effects of competitive superiority on firms’ strategic behaviour across stages of industry...

Group No.: 4712

NANYANG TECHNOLOGICAL UNIVERSITY

NANYANG BUSINESS SCHOOL

EFFECTS OF COMPETITIVE SUPERIORITY ON FIRMS’ STRATEGIC BEHAVIOUR ACROSS

STAGES OF INDUSTRY EVOLUTION

Submitted by: Chung Wei Peng, Joseph 075522D05Kim Yong Wei, Luther 075797K05Lee Kuok Howe 075635F05

Supervisor: Dr. Lim Kui Suen, Lewis (Asst. Professor in Marketing)

Applied Research Project submitted to Nanyang Business School, Nanyang Technological University in partial fulfillment for the degree of Bachelor

of Business

Academic Year 2009/2010

1

TABLE OF CONTENTS

ACKNOWLEDGEMENTS.......................................................................................- 5 -

ABSTRACT.................................................................................................................- 6 -

1. INTRODUCTION..............................................................................................- 7 -

1.1 Motivation For The Study..........................................................................- 7 -

1.2 Research Objectives....................................................................................- 8 -

1.3 Methodology................................................................................................- 9 -

1.4 Contribution Of The Study......................................................................- 10 -

2. LITERATURE REVIEW................................................................................- 11 -

2.1 Competitive Superiority...........................................................................- 11 -

2.2 Market Evolution......................................................................................- 12 -

2.3 Marketing Tools........................................................................................- 12 -

2.3.1 Advertising.............................................................................................- 13 -

2.3.2 Sales Force..............................................................................................- 13 -

2.3.3 Research and Development (R&D)........................................................- 14 -

2.4 Marketing Strategies................................................................................- 15 -

2.4.1 Exploit versus Explore............................................................................- 15 -

2.4.2 Push versus Pull......................................................................................- 16 -

2.5 Bridging the Research Gaps....................................................................- 16 -

3. HYPOTHESIS..................................................................................................- 18 -

3.1 Initial Phase (Periods 1 – 2).....................................................................- 18 -

3.2 Uncertainty Phase (Periods 3 – 4)...........................................................- 19 -

3.3 Growth Phase (Periods 5 – 6)..................................................................- 20 -

3.4 Maturity Phase (Periods 7 – 8)................................................................- 21 -

2

4. METHODOLOGY...........................................................................................- 22 -

4.1 Markstrat – The Simulation....................................................................- 22 -

4.2 Participants and Procedures....................................................................- 22 -

4.3 Data Collection..........................................................................................- 23 -

4.3.1 Measures.................................................................................................- 23 -

4.3.2 Initial Phase (Periods 1 – 2)....................................................................- 24 -

4.3.3 Uncertainty Phase (Periods 3 - 4)...........................................................- 26 -

4.3.4 Growth Phase (Periods 5 – 6).................................................................- 27 -

4.3.5 Maturity Phase (Periods 7 - 8)................................................................- 28 -

5. RESULTS..........................................................................................................- 29 -

5.1 General Results.........................................................................................- 29 -

5.2 Initial Phase (Periods 1 – 2).....................................................................- 29 -

5.3 Uncertainty Phase (Periods 3 – 4)...........................................................- 30 -

5.4 Growth Phase (Periods 5 – 6)..................................................................- 31 -

5.5 Maturity Phase (Periods 7 – 8)................................................................- 33 -

5.6 Summary of Results..................................................................................- 35 -

6. DISCUSSION....................................................................................................- 36 -

6.1 Setting the Ideal Brand Image in the Initial Phase................................- 36 -

6.2 Pioneer Advantage and Pull Strategy in Uncertainty Phase................- 37 -

6.3 Emphasis on New Markets in Growth Phase.........................................- 37 -

6.4 Push Strategy in Maturity Phase.............................................................- 38 -

6.5 Overall Managerial Implications............................................................- 39 -

6.5.1 Initial Phase (Periods 1 – 2)....................................................................- 39 -

6.5.2 Uncertainty Phase (Periods 3 – 4)..........................................................- 39 -

6.5.3 Growth Phase (Periods 5 – 6).................................................................- 40 -

3

6.5.4 Maturity Phase (Periods 7 – 8)...............................................................- 40 -

6.6 Potential Pitfall of Strategies Taken by Competitively Superior Firms - 41 -

7. LIMITATIONS AND FUTURE RESEARCH..............................................- 42 -

APPENDIX A............................................................................................................- 44 -

TABLE 7: SUMMARY OF HYPOTHESES DEVELOPMENT FOR VARIOUS PHASES.................................................................................................................- 44 -

APPENDIX B............................................................................................................- 45 -

TABLE 8: SAMPLE OF AN EXECUTIVE MEMORANDUM......................- 45 -

APPENDIX C............................................................................................................- 49 -

TABLE 9: SAMPLE OF MARKSTRAT MARKET RESEARCH STUDIES. - 49 -

APPENDIX D............................................................................................................- 51 -

TABLE 10: SAMPLE OF MARKSTRAT INDUSTRY NEWSLETTER........- 51 -

APPENDIX E............................................................................................................- 53 -

TABLE 11: SAMPLE CALCULATION OF COMPETITIVE SUPERIORITY. - 53 -

APPENDIX F............................................................................................................- 54 -

TABLE 12: CHANGES IN COMPETTIVE SUPERIORITY OVER DIFFERENT PHASES.........................................................................................- 54 -

REFERENCES...........................................................................................................- 55 -

4

ACKNOWLEDGEMENTS

We would like to express our heartfelt gratitude and appreciation for our

supervisor, Dr. Lewis Lim, Assistant Professor in Marketing. He has patiently provided

us with continuous support and guidance throughout the course of our research, while at

the same time, equipping us with all the knowledge that he has about our research topic.

We are also pleased to be provided with ample Markstrat data, which was compiled by

him for our easy reference and access. We are glad to finish this project under his

supervision and guidance.

5

ABSTRACT

Firms are constantly faced with the decision to either adapt or change their

strategy based on the stage of industry evolution as well as the actions of their

competitors. They often benchmark their own strategies against the actions of

competitors who are superior to them. However, they do not always know the likely

behaviors of superior competitors across the different stages of industry evolution. To

address this knowledge gap, this study examines the behavioral tendencies of

competitively superior firms at the different phases of the industry. We consider five

major behavioral tendencies of superior firms, namely, advertising aggressiveness, sales

force aggressiveness, R&D aggressiveness, exploit versus exploration of growth

resources and push versus pull marketing strategies. We measured these tendencies

using quantitative data from Markstrat, a marketing strategy simulation which served as

a microcosm of real life competitive behavior. We find that competitively superior firms

exhibit different behaviors at different phases of the industry evolution: In the initial

phase, these firms allocate a greater part of their budget to both advertising and sales

force to defend their position, whereas in the uncertainty phase, they allocate more of

their budget to R&D to defend their position. In the growth phase, superior firms exploit

their resources more than they explore them. Finally, in the maturity phase, these firms

tend to employ a push strategy as opposed to a pull strategy. We discuss how the

findings of the study can aid mangers in making more informed decisions and how the

decisions made by the dominant firm may not always be the best decision despite their

superiority.

6

1. INTRODUCTION

1.1 Motivation For The Study

Consider the following scenario:

You are the marketing manager at Company A. Your company’s first foray into a new industry was not as successful as what you wanted it to be, resulting in other companies dominating your industry. You begin to observe the actions of the superior companies and wonder what their next steps will be as the industry evolves over time. What should you do to pre-empt your competitors’ actions in different phases of the market evolution?

The above scenario exemplifies what managers at weaker firms often face

when making decisions over the different phases of an industry evolution. Managers

are constantly faced with making difficult strategic decisions in an ever-changing

competitive landscape within their industry. As part of their decision making, they often

benchmark their own strategies against the actions of competitors who are superior to

them. Yet, issues concerning the interactions between competitive dynamics and market

evolution have not received sufficient research attention (Lambkin & Day 1989;

Gatignon & Soberman 2002). Consequently, managers are not always equipped with

good working knowledge that would enable them to anticipate the moves of dominant

competitors.

