Feng, H., Morgan, N. A., and Rego, L. (2020). The Impact of Unprofitable Customer Management Strategies on Shareholder Value. Journal of the Academy of Marketing Science, 48(2), 246–269.
Abstract
A significant proportion of many firms’ customers are unprofitable. The question of how unprofitable customers should be managed has recently received increasing research attention from the customer and manager angles, but the effects of unprofitable customer management (UCM) strategies on shareholder value is unknown. Using an event study methodology, we examine stock market reactions to disclosures of firms’ UCM strategy decisions. Results from a sample of UCM strategy disclosure events reveal an average short-term abnormal stock return of −0.53%. Drawing on signaling theory logic, we explore a number of signal (UCM strategy), signaler (firm engaging in UCM), and signaling environment characteristics that may affect the shareholder value effects of firms’ UCM approaches. Our analyses show that investors respond more favorably to indirect UCM strategies than to direct customer divestment strategies. We also find that particular types of indirect UCM strategy approaches and strategic intent in UCM strategy adoption, stronger firm marketing capabilities and, and positive publicity can help mitigate the generally negative abnormal stock returns observed. Overall, our findings have important implications for marketing theory and provide actionable new insights for managers into how to approach the management of unprofitable customers.
Musarra, G., and Morgan, N. A. (2020). Outside-in marketing: Renaissance and future. Industrial Marketing Management, 89, 98-101.
Morgan, N. A., Whtiler, K. A., Feng, H., and Chari, S. (2019). Research in Marketing Strategy. Journal of the Academy of Marketing Science. 47(1), 1-26.
Morgan, N. A. (2019). Researching Marketing Capabilities: Reflections from Academia. Academy of Marketing Science Review, 9(3-4), 381–385.
Morgan, N. A., Feng, H., and Whitler, K. A. (2018). Marketing Capabilities in International Marketing. Journal of International Marketing, 26(1), 61-95.
Chabowski, B., Kekec, P., Morgan, N. A., Hult, G. T. M., Walkowiak, T., and Runnalls, B. (2018). An Assessment of the Exporting Literature: Using Theory and Data to Identify Future Research Directions. Journal of International Marketing, 26(1), 118-143.
Abstract
Exporting research is an established facet of the field of international marketing. That stated, the radical increase in recent export activity necessitates a sustained research effort devoted to the topic. In this article, the authors provide a qualitative review of the core theoretical exporting areas and evaluate the exporting domain quantitatively over six decades (1958–2016). For the quantitative analysis, they use multidimensional scaling and apply established bibliometric principles to offer an understanding of the field and to provide suggestions for future exporting research. For the evaluations, the authors used data from 830 articles with 52,191 citations from 35 journals. Using cocitation analysis as the basis to evaluate the data, they propose a series of intellectual structure implications on exporting that relate to internationalization process stages, dynamic capabilities, knowledge scarcity, social networks, export marketing strategy, absorptive capacity and learning, and nonlinear performance relationships involving marketing channel relationships.
Spyropoulou, S., Katsikeas, C., Skarmeas, D., and Morgan, N. A. (2018). Strategic Goal Accomplishment in Export Ventures: The Role of Capabilities, Knowledge, and Environment. Journal of the Academy of Marketing Science, 46(1), 109-129.
Feng, H., Morgan, N. A., and Rego, L. L. (2017). Firm Capabilities and Growth: The Moderating Role of Market Conditions. Journal of the Academy of Marketing Science, 45(1), 76-92.
Hult, G. T. M., Morgeson III, F. V., Morgan, N. A., Mithas, S., and Fornel, C. (2017). Do Managers Know What Their Customers Think and Why? Journal of the Academy of Marketing Science. 45(1), 37-54.
Abstract
The ability of a firm’s managers to understand how its customers view the firm’s offerings and the drivers of those customer perceptions is fundamental in determining the success of marketing efforts. We investigate the extent to which managers’ perceptions of the levels and drivers of their customers’ satisfaction and loyalty align with that of their actual customers (along with customers’ expectations, quality, value, and complaints). From 70,000 American Customer Satisfaction Index (ACSI) customer surveys and 1068 firm (manager) responses from the ACSI-measured companies, our analyses suggest that managers generally fail to understand their firms’ customers in two important ways. First, managers systematically overestimate the levels of customer satisfaction and attitudinal loyalty, as well as the levels of key antecedent constructs such as expectations and perceived value. Second, managers’ understanding of the drivers of their customers’ satisfaction and loyalty are disconnected from those of their actual customers. Among the most significant “disconnects,” managers underestimate the importance of customer perceptions of quality in driving their satisfaction and of satisfaction in driving customers’ loyalty and complaint behavior. Our results indicate that firms must do more to ensure that managers understand how their customers perceive the firm’s products and services and why.
Katsikeas, C. S., Morgan, N. A., Leonidou, L. C., and Hult, G T. M. (2016). Assessing Performance Outcomes in Marketing. Journal of Marketing, 80(2), 1-20.
