sensing capability empowers a company to categorize customers, lower its operational costs while increase expected profits; that when an industry experiences slow growth, its member company’s profit can grow only through a combination of raising unit price and lowering unit cost; and how market knowledge and innovative understanding of market invitations potentially lead to effective CVPs. Instead of employing either a statistics-based approach or an anecdotal analysis, this work relies on the rigor of game theory so that all results established are generally true unless given conditions are violated. Managerial recommendations for decision makers and potential questions for future research are provided.

Suggested Citation

  • Jeffrey Yi-Lin Forrest & Zaiwu Gong & Edward Scott & Gerardo Eloy Soto Ruiz, 2020. "Market-Sensing Capabilities, Profitability Within Stagnant Industries And Crafting Of Customer Value Propositions," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 26, pages 53-76, December.
    • Handle: RePEc:aic:revebs:y:2020:j:26:forrestj
    DOI: 10.47743/rebs-2020-2-0003
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    References listed on IDEAS

    as
    1. Adrian Payne & Pennie Frow & Andreas Eggert, 2017. "The customer value proposition: evolution, development, and application in marketing," Journal of the Academy of Marketing Science, Springer, vol. 45(4), pages 467-489, July.
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    4. Corinna Clements & Jeffrey Alwang & Ramadhani Achdiawan, 2019. "Value Chain Approaches in a Stagnant Industry: The Case of Furniture Production in Jepara, Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 55(3), pages 341-365, September.
    5. Guangliang Ye & Richard L. Priem & Abdullah A. Alshwer, 2012. "Achieving Demand-Side Synergy from Strategic Diversification: How Combining Mundane Assets Can Leverage Consumer Utilities," Organization Science, INFORMS, vol. 23(1), pages 207-224, February.
    6. Shantanu Dutta & Om Narasimhan & Surendra Rajiv, 1999. "Success in High-Technology Markets: Is Marketing Capability Critical?," Marketing Science, INFORMS, vol. 18(4), pages 547-568.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    customer relation; market invitation; market knowledge; market-level growth; Nash equilibrium; profit portfolio;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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