Having information about their competitive environment thus allows managers

in weaker firms to develop a meaningful strategy (Deshpande & Gatignon, 1994) across

the different stages of industry evolution. The information allows them to develop an

understanding of what affects market position and profitability (Deshpande & Gatignon,

1994), thereby enabling them to compete more effectively against the superior firms

(Hambrick et al., 1982; Woo & Cooper, 1981, 1982).

7

Accordingly, there is a need to conduct this research so as to allow managers at

weaker firms to anticipate the types of strategies that dominant firms tend to undertake

in different stages. Such understanding can be used to predict competitors’ actions

(Deshpande & Gatignon, 1994) and thus make informed strategic decisions that deliver

better financial performance.

1.2 Research Objectives

Investments in marketing communications like advertising will improve the

relationship between customers and a brand, thus increasing the competitive advantage

of the company. Companies that engage in aggressive marketing communications may

gain better performance than those investing less intensely (Andras & Srinivasan.

2003). Therefore, it is important to study the advertising aggressiveness of dominant

firms in defending their positions over different phases.

Sales force marketing has emerged in research studies as being important

business factors (Luo, 1995; Chen, 1994) in effective marketing means. With sales force

marketing having a positive relationship with sales growth and profitability (Luo, 1995;

Chen, 1994), it is vital to study the sales force aggressiveness of dominant firms in

defending their positions over different phases.

In gaining competitive advantage, companies invest more in research and

development (R&D) to gain profits and success of future innovation efforts (Elie &

Miklos, 2003). Research shows a positive relationship between R&D aggressiveness

and company’s performance (Kotabe, 1990). When more dominant firms show more

R&D competence, they spend more on R&D to stay ahead of competition (Elie &

8

Miklos, 2003). Therefore, it is important to study the R&D aggressiveness of dominant

firms in defending their positions over different phases.

The dynamic processes of exploitation and exploration are key sources of an

organization's sustainable competitive advantage (Eisenhardt & Martin, 2000).

Exploration is viewed as future sources of competitive advantage while exploitation is

viewed as current sources (Ireland & Webb, 2004). They serve as good proxies on

whether firms are able to gain or defend their superiority. Therefore, it is important to

study how dominant firms utilize exploit or explore strategies to defend their positions

over different phases.

More companies are placing channel management as high priority (Frazier,

1999). Push strategies that include distribution channels through the use of sales force

and pull strategies in the form of marketing communications via advertising are seen as

important sources of a company’s competitive advantage (Neves et al., 2001).

Therefore, it is important to study how dominant firms utilize push or pull strategies to

defend their positions over different phases.

In short, we set out to investigate the (1) advertising aggressiveness, (2) sales

force aggressiveness, and (3) R&D aggressiveness of competitively superior firms, and

how they utilize (4) exploitation or exploration strategies and (5) push or pull strategies

to defend their positions over different phases of an industry evolution.

1.3 Methodology

This study utilizes data generated from “Markstrat”, a marketing strategy

simulation used widely in business programs globally. It provides us with secondary

data whereby participants made strategic marketing decisions in a realistic industry

9

setting (Gatignon, 1987) over eight weeks. Participants were undergraduates aged early

20s taking the Product and Pricing Management class at Nanyang Business School. As

participants competed with one another in teams (representing firms), we are able to

observe the behaviors of competitively superior firms over the different stages of

industry evolution. Analysis of the behavioral data allows us to understand the different

types of competitive actions that managers took across various industry phases.

1.4 Contribution Of The Study

Our study contributes to the understanding of competitive behavior in three

important ways. First, having competitive knowledge about how dominant firms behave

allows managers to know their rivals and assess their own competitive position

(Deshpande & Gatignon, 1994). This allows managers in under-performing firms to

have sufficient knowledge to predict competitors’ actions, which is an important part of

competitive analysis (Erickson et al., 1990). Pre-emptive actions can then be devised to

allow them to compete successfully in the industry (Deshpande & Gatignon, 1994).

Second, managers can have a better understanding about the levels of different

marketing strategies that are employed in achieving maximum results. An appropriate

strategy can be devised to achieve maximum results within their financial constraints.

This is useful to managers in weaker firms who have limited financial resources, unlike

their superior counterparts who have abundant slack resources (Singh, 1990).

Third, managers can understand the different competitive nature of the industry

at different stages, enabling them to execute the optimal strategy at the most appropriate

timing to reap the highest benefits. Firms that were slower in engaging competitive

actions tend to experience market share erosion and dethronement (Ferrier et al., 1999).

10

2. LITERATURE REVIEW

2.1 Competitive Superiority

We define competitive superiority as competitive advantage in terms of

financial performance and available resources that a company gains over its rivals as a

result of its past strategic decisions. It is a result of relative superiority in the skills and

resources that a company deploys, allowing it to do better than its competitors (George

S. Day & Robin Wensley, 1998).

It is necessary for companies to maintain or improve their competitive

superiority as being the dominant firm means having abundant resources and increased

capability to mount competitive attacks (Singh, 1990). Companies need to have a strong

financial background in order to carry out continued investment to stay ahead of

competition (George S. Day & Robin Wensley, 1998). Therefore, from the onset, it is

essential for managers to make the correct strategies to kick-start their dominance. This

makes the maintenance of competitive superiority a long-lasting and cyclical process

(George S. Day & Robin Wensley, 1998).

Furthermore, with most research studies focusing on the individual strategic

profiles of firms instead of the strategic competitive behaviors, such studies risk

assuming that each firm is an independent entity and only pursue its own strategic

objectives, whilst remaining oblivious to its competitor’s objectives (Chen & Hambrick,

1995). Our research seeks to gather knowledge about the types of decisions that

managers tend to undertake with greater competitive superiority, in an attempt to defend

their market position, taking in consideration their rivals’ competitive reactions.

11

2.2 Market Evolution

Besides understanding their competitors, managers also need to understand

their competitive environment in order to develop a successful strategy (Deshpande &

Gatignon, 1994). Research showed that strategic decisions undertaken by companies are

dependent on the market conditions and the competitive superiority that the company

holds (Ramaswamy, Gatignon & Reibstein, 1994).

Knowing that market conditions do influence strategic decisions, we foresee

that managers will want to know what decisions their rivals made in the different

phases. Research on market evolution identified different levels of competitive activity

in the early, high-demand and the mature, decreasing demand stage of the industry

(Agarwal & Gort, 1996; Agarwal, Sarkar & Echambadi, 2002; Carroll & Hannan,

1989). Competitive actions are stronger in growing markets (Ramaswamy et al. 1994,

Robinson 1988, Bowman & Gatignon 1995) and companies undertake strategies that

help to create the demand in the industry thereby benefiting all firms (Agarwal &

Bayus, 2002). Caves (1980) suggest that in low growth situation, companies will

stimulate the industry by proposing new marketing campaigns. With differing levels of

competitive interaction at different stages (Schumpeter, 1976), it will be interesting to

note if managers employ different strategies with varying levels of competitive

superiority.

2.3 Marketing Tools

Bronnenberg et al. (2000) indicates that the marketing mix employed is

determined by a firm’s market position and maturity of the market. Therefore, our

research seeks to understand the decisions managers in more dominant firms make with

12

regards to the 4Ps of marketing mix. The marketing tools analyzed1 are advertising

(promotion), sales force (place) and R&D (product).

2.3.1 Advertising

Managers commonly employ advertising because it helps to create the initial

awareness amongst its target consumers. A large budget is often spent on advertising as

high levels of activity on one marketing element helps to affect the responsiveness for

another (Gatignon, 1984). High levels of competitive advertising help to speed up

industry growth by increasing awareness and improving brand image (Bowman &

Gatignon, 2000). The company can also engage in other marketing efforts more

successfully if consumers have a positive brand image (Keller, 1993). With significant

benefits expected from the use of advertising, analyzing decisions made by managers in

superior firms in this dimension might provide useful insights.

