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Market Power and Market Value Creation

In: Strategic Management Accounting in a Network Economy

Author

Listed:
  • Wingsun Li

    (Beijing Normal University & Hong Kong Baptist University—United International College)

Abstract

Market power plays a crucial role in enabling a firm to excel amidst market competition, which leads to the enhancement of shareholder value. To elucidate this effect, I would start to examine the intricate relationship between market power and price elasticity. By aligning prices in accordance with appropriate brand and customer strategies, a firm can significantly bolster its market power. In fact, market power represents the manifestation of competitive advantages within the target market. Expanding market power necessitates a firm’s ability to attune to customers’ price sensitivity, and the capability to execute a well-coordinated array of branding and customer relationship management (CRM) strategies. These synchronized efforts in the market sphere ultimately translate into tangible market value, reflected in the overall creation of value. The subsequent part of the chapter delves into the role of brands and customer value as key drivers for value creation. By adopting a market value perspective, one can circumvent the traditional pitfalls of viewing marketing expenditure as a mere short-term profit-seeking endeavor. Empirical evidence supports the notion that both brand value and customer value can serve as instrumental components in fostering long-term value, provided a purposeful control process is established to guide value creation. In conclusion, the chapter culminates by presenting a comprehensive and holistic framework for market value creation.

Suggested Citation

  • Wingsun Li, 2023. "Market Power and Market Value Creation," Management for Professionals, in: Strategic Management Accounting in a Network Economy, chapter 0, pages 159-182, Springer.
    • Handle: RePEc:spr:mgmchp:978-981-99-5253-3_7
    DOI: 10.1007/978-981-99-5253-3_7
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