Feng, H., Morgan, N. A., and Rego, L. L. (2015). Marketing Department Power and Firm Performance. Journal of Marketing, 79(5), 1-20.
Abstract
This study empirically investigates marketing department power in U.S. firms throughout 1993–2008 and assesses its impact on firm performance. Using a new objective measure of marketing department power and a cross-industry sample of 612 public firms in the United States, the results reveal that, in general, marketing department power increased during this time period. Furthermore, the analyses show that a powerful marketing department enhances firms' longer-term future total shareholder returns beyond its positive effect on firms' short-term return on assets (ROA). The findings also reveal that a firm's long-run market-based-asset-building and short-run market-based- asset-leveraging capabilities partially mediate the effect of a firm's marketing department power on its longer-term shareholder value performance and fully mediate the effect on its short-term ROA performance. This research provides new insights for marketing scholars and managers with regard to both marketing's influence within the firm and how investments in building a powerful marketing department affect firm performance.
Rego, L. L., Morgan, N. A., and Fornell, C. (2013). Reexamining the Market Share-Customer Satisfaction Relationship. Journal of Marketing, 77(5), 1-20.
Leonidou, C. N., Katsikeas, C. S., and Morgan, N. A. (2013). Greening' the Marketing Mix – Does it Payoff? Journal of the Academy of Marketing Science, 41(2), 151-170.
Morgan, N. A., Katsikeas, C. S., and Vorhies, D. W. (2012). Export Marketing Strategy Implementation, Export Marketing Capabilities, and Export Venture Performance. Journal of the Academy of Marketing Science, 40(2), 271-289.
Morgan, N. A. (2012). Marketing and Business Performance. Journal of the Academy of Marketing Science, 40(1), 102-119.
Wiles, M., Morgan, N. A., and Rego, L. L. (2012). The Effect of Brand Acquisition and Disposal on Stock Returns. Journal of Marketing, 76(1), 38-58.
Morgan, N. A., and Slotegraaf, R. J. (2012). Marketing Capabilities for B2B Firms. In G. Lilien and R. Grewal, (Eds.), Handbook of Business-to-Business Marketing (90-108). Cheltenham, UK: Edward Elgar Publishing.
Yarbrough, L., Morgan, N. A., and Vorhies, D. W. (2011). The Impact of Product Market Strategy-Organizational Culture Fit on Business Performance. Journal of the Academy of Marketing Science, 39(5), 555-573.
Gooner, R. A., Morgan, N. A., and Perreault, W. D. (2011). Is Retail Category Management Worth the Effort (and Does A Category Captain Help or Hinder)? Journal of Marketing, 75(6), 18-33.
Morgan, N. A. (2010). Commentary on Shelby Hunt’s Selected Contributions to Marketing Management and Strategy Literature. In R. Varadarajan (Ed.), Legends in Marketing, Vol. 7, Marketing Management and Strategy (362-371).Thousand Oaks, CA: Sage Publishing.
Morgan, N. A., Vorhies, D. W., and Mason, C. H. (2009). Market Orientation, Marketing Capabilities, and Firm Performance. Strategic Management Journal, 30(8), 909-920.
Abstract
Drawing on traditional resource-based theory and its recent dynamic capabilities theory extensions, we examine both the possession of a market orientation and the marketing capabilities through which resources are deployed into the marketplace as drivers of firm performance in a cross-industry sample. Our findings indicate that market orientation and marketing capabilities are complementary assets that contribute to superior firm performance. We also find that market orientation has a direct effect on firms' return on assets (ROA), and that marketing capabilities directly impact both ROA and perceived firm performance.
Morgan, N. A., Slotegraaf, R. J., and Vorhies, D. W. (2009). Linking Marketing Capabilities with Profit Growth. International Journal of Research in Marketing, 26(4), 284-293.
Abstract
Profit growth is one of the primary drivers of a firm's stock price and therefore is a clear priority for managers. Yet little is known about how a firm's marketing capabilities may be linked with its profit growth. In this study, we use data from a cross-industry sample of 114 firms to investigate how market sensing, brand management, and customer relationship management (CRM) capabilities determine firms' revenue growth and margin growth—the two components of profit growth. Our results reveal that these marketing capabilities have direct and complementary effects on both revenue and margin growth rates. Critically, we find that brand management and CRM capabilities have opposing effects on revenue and margin growth rates, such that a failure to examine these two underlying components would mask the relationships between these marketing capabilities and ultimate profit growth rates.
Morgan, N. A., and Rego, L. L. (2009). Brand Portfolio Strategy and Firm Performance. Journal of Marketing, 73(1), 59-74.