2.3.2 Sales Force

Sales force is another marketing tool that companies use to bring the product

closer to consumers. Sales force is the contact point between the company and

consumers. Sales force is considered as information acquisition and dissemination

activities that are essential in understanding the company’s target consumers (Narver &

Slater, 1990; Kohli & Jaworski, 1990). A better understanding of the consumers allows

the company to exploit this advantage and deliver superior value2 to the consumers

(Kohli & Jaworski, 1990). Sales force represents the “face” of the company, whereby

the style of their selling efforts portrays the strategic orientation of the company (Narver

1 Price is left out from our analysis due to the inability to make a fair comparison between price and the different types of products introduced by companies.

2 In Markstrat terms, superior value being delivered to consumers is translated to increased purchasing intention and brand awareness of consumers.

13

& Slater, 1990; Kohli & Jaworski, 1990). This adds up to the brand image of the

company which will translate to better brand awareness among consumers who are then

more willing to purchase the company’s products. Having seen the importance of sales

force, it is worthwhile to analyze the strategic decisions made by managers in superior

firms in the sales force dimension.

2.3.3 Research and Development (R&D)

Substantial research has been done on the relationship between innovation and

competitive advantage (Henderson & Cockburn, 1994). Geroski et al. (1993) and

Roberts (1999) highlighted that a successful R&D effort is capable of generating a

proprietary competitive advantage and superior financial performance to the firm.

Because of its high revenue-generating potential, R&D has gained much attention, such

that rival firms are investing significant financial resources to the creation of

technological progress (Arrow, 1962). Firms have a greater incentive to show more

competency in R&D as there is an incentive of retaining the market leader position

longer (Elie & Miklos, 2003).

However, rivalry actions in R&D efforts have undermined the financial

performance of competing firms (Barnett & Hansen, 1996). This results in high levels

of competitive tension amongst rival firms with respect to their involvement in R&D.

Therefore, it is beneficial to analyze the strategic decisions made by managers in

superior firms in the R&D dimension.

14

2.4 Marketing Strategies

2.4.1 Exploit versus Explore

March (1991) defines exploration as the “experimentation with new

alternatives” that have returns that are uncertain and often negative while exploitation as

the “refinement and extension of existing competencies, technologies, and paradigms”.

Exploration and exploitation is a manifestation of organizational learning (Sinkula,

1994; Slater and Narver, 1995). However, these concepts have evolved and many

believe that exploration and exploitation strategies are key for a firm to gain competitive

advantage.

We will like to utilize marketing strategies as key measurements of the

exploration and exploitation strategies of the firm, as firms exhibit a dominant emphasis

on marketing efforts (Kyriakopoulos & Moorman, 2004).

Marketing exploitation strategies are defined as the refinement and

improvement of skills and knowledge in association to current marketing strategies,

which include marketing communications and distributions (Kyriakopoulos &

Moorman, 2004). Marketing exploration strategies are defined as strategies involved in

challenging prior approaches which interface with the market, such as new positioning,

products and channels (Kyriakopoulos & Moorman, 2004).

Previous works indicate that maintaining an appropriate combination between

exploration and exploitation strategies is essential for a firm’s prosperity (March, 1991;

Levinthal & March, 1993; Rothaermel & Deeds, 2004). However, we will like to argue

that competitively superior firms will tend to focus on one of the strategies based on

environmental uncertainty (Lawrence & Lorsch, 1967). Defenders are inclined towards

15

implementing exploitation techniques during low intensity period (Miles and Snow,

1978) and will shift towards using exploration strategies when competition intensifies

(Auh & Menguc, 2004). Therefore, our study will fill in the gaps by examining which of

the exploration or exploitation strategies they will tend to focus based on the

environment.

2.4.2 Push versus Pull

Push strategy is defined as the allocation of a firm’s resources to motivate

desirable outcomes at the next vertical level of the firm (Chiou, 2009). This represents

the sales force that helps sell the products. Pull strategy is defined as the allocation of a

firm’s resources to motivate brand preference with customers (Frazier, 1999). This

represents the marketing communication activities like advertising that firm

implements.

Frazier (1999) argues that the combination of both pull and push resources is

essential for the firm to grow. Furthermore, effective marketing strategy implementation

requires careful coordination of marketing communication programs with distribution

strategy to maximize brand value to the retailers and end users (Webster, 2000).

However, little research has been done to showcase the behavioral patterns of superior

firms in different phases. Therefore, we will like to explore these trends to see which

strategies superior firms will implement given a certain situation.

2.5 Bridging the Research Gaps

Looking at the diverse dynamics of competitive actions and strategies that

firms of different superiority in an evolving industry can employ, it is important that

managers are able to continuously and accurately assess their competitors’ actions to

16

come up with their own counter-actions (Aaker, 2007; Czepiel, 1992; Hooley et al.

2008; Porter 1980). Firms need to update themselves about their competitors’ actions in

order to maintain their competitive superiority over an industry evolution (Porter, 1980;

Shapiro, 1989; Teece, Pisano & Shuen 1997). Therefore, competitor assessment has

become an important part of strategic analysis and planning (Day & Wensley, 1988;

Deshpande & Gatignon, 1994; Reibstein & Wittink, 2005).

However, the lack of understanding of their competitors often led to inaccurate

predictions of competitors’ moves (Clark & Montgomery, 1996; Day & Reibstein,

1997; Dickson & Urbany, 1994; Zajac & Bazerman, 1991), where wrong strategies

employed will undermine their previous competitive superiority. Therefore, we see

potential in our research in helping managers of less superior firms to better understand

the strategies undertaken by superior firms over an industry evolution, and thereby

formulate better competitive reactions to improve their company’s performance.

17

3. HYPOTHESIS

Based on our literature review, we develop a research framework examining

the behavioral tendencies of superior firms at different phases. This research framework

will be analyzed based on the characteristics portrayed in different phases and formulate

the possible behaviors that a superior firm will undertake.

3.1 Initial Phase (Periods 1 – 2)

We will like to study factors that competitively superior firms will employ to

defend its position. Insufficient competitive knowledge would lead firms to behave

cautiously, limiting themselves to “tried and tested” strategies to establish their

competitive superiority. Furthermore, defenders (superior firms) focus on improving

their efficiency primarily through exploitation by refining their existing resources and

capabilities (Matsuno & Mentzer, 2000; Miles & Snow, 1978; Shortell & Zajac, 1990).

With no technology to explore3, we are thus studying which of the two marketing tools

superior firms will tend to focus on to defend its position. The two strategies are

advertising and sales force.

Therefore, we hypothesize the following:

H1: In the initial phase, the greater the competitive superiority, the greater the

amount of budget being allocated to advertising to defend its position.

H2: In the initial phase, the greater the competitive superiority, the greater the

amount of budget being allocated to sales force to defend its position.

3.2 Uncertainty Phase (Periods 3 – 4)3 In the Markstrat context, firms are only allowed to start their R&D process from Period 3 onwards, i.e. Phase 2 (Uncertainty Phase).

18

We will be studying variables to see how dominant firms maintain its lead. We

will like to prove that superior firms will allocate large financial resources to R&D, with

the availability of new technology. When competition intensifies, companies must

innovate and differentiate (Zahara, 1993). Furthermore, since defenders lack exploratory

capacity and are heavily involved in exploitive actions, diverting resources to

exploratory means will help increase the firm’s performance (Auh & Menguc, 2004).

Therefore,

H3: In the uncertainty phase, the greater the competitive superiority, the

greater the amount of budget being allocated to R&D to defend its position.

With the availability of new market and technology, consumers do not have

any product knowledge, compared to existing products where substantial marketing has

already been done. Therefore, it is essential for a superior firm to build a strong brand

for its new product. Thus, firms can aggressively advertise for its new products.

Therefore, we are studying whether superior firms will divert more of its resources for

its pull strategy to the new market than the existing market. Therefore,

H4: In the uncertainty phase, the greater the competitive superiority, the more

the firm will employ a pull strategy in the new market as opposed to an existing market.

3.3 Growth Phase (Periods 5 – 6)

19

We will first compare the strategic direction superior firms will head in. Firms

will either focus its resources on developing new products through R&D to better serve

its customers in the future or exploit its existing product line to gain more profits. The

latter is typically done through a 2-prong approach, where firms utilize advertising and

sales force to capture more market share. Based on the optimal-timing approach, this is

the when exploitation should begin since the firm’s ignorance has been sufficiently

reduced through exploration (Young et al., 2008). Furthermore, superior firms will tend

to be more risk adverse at this point as they want to further extend their lead by

capitalizing on their current superiority. Therefore they will not commit significant

resources on R&D where the returns are harder to measure. Therefore,

H5: In the growth phase, the greater the competitive superiority, the more the

firm will exploit resources as opposed to explore new opportunities.

This is also the phase where new market will be growing at an exponential rate.

With many new customers and few competitors in the new market, firms will prefer to

invest its resources in there. We will like to examine whether superior firms will switch

its focus to the new market by employing a combination of both push and pull strategy

to better capture a larger market share (Fraizer, 1999 & Webster, 2000). Therefore, we

hypothesize the following:


firm will employ a push strategy in a new market as opposed to an existing market.


firm will employ a pull strategy in a new market as opposed to an existing market.

3.4 Maturity Phase (Periods 7 – 8)

20

We will like to study whether competitively superior firms will continue to use

push strategy over pull strategy as the industry is already saturated. Furthermore,

consumers will be knowledgeable about the products due to advertising done

previously. Superior firms will refocus their marketing strategy to a push strategy where

sales personnel will promote its products through various distribution channels.

Therefore, we hypothesize the following:

H8: In the maturity phase, the greater the competitive superiority, the more the

firm will employ a push strategy as opposed to a pull strategy.

With decreasing number of new consumers, firms will vie for market share.

Profits margins will remain thin due to the cutthroat pricing that others employ. Thus,

we will like to examine among which marketing tools (sales force or advertising)

superior firms will focus on to counter the pricing strategy. Therefore,

H9: In the maturity phase, the greater the competitive superiority, the greater

the amount of budget being allocated to advertising to defend its position.

H10: In the maturity phase, the greater the competitive superiority, the greater

the amount of budget being allocated to sales force to defend its position.

The ten hypotheses4 developed will help us to better understand the strategic

decisions undertaken by competitively superior firms over an industry evolution.

4 Refer to Appendix A, Table 7: Summary of Hypotheses Development For Various Phases

21

4. METHODOLOGY

The various hypotheses were examined, using secondary data obtained from a

marketing simulation game called Markstrat.

4.1 Markstrat – The Simulation

Markstrat Online (Larreche & Gatignon, 1998) is a marketing simulation

whereby players take on the role of managers and develop strategic marketing decisions.

Markstrat has been used in other studies to analyze the behavior of dominant firms in

performing R&D (Chandy, Prabhu & Antia, 2003) and competitive reactions

(Montgomery, Moore & Urbany, 2005). Markstrat is able to provide us with a

controlled environment, reducing the common issues associated with field studies.

Results from Markstrat are realistic and have high external validity (Klammer &

Kinnear, 1987).

4.2 Participants and Procedures

The participants were mostly 2nd year marketing undergraduates in Nanyang

Business School, studying Product and Pricing Management. Participants were divided

into teams of four members with each team representing an individual firm in an

industry with four other firms. Participants had to come up with an Executive

Memorandum5 with regards to their decisions in alternate periods, in order to

understand their mindset. Their performance in the Markstrat simulation was also

graded to ensure that they took the simulation seriously.

5 Refer to Appendix B, Table 8: Sample of an Executive Memorandum

22

The simulation lasted for 8 periods6, over a time of period of 8 weeks. In order

to ensure that there is fairness and also not affect the results (Ross, 1987), firms in each

industry started on equal footings and same competitive environment.

4.3 Data Collection

There are a total of 80 firms in our data spread across 20 industries. Each

period in Markstrat represents a year in reality. The eight periods in the simulation are

divided into four phases (initial, uncertainty, growth and maturity).

Data were collected from the Markstrat Company Reports. We extracted the

independent variable, competitive superiority, from previous period to calculate for

current period, as firms will base their decisions on previous competitive superiority.

4.3.1 Measures

We will be using the measures below to run our analysis.

TABLE 1: OPERATIONALIZATION OF VARIABLES

Dependent/ Independent

Variable

Measure Operationalization

Advertising Aggressiveness

Advertising Expense

Total Budget7

The amount of resources spent on advertising proportionate to total budget

Sales Force Aggressiveness

Sales Force Expense

Total Budget

The amount of resources spent on sales force proportionate to total budget

R&D R&D Expense The amount of resources spent on R&D 6 Each period in the Markstrat simulation stands for one year in the reality7 Total budget includes allocated available budget based on revenue made from last period and amount of loans borrowed, where each loan is capped at K$5000 for each period.

23

Aggressiveness

Total Budget

proportionate to total budget

New_Old_Adv Vodite Advertising

Sonite Advertising

The amount of resources spent on Vodite advertising proportionate to Sonite advertising

New_Old_SF Vodite Sales Force

Sonite Sales Force

The amount of resources spent on Vodite sales force proportionate to Sonite sales force

Exploit_Explore Advertising Expense

Sales Force Expense

R&D Expense

The amount of resources spent on total sales force and advertising proportionate to R&D.

Exploit: Sales Force + Advertising

Explore: R&D Expenditure

Push_Pull Sales Force Expense

Advertising Expense

The amount of resources spent on sales force proportionate to advertising expense

Competitive Superiority

Stock Price Index The individual figures from the 3 key performance index were benchmarked and compared against the industry average.

The differences were scored and expressed in percentage. The mean of the 3 figures would be competitive superiority

Net Contribution

Return on Investment

4.3.2 Initial Phase (Periods 1 – 2)

We are examining if firms with greater competitive superiority will allocate

more resources into advertising and sales force. In order to reflect a better representation

of the importance, advertising aggressiveness is used instead of the total amount spent

on advertising. Likewise, sales force aggressiveness is used instead of total amount

spent on sales force. The values for advertising and sales force expenditure are extracted

from the Markstrat Market Research Studies.8

8 Refer to Appendix C, Table 9: Sample of Markstrat Market Research Studies (only sections where values are extracted)

24

Competitive superiority was determined by extracting the Stock Price Index

(SPI), Net Contribution and Return on Investment (ROI) of each firm from the

Markstrat Industry Newsletter9. These figures were than benchmarked and compared

against the industry average and the differences scored in percentage. The mean of each

firms’ score in the three key performance indicators will represent the firms’

competitive superiority.10

Regression Model for Testing H1:

Y = + 1X1 +

Where,

Y = Advertising Aggressiveness

X1 = Competitive Superiority


Y = + 1X1 +

Where,

Y = Sales Force Aggressiveness


9 Refer to Appendix D, Table 10: Sample of Markstrat Industry Newsletter (only sections where values are extracted)

10 Refer to Appendix E, Table 11: Sample Calculation of Competitive Superiority

25

4.3.3 Uncertainty Phase (Periods 3 - 4)

We used R&D aggressiveness, instead of the amount of money spent on R&D.

In order to test if superior firms will employ a pull strategy in a new market as opposed

to existing, a proportion whereby the new market, Vodite’s11 advertising expense is

expressed as a proportion against the current market, Sonite’s12 advertising cost. This

proportion is expressed as New_Old_Adv. The following regression model was

developed for H3 and H4.