Abstract
Most large firms operating in consumer markets own and market more than one brand (i.e. they have a brand portfolio). Although firms make corporate-level strategic decisions regarding their brand portfolio, little is known about whether or how a firm's brand portfolio strategy is linked to its business performance. Using data from the American Customer Satisfaction Index and other secondary sources, the authors examine the impact of the scope, competition, and positioning characteristics of brand portfolios on the marketing and financial performance of 72 large publicly traded firms operating in consumer markets over ten years (from 1994 to 2003). Controlling for several industry and firm characteristics, the authors analyze the relationship between five specific brand portfolio characteristics (number of brands owned, number of segments in which they are marketed, degree to which the brands in the firm's portfolio compete with one another, and consumer perceptions of the quality and price of the brands in the firm's portfolio) and firms' marketing effectiveness (consumer loyalty and market share), marketing efficiency (ratio of advertising spending to sales and ratio of selling, general and administrative expense to sales), and financial performance (Tobin's q, cash flow, and cash flow variability). They find that each of these five brand portfolio characteristics explains significant variance in five or more of the seven aspects of firms' marketing and financial performance examined.
Rego, L. L., Billett, M., and Morgan, N. A. (2009). Consumer-Based Brand Equity and Firm Risk. Journal of Marketing, 73(6), 47-60.
Abstract
Investors and managers evaluate potential investments in terms of risk and return. Research has focused on linking marketing activities and resource deployments with returns but has largely neglected marketing's role in determining risk. Yet the theoretical literature asserts that investments in market-based assets, such as brands, should lead to reductions in firm risk. Adopting risk measures that are well established in the finance literature, the authors use credit ratings to capture debt-holder risk and the standard deviation of stock returns to measure equity-holder risk, which they then decompose into systematic and unsystematic equity risk. The authors examine the impact of consumer-based brand equity (CBBE) on firm risk using data covering 252 firms from EquiTrend, COMPUSTAT, and the Center for Research in Security Prices over the 2000–2006 period. They find that a firm's CBBE is associated with firm risk and explains variance in the risk measures beyond that explained by existing finance models (i.e., it has “risk relevance”). They also find that CBBE has a stronger role in predicting firm-specific unsystematic risk than systematic risk but that it also has a particularly strong role in protecting equity holders from downside systematic risk. The results have clear economic significance and suggest that managers should make brand management part of the firm's risk management strategy and protect or even increase CBBE investments during periods of economic uncertainty.
Morgan, N. A., Kaleka, A., and Gooner, R. A. (2007). Focal Supplier Opportunism in Supermarket Retailer Category Management. Journal of Operations Management, 25(2), 512-527.
Abstract
Common prescriptions for improving the performance of supermarket retailers center on using key suppliers as "category captains" and leveraging their resources and capabilities to implement effective category management that will both reduce retailer costs and provide a basis for differentiation. However, despite these widespread prescriptions, the potential for supplier opportunism means that supermarket retailers are either skeptical or have failed to make such category management relationships with key suppliers work. Drawing on agency, transaction costs, and network theory, we synthesize insights from qualitative fieldwork with retailer and supplier managers and primary data from 73 category managers in U.K. supermarket retailers to empirically examine antecedents and consequences of category-level focal supplier opportunism. Our findings suggest that focal supplier opportunism decreases retailer category performance and increases militant behaviors among non-focal suppliers in the category supply chain. Consistent with retailer fears, we find that focal suppliers with significant influence in retailers’ category management efforts are more likely to engage in opportunistic behavior. However, our results also reveal that retailer fears that being dependent on a focal supplier will lead to greater supplier opportunism are largely unfounded, while supplier dependence on the retailer is also unrelated to focal supplier opportunism. Finally, we find that retailers’ ability to monitor – but not to punish – its focal suppliers is negatively related to opportunistic behavior among focal suppliers.
Morgan, N. A. and Rego, L. L. (2006). The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance. Marketing Science, 25(5), 426-439.
Morgan, N. A., Anderson, E. W., and Mittal, V. (2005). Understanding Firms’ Customer Satisfaction Information Usage. Journal of Marketing, 69(3), 131-151.
Vorhies, D. W., and Morgan, N. A. (2005). Benchmarking Marketing Capabilities For Sustained Competitive Advantage. Journal of Marketing, 69(1), 80-94.
Morgan, N. A., Kaleka, A., and Katsikeas, C. S. (2004). Antecedents of Export Venture Performance: A Theoretical Model and Empirical Assessment. Journal of Marketing, 68(1), 90-108.
Morgan, .l A., Zou, S., Vorhies, D. W., and Katsikeas, C. S. (2003). Experiential and Informational Knowledge, Architectural Marketing Capabilities, and the Adaptive Performance of Export Ventures. Decision Sciences, 34(2), 287-321.
Vorhies, D. W., and Morgan, N. A. (2003). A Configuration Theory Assessment of Marketing Organization Fit With Business Strategy and Its Relationship with Marketing Performance. Journal of Marketing, 67(1), 100-115.
Edited on October 5, 2017
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