Y = + 1X1 +

Where,

Y = R&D Aggressiveness



Y = + 1X1 +

Where,

Y = New_Old_Adv


11 Vodite refers the new product/technology introduced in the new market

12 Sonite refers to the product in the existing market

26

4.3.4 Growth Phase (Periods 5 – 6)

The following regression models were developed:


Y = + 1X1 +

Where,

Y = Exploit_Explore



Y = + 1X1 +

Where,

Y = New_Old_SF



Y = + 1X1 +

Where,

Y = New_Old_Adv


27

4.3.5 Maturity Phase (Periods 7 - 8)

The following regression models were developed:


Y = + 1X1 +

Where,

Y = Push_Pull



Y = + 1X1 +

Where,

Y = Advertising Aggressiveness



Y = + 1X1 +

Where,

Y = Sales Force Aggressiveness


28

5. RESULTS

5.1 General Results

Based on the statistical test conducted on the 80 firms, most variables had

significant results in all phases. This proves that the competitive superiority behavioral

tendencies we predicted at the different phases were generally true. The only exception

will be H9 where results were insignificant. However, the hypothesis was created in

order to reinforce the concept of H8.

5.2 Initial Phase (Periods 1 – 2)

We compared the measurement of the competitive gap among firms against

their advertising aggressiveness (H1) and sales force aggressiveness (H2). We performed

a regression analysis and found out that the greater the competitive superiority, the

greater the amount of budget allocated to advertising and sales force to defend its

position.

TABLE 2: RESULTS FOR H1 AND H2

Results for H1

Independent Variables Standardized Beta Estimate p-value

Competitive_Superiority -.235 .036

*Model R2 = .055; F (1, 78) = 4.554 (p < .001)

Results for H2



*Model R2 = .056; F (1, 78) = 4.610 (p < .001)

29

5.3 Uncertainty Phase (Periods 3 – 4)

We benchmarked the measurement of competitive gap among firms against

their R&D aggressiveness (H3) and pull strategy (H4). A regression test was conducted

and the results were significant and indicate that the greater the competitive superiority,

the greater the amount of budget allocated to R&D to defend its position. Furthermore,

superior firms will focus its pull strategy on the new market than on the existing due to

the introduction of new technologies.

TABLE 3: RESULTS FOR H3 AND H4

Results for H3


Competitive_Superiority .402 .000

*Model R2 = .162; F (1, 78) = 15.071 (p < .001)

Results for H4



*Model R2 = .056; F (1, 78) = 4.667 (p < .001)

30

5.4 Growth Phase (Periods 5 – 6)

With R&D available from this phase onwards, we were able to further sub-

divide our results into 2 different periods to ensure better accuracy of results. We

tabulated the measurement of competitive superiority with the measurement of explore

exploit strategies (H5). We divided their resources allocated for both their push (H6) and

pull (H7) strategies into the new and existing market and benchmarked it against the

measurement of competitive superiority.

Using regression analysis, we observed that the results were positive, indicating

that superior firms tend to exploit its resources than explore new opportunities in the

growth phase. It also proves that dominant firms concentrate more of its resources on

the new market through the use of both push and pull strategy in the growth phase.

TABLE 4: RESULTS FOR H5, H6 AND H7

Results for H5: Early Period (Period 5)



*Model R2 = .084; F (1, 72) = 6.499 (p < .001)

Results for H5: Later Period (Period 6)



*Model R2 = .074; F (1, 79) = 6.247 (p < .001)

31




*Model R2 = .166; F (1, 78) = 15.476 (p < .001)




*Model R2 = .165; F (1, 78) = 15.366 (p < .001)




*Model R2 = .104; F (1, 78) = 9.086 (p < .001)




*Model R2 = .160; F (1, 78) = 14.877 (p < .001)

5.5 Maturity Phase (Periods 7 – 8)

We compared the measurement of competitive superiority against the

measurement of the push over pull strategy (H8), advertising aggressiveness (H9) and

32

sales force aggressiveness (H10). By using regression analysis, we observed that H8 and

H10 were significant while H9 was not. This illustrates that dominant firms tend to

employ a push strategy rather than a pull strategy. This analysis is further substantiated

where superior firms will allocate more of its budget to sales force (push strategy) rather

than advertising (pull strategy).

TABLE 5: RESULTS FOR H8, H9 AND H10




*Model R2 = .120; F (1, 78) = 10.638 (p < .001)




*Model R2 = .104; F (1, 78) = 9.014 (p < .001)




*Model R2 = .008; F (1, 78) = .638 (p < .001)

33




*Model R2 = .020; F (1, 78) = 1.562 (p < .001)




*Model R2 = .148; F (1, 78) = 13.563 (p < .001)




*Model R2 = .085; F (1, 78) = 7.204 (p < .001)

5.6 Summary of Results

The following is a summary of the results of our hypotheses.

34

TABLE 6: SUMMARY OF RESULTS FOR HYPOTHESES

Hypothesis Result

H1: In the initial phase, the greater the competitive superiority, the greater the amount of budget being allocated to advertising to defend its position.

Supported

H2: In the initial phase, the greater the competitive superiority, the greater the amount of budget being allocated to sales force to defend its position.

Supported

H3: In the uncertainty phase, the greater the competitive superiority, the greater the amount of budget being allocated to R&D to defend its position

Supported

H4: In the uncertainty phase, the greater the competitive superiority, the more the firm will employ a pull strategy in a new market as opposed to an existing market.

Supported

H5: In the growth phase, the greater the competitive superiority, the more the firm will exploit resources as opposed to explore new opportunities.

Supported

H6: In the growth phase, the greater the competitive superiority, the more the firm will employ a push strategy in a new market as opposed to an existing market.

Supported

H7: In the growth phase, the greater the competitive superiority, the more the firm will employ a pull strategy in a new market as opposed to an existing market.

Supported

H8: In the maturity phase, the greater the competitive superiority, the more the firm will employ a push strategy as opposed to a pull strategy.

Supported

H9: In the maturity phase, the greater the competitive superiority, the greater the amount of budget being allocated to advertising to defend its position.

Not Supported

H10: In the maturity phase, the greater the competitive superiority, the greater the amount of budget being allocated to sales force to defend its position.

Supported

35

6. DISCUSSION

To achieve superior performance, it is essential for managers to sustain their

competitive advantage (Stanley, 1996) by updating themselves of their competitor’s

actions. Furthermore, rapid developments in the industry have increased the pressure on

managers to maintain their firm’s advantage, especially when the strategies are

dependent on market conditions (Stanley, 1996). In situations whereby managers are

unable to make informed predictions of competitive actions due to unavailability of

competitive information (Leeflang & Wittink, 1996), we see promising relevance in our

research in helping managers to better understand the decisions that managers in

superior firms tend to undertake in different phases, and thereby enabling them to make

better pre-emptive strategies.

6.1 Setting the Ideal Brand Image in the Initial Phase

In the initial phase, we identify brand image as the top objective of managers in

superior firms. Managers are concerned with setting the correct brand image and

perception in consumers’ minds, especially when their product knowledge is low in the

initial phase. Communicating a brand image to a specific target market is an important

marketing activity (Gardner & Levy, 1995; Grubb & Grathwhol, 1967; Moran 1973;

Reynolds & Gutman, 1984; White, 1959). A positive branding is able to help establish a

brand’s position and protect the brand from competitors’ actions (Oxenfeldt & Swann,

1964), thereby improving the company’s performance (Shocker & Srinivasan, 1979;

Wind 1973).

Hypothesis 1 and 2 show that more competitively superior firms allocate more

resources to advertising and sales force to build up their brand image in the initial phase.

36

Research shows that advertising is successful in generating brand equity (Boulding, Lee,

& Stealin, 1994; Chay & Tellis, 1991; Johnson, 1984; Lindsay, 1989; Maxwell, 1989)

and there is a positive relationship between advertising expenditure and brand equity

(Simon & Sullivan, 1993). Likewise, managers spend more on sales force to push

products to consumers to increase distribution. Increasing the reach to consumers

reduces the efforts that consumers have to make, thus increasing the perceived value.

This leads to greater consumer satisfaction and brand loyalty (Boonghee, Naveen &

Sungho, 2000).

6.2 Pioneer Advantage and Pull Strategy in Uncertainty Phase

The availability of new technology in the uncertainty phase presents companies

with a “black-box” situation, as there was no prior knowledge about consumer

preferences. However, competitively superior firms are willing to allocate more

resources to R&D despite the uncertainty involved as first entrant enjoys first-mover

advantages and are better able to maintain market share over their later counterparts

(Robinson, Kalyanaram & Urban, 1994). First movers can expect to enjoy short-term

monopoly positions that are capable of providing superior financial performance

(Geroski et al., 1993). To pull off a successful product launch in a new market, our

research shows that managers employ a pull strategy in order to educate consumers

(Soberman & Gatignon, 2005) and create the brand awareness, which will be a

competitive advantage as the industry progresses.

6.3 Emphasis on New Markets in Growth Phase

In the growth phase, superior firms emphasize on exploiting activities than

exploring (Hypothesis 5). From Hypothesis 3, it shows that superior firms would

37

probably face a tighter financial budget as compared to their counterparts due to their

previous R&D investments. This could be the reason why these firms are keener on

recouping their investments through exploiting activities instead. After a product

launch, further changes to a product take on additional resources. This spells for a new

strategy to allocate additional resources to areas like advertising and sales force in an

attempt to change consumers’ mindset (Soberman & Gatignon, 2005).

From Hypothesis 6 and 7, we infer that superior firms focus highly on the new

market in the growth phase by employing both push and pull strategies. This means that

less emphasis was placed on the existing market. Two possible reasons are as follows.

First, the superior firms might be successful in the existing market, propelling them into

believing that they are able to emulate the same kind of success they had in the new

market (Zook & Allen, 2003). Secondly, superior firm might be losing market share in

the existing market and believes that the new market will provide them with greater

returns to defend their position (March & Shapira, 1987). This indicates that superior

firms believe that the new market is more financially attractive and so place more

resources.

6.4 Push Strategy in Maturity Phase

Results from Hypothesis 8 and 10 established the strategy that superior firm

focuses when competition is the stiffest. It shows managerial intention of pushing the

products to the consumers through sales force rather than attracting more customers.

Competitively superior firms might believe that sufficient brand loyalty has already

been built (Keller, 1993), and the environment calls for a new urgency to push for hard

selling in order to maintain their foothold. It could also be that pull strategy requires a

longer time as it serves to convert customers to be familiar with the brand (Alba &

38

Hutchinson, 1987). Also, the merchandise novelty is already experiencing the worn-out

effects and would be difficult to reverse the already set trend.

6.5 Overall Managerial Implications

6.5.1 Initial Phase (Periods 1 – 2)

It might be worthwhile for managers to allocate more resources to both

advertising and sales force when companies are all starting equally. It is essential for

managers to continually make the correct decisions from the start in order to kick-start

their dominance. This allows the company that manages to move ahead of competition

initially to have a competitive advantage in terms of greater financial resources for

stronger competitive actions later (George S. Day & Robin Wensley, 1998). Therefore,

we see great importance in the ability of companies to pull ahead of competition in the

initial phase by placing more emphasis on both advertising and sales force.

6.5.2 Uncertainty Phase (Periods 3 – 4)

Despite the intuitive action of taking a risk adverse move by placing emphasis

on the existing market in an uncertainty phase (Pratt, 1964; Arrow, 1965; Ross, 1981), it

might be worthwhile for managers to consider the alternative of investing money into

utilizing a pull strategy in the new market as it might provide better payoffs in the future

(March & Shapira, 1987).

If the weaker firms do not have the financial capabilities to do so initially, it

might be a good alternative to be the market’s late entrant. It might be easier for late

entrants to come up with more ideal products (Carpenter & Nakomoto, 1989) according

to consumers’ preferences after the first-mover’s products as there is less uncertainty

39

(Soberman & Gatignon, 2005). Likewise, weaker firms who launched their innovation

later could still employ a pull strategy and focus on building a brand image to a greater

extent, which is significantly made easier as the category is already well understood

when the first-mover first entered the market (Soberman & Gatignon, 2005).

6.5.3 Growth Phase (Periods 5 – 6)

Despite the general trend that superior firms tend to employ exploit strategies

during the growth stage, managers should not rush into making similar decisions as

different firms could be in different stages of R&D. Hence, a blind adoption of the

observed strategy could be myopic as the benefits from their R&D might be too early to

be yielded (Levitt, 1960).

As superior firms tend to invest more in the new market through push and pull

strategy, less competitively superior firms could establish themselves in the existing

market as competitors’ investment in the new market tend to make them less

competitive in the existing (Blundell, Griffith & Van Reenen, 1999). However, these

firms have to weigh the benefits and costs of exploiting the current opportunity being

presented or following the trend of entering the new market with the rest.

6.5.4 Maturity Phase (Periods 7 – 8)

In maturity phase, merchandise desirability is declining. As superior firms

move to push more of their products to their customers, increasing monetary

investments would be involved through hiring more sales forces and granting price

promotions. The strong competitive nature might strain the firm’s resources as they

strive to maintain their market share through aggressive push strategies. Hence, it might

be possible for managers to withdraw entirely from the maturing product category when

40

competition becomes overly stifling to avoid commitment escalation, which could result

in severe losses (Robbins & Judge, 2009). Withdrawal might be the wiser step to retain

most of the profits obtained from earlier phases when the situation turns unfavorable

(Boulding, Morgan & Staellin, 1997).

6.6 Potential Pitfall of Strategies Taken by Competitively Superior Firms

A simple study was done to investigate whether superior firms were able to

maintain their superiority across phases with the strategies they employed. For example,

only about 68.75% of superior firms managed to maintain their leadership position over

a period of one phase (i.e. uncertainty to growth phase)13. This suggests that strategies

that superior firms employ might not always be the most effective strategy in sustaining

their competitive superiority. Therefore, weaker firms should exercise prudence and not

emulate the strategies dominant firms tend to undertake but should only use it as a

reference to make informed decisions.

13 Refer to Appendix F, Table 12: Changes in Competitive Superiority Over Different Phases

41

7. LIMITATIONS AND FUTURE RESEARCH

In our research study, there are several limitations, of which some could be

possible directions for future research.

We acknowledge the limitation that is involved with using Markstrat data

whereby the subjects are marketing undergraduates who have no real-life managerial

experience. As noticed by Babb, Leslie and Van Slyke (1966), the behaviors of

experienced managers differ from undergraduate students, as managers are more

cautious.

Also, the setting of the Markstrat simulation removes externalities like

political, environmental and social factors that often have an impact in reality. This

makes decisions independent of externalities, which differs from reality. However, the

chances of decisions differing should be minimized by the fact that all hypotheses

developed are supported by literature review.

We see potential future directions in our research in three main areas. In our

research, we identified the potential pitfall of the strategies that competitively superior

firms tend to undertake, resulting in their failure to maintain their superiority. In

improving their company’s financial performance, it will thus be interesting to see

which strategies would be more effective in helping companies achieve sustainable

competitive advantage across phases.

Also, we left out price as one of the marketing tools because of the inability to

group products due to differences in product features of individual firms. However, with

a 1% increase in price capable of bringing a 11.1% increase in profits generated (Marn

& Rosiello, 1992), we see a future potential in exploring the effects of price in helping

companies achieve competitive superiority over an industry evolution.

42

In addition, another interesting area will be the managerial decision making

process. It will be enlightening to identify the behaviors and biases involved during the

decision making process when managers have to cope with limited resources. The

following abstract from an Executive Memorandum14 further illustrates this point:

“However, because of R&D, competitors will start pushing out new or modified specialized products targeted solely at the individual market segment. For the last period, we lost our competitive advantage in terms of our advertising and sales force strategy due to our decision to spend more money on R&D.”

Finally, we strongly believe that our research on effects of competitive

superiority on managerial decision-making in an industry evolution will provide useful

insights on the strategic decisions that managers in superior firms tend to undertake.

This provides weaker firms with competitive intelligence about their competitors and

thereby enable them to come up with pre-emptive strategic actions. We hope that our

research will provide a good foundation for future research on the area of competitive

superiority in an industry evolution.

APPENDIX A

TABLE 7: SUMMARY OF HYPOTHESES DEVELOPMENT FOR VARIOUS

PHASES14 Refer to Appendix B, Table 8: Sample of an Executive Memorandum

43

H1 H2 H3 H4 H5 H6 H7 H8 H9 H10Initial PhaseUncertainty Phase Growth PhaseMaturity Phase

APPENDIX B

TABLE 8: SAMPLE OF AN EXECUTIVE MEMORANDUM

44

Memorandum 05/03/09Executive Summary

The company’s performance in period 3 was positive as stock prices and contribution increased. However, our concern was the drop in market share in Sonite, due to the lack of resources given to our sales force distribution. Therefore, for period 4, our focus will be to recapture back market share and maintain our profitability by increasing advertising and sales force distribution, and introducing products which are highly targeted.

Internal Analysis

Looking at the company’s performance indicators in period 3, there was an increase in performance. Stock prices and net contribution increased by 4.1% and 2.8% respectively. This could be due to the overall increase of 18.2% in the Sonite market. However, the company’s ROI decreased by 33.3%, due to the firm’s heavy expenditure in R&D (K$2,480). Our efforts in R&D have produced a new product, SANE, and also modified SAMA, so as to ensure our products target towards individual market segments.

The overall brand awareness for both SAMA and SALT has increased, due to the increase in advertising expenditure. However, overall purchase intention for SALT and among the Professionals segment dropped 2.4% and 10% respectively. This is despite having strong brand awareness and a more ideal perception of our brand than competitors’. An explanation is the lack of resources allocated to sales force, which hurt the distribution of SALT. The lack of sales force in the mass merchandise sector caused the decrease in purchase intention, as there is an increasing amount of Professionals and Others buying from this channel. This meant that our target consumers shopping in mass merchandiser are not exposed to our product, preventing them from buying it.

External Analysis

The growing trend of the Sonite looks set to continue with forecasted growth of 7.4% to 135.2% for the various consumer segments. Only the Buffs segment market share is expected to decrease by 28.5%. It is expected that competitors will continue to tap on the growing force of the other four customer segments. However, because of R&D, competitors will start pushing out new or modified specialized products targeted solely at the individual market segment. For the last period, we lost our competitive advantage in terms of our advertising and sales force strategy due to our decision to spend more money on R&D.

Competitors - Differences in Advertising Strategies

Market Leader, Firm I, spent the most on advertising expenditure (K$6153) without emphasizing much on advertising research (K$634). But, they still had the highest brand awareness and purchase intentions for both their products. Therefore, we are positive that advertising expenditure plays a more crucial role.

Looking at the trends of the other companies’ advertising expenditure, they have started to become more specialized in their target segment. Firm E spent about 25.4% of their total advertising expenditure and Firm I spent about 28.1% in our same targeted

45

Professional segment. Therefore, we expect them to further increase their advertising expenditure as they attempt to wrest market share from us.

Competitors - Differences in Sales Force Strategies

Analyzing the market leader Firm I, it can be seen that their strategy to increase sales force by 33.3% from the last period was a right move as it led them to be the top firm in the market. More significantly, we notice that competitors were increasing their sales force in the mass merchandise sector (especially Firm E which doubled their sales force in this area). This corresponds with the shift in shopping habits of all the consumers to mass merchandise sectors (from 26.0% to 28.1%). Therefore, it is expected that our competitors will continue to increase their sales force to meet the increased demands.

Competitors - Differences in Price Strategies

Even though, market leader Firm I decreased and set their price at the highest level ($535) for the last period, they still managed to generate the highest amount of sales. They still have the highest purchase intention among the various brands.

As a result, we can say that strategies on sales force distribution and advertising expenditure employed by market leader Firm I help to justify the high price that they set.

Research and Development

Firm E spent the most amount (K$5500). We can infer that Firm E will have gotten hold of a feasibility report on Vodite and also a specialized portfolio of Sonite brands. However, they are restricted by their budget constraints for the next period (K$10,000), which is the 2nd lowest in the industry, to push out their new products. One of the factors that Firm I managed to achieve pole position is due to their small R&D expenditure (K$1020). Their failure to invest in R&D last period might result in them losing their competitive advantage as their products are not catered to the individual market segments.

Decisions for Period 4

Our overall objective is to increase overall profitability by tuning the products specifications to suit the needs of our target market. More emphasis will be given towards advertising and sales force distribution.

SALT – Market Leader in the Professional Segment

SALT will be positioned to entirely focus on the Professionals segment. This is because the product characteristic of SALT is exactly suited to the Professional segment. Therefore, we aim to maintain our market leader status in the professional segments.

The price of the SALT brand will remain constant at K$510 as it matches the ideal price of the professionals based on a consumer survey that was conducted. There will be an increase of production volume by 15% to accommodate the growth of the Professionals segment.

An increase in advertising expenditure to K$4,500 is required in order to take over market leader position as Firm I is expected to increase advertising expenditure. This increase is further substantiated from a market research that 20% increase in advertising expenditure will help to increase the market share by 5%.

This period advertising will focus on the power and design of our products, as the Professionals prefer these two factors based on a consumer research study.

46

SAMA – Market Leader in Others Segment

SAMA was decided to entirely focus on the Others segment. This is due to the fact that SAMA has the biggest market share in the Others segment compared to the rest. As such, SAMA was modified so that it is able to suit the Other’s needs better.

The production will only increase by 8% despite expecting a larger growth in the Others segment as it is expected that there will be some loss in the Singles segment due to the introduction of SANE. SAMA is set 10% above the Others ideal price as the product is modified to better suit the Others needs.

An increase in advertising expenditure to K$3,200 is required as we need to match Firm U, the highest spender of advertising expenditure on the Others segment. Our newly modified SAMA did not manage to meet Others requirement in terms of power and price thus our advertising will focus on this two aspects.

SANE- Bringing Sanity to the Singles Segment

SANE is designed to capture the majority of Singles segment, which is untapped in the industry. Production was set to 110KU as SANE is expected to capture a estimated market share of 30% as the product is more targeted towards the singles. Despite having a higher ideal price of the Singles, SANE is priced at $270 because Singles will be willing to pay a slightly higher premium as SANE is a product designed specially to suit their needs,

As Sane is a totally new brand, we have decided to spent K$3000 to build its brand awareness, focusing on the power aspect of SANE, as it is a relative important factor to the Singles.

Sales Force Distribution

Our total Sales force distribution will increase by 50% with emphasis given to the Mass Merchandiser based on the external analysis.

Forecast

Sonite market is expected to grow in Period 4 with 14.4% on average for the Professionals and High Earners, 35.2% for Singles and 19.6% for Others. As such, we will expect our revenue to increase with a similar range.

Increasing our overall advertising expenditures and sales force allocation for the various brands will allow us to compete competitively in the various segments. Riding along high brand awareness for all our brands, we are expected to increase our market share in all our brands except SAMA.

Most likely scenario

All our brands target specifically at different segments. With different brands positioned themselves to cater to different segment, we will expect to take hold on to our market share in the various segments.

We are expected to register a net contribution after marketing of K$37,458, giving us a budget of K$15,000 for next period to fund for our introduction of Vodite brand for the next period. However, SANE will not be expected to rake in profits for us this period due to the high advertising expenditures incurred to boost its brand awareness.

Best Case Scenario

47

Advertising expenditures and sales force allocation are targeted to be higher than other firms. Taking advantage of our early R&D on each brand, we are able to target at specific targets, giving us a competitive advantage over other firms. As such, we are expected to hold 25% market share for SALT and SAMA as well as 30% for SANE.

We are expected to register a net contribution after marketing of K$42,371, giving us a budget of K$16,750 for the next period to fund for our introduction of Vodite brand next period.

Worst Case scenario

Firms may attempt to drive down their price to regain market share lost to Firm I in the last period, thus affecting our sales since our strategy this period is to increase advertising expenditures. With market share expected to drop, SANE will be hit the most, making a loss of K$1,700, since its objective was to increase brand awareness through extensive advertising expenditures.

We are expected to register a net contribution after marketing of K$33,168, giving us a budget of only K$13,050 for the next. This budget constraint for the next period will make it difficult for us to launch our R&D product in the Vodite market.

APPENDIX C

TABLE 9: SAMPLE OF MARKSTRAT MARKET RESEARCH STUDIES

INDUSTRY BENCHMARKING

48

BENCHMARKING - ESTIMATED OVERALL PERFORMANCE Unit A E I O USales Retail sales K$ 135,186 179,447 118,570 127,048 82,960 Revenues K$ 88,943 114,935 77,978 83,730 54,350Production Cost of goods sold K$ -40,244 -66,088 -25,768 -39,628 -19,516 Inventory holding cost K$ -52 -283 -1 -985 -132 Inventory disposal loss K$ 0 0 0 -1 0 Contribution before marketing K$ 48,646 48,564 52,210 43,116 34,702

Marketing Advertising expenditures K$ -10,000 -5,600 -7,329 -8,600 -5,782 Advertising research expenditures K$ -1,600 -600 -815 -1,113 -850

Sales force K$ -3,546 -2,499 -3,479 -3,580 -2,215 Contribution after marketing K$ 33,500 39,865 40,587 29,824 25,855Other expenses Market research studies K$ -687 -777 -923 -467 -923 Research and development K$ 0 -3,550 -7,690 -390 -1,310 Interest paid K$ -353 -500 -564 -752 -98 Exceptional cost or profit K$ 0 0 0 0 0 Net contribution K$ 32,460 35,038 31,410 28,215 23,524Next period budget K$ 13,000 14,000 12,550 11,300 9,400

BENCHMARKING - ESTIMATED PERFORMANCE IN SONITE MARKET Unit A E I O USales Retail sales K$ 135,186 72,733 118,570 127,048 82,960 Revenues K$ 88,943 47,747 77,978 83,730 54,350Production Cost of goods sold K$ -40,244 -17,797 -25,768 -39,628 -19,516 Inventory holding cost K$ -52 -283 -1 -985 -132 Inventory disposal loss K$ 0 0 0 -1 0 Contribution before marketing K$ 48,646 29,667 52,210 43,116 34,702

Marketing Advertising expenditures K$ -10,000 -3,600 -7,329 -8,600 -5,782 Advertising research expenditures K$ -1,600 -100 -815 -1,113 -850

Sales force K$ -3,546 -1,754 -3,479 -3,580 -2,215 Contribution after marketing K$ 33,500 24,213 40,587 29,824 25,855

BENCHMARKING - ESTIMATED PERFORMANCE IN VODITE MARKET Unit A E I O USales

49

Retail sales K$ 0 106,713 0 0 0 Revenues K$ 0 67,188 0 0 0Production Cost of goods sold K$ 0 -48,291 0 0 0 Inventory holding cost K$ 0 0 0 0 0 Inventory disposal loss K$ 0 0 0 0 0 Contribution before marketing K$ 0 18,897 0 0 0Marketing Advertising expenditures K$ 0 -2,000 0 0 0 Advertising research expenditures K$ 0 -500 0 0 0 Sales force K$ 0 -745 0 0 0 Contribution after marketing K$ 0 15,652 0 0 0

50

APPENDIX D

TABLE 10: SAMPLE OF MARKSTRAT INDUSTRY NEWSLETTER

STOCK MARKET AND KEY PERFORMANCE INDICATORS

STOCK MARKET

FirmStock price index

Market capitalization Net contribution (K$)

base 1000 K$ Period 4 Cumulative

E 1,847 523,068 35,038 128,738A 1,526 431,960 32,460 127,307I 1,495 423,404 31,410 127,158O 1,384 391,899 28,215 101,793U 1,125 318,484 23,524 110,755

COMPANY KEY PERFORMANCE INDICATORS (period 4 values)

Unit A E I O UMarket share

Total %$ 21.0% 27.9% 18.4% 19.8% 12.9% Sonite market %$ 25.2% 13.6% 22.1% 23.7% 15.5%

Vodite market %$ 0.0% 100.0% 0.0% 0.0% 0.0%

Retail sales

Total K$ 135,186 179,447 118,570 127,048 82,960 Sonite market K$ 135,186 72,733 118,570 127,048 82,960

Vodite market K$ 0 106,713 0 0 0

Contribution

Before marketing K$ 48,646 48,564 52,210 43,116 34,702

After marketing K$ 33,500 39,865 40,587 29,824 25,855

Net K$ 32,460 35,038 31,410 28,215 23,524 Cumulative net

K$ 127,307 128,738 127,158 101,793 110,755

Shareholder value

Stock price index Base 1000 1,526 1,847 1,495 1,384 1,125

Market capitalization K$ 431,960 523,068 423,404 391,899 318,484

Current return on investment Ratio 2.05 2.69 1.55 1.99 2.12

Cumulative return on investment

Ratio 2.67 2.71 2.46 2.29 2.83

51

COMPANY KEY PERFORMANCE INDICATORS (% change from period 3 to period 4)

A E I O UMarket share Total 0.3% 41.2% -24.7% 14.4% -26.4% Sonite market 20.2% -31.4% -9.8% 37.1% -11.7% Vodite market - - - - -Retail sales Total 30.9% 84.3% -1.7% 49.3% -3.9% Sonite market 30.9% -25.3% -1.7% 49.3% -3.9% Vodite market - - - - -Contribution Before marketing 14.5% 22.3% 2.7% 25.9% 0.8% After marketing -0.6% 27.4% -1.9% 11.4% -0.6% Net 5.7% 40.2% -20.8% 23.5% -7.0% Cumulative net 34.2% 37.4% 32.8% 38.3% 27.0%Shareholder value Stock price index 3.8% 32.3% -8.0% 20.5% -7.9% Market capitalization 3.8% 32.3% -8.0% 20.5% -7.9% Current return on investment -21.3% 55.2% -56.9% -3.6% -23.3% Cumulative return on investment -10.3% -0.2% -19.1% -5.7% -9.0%

52

APPENDIX E

TABLE 11: SAMPLE CALCULATION OF COMPETITIVE SUPERIORITY

Southeast_09 P04Firms Net Contribution Industry Average Score

Southeast_A_09 32,46030129.4

7.74%Southeast_E_09 35,038 16.29%Southeast_I_09 31,410 4.25%Southeast_O_09 28,215 -6.35%Southeast_U_09 23,524 -21.92%

Firms SPI Industry Average ScoreSoutheast_A_09 1,526

1475.43.43%

Southeast_E_09 1,847 25.19%Southeast_I_09 1,495 1.33%Southeast_O_09 1,384 -6.19%Southeast_U_09 1125 -23.75%

Firms Current ROI Industry Average ScoreSoutheast_A_09 2.05

2.08

-1.44%Southeast_E_09 2.69 29.33%Southeast_I_09 1.55 -25.48%Southeast_O_09 1.99 -4.33%Southeast_U_09 2.12 1.92%

Calculation of Industry Average for Net Contribution

= (32,460 + 35,038 + 31,410 + 28,215 + 23,524) / 5

= 30,129.4

Calculation of Individual Score for Each Firm (e.g. Firm A’s Net Contribution)

= [(32,460 – 30,129.4) / 30,129.4] x 100%

= 7.74%

*Calculations remain as same for SPI and Current ROI tables.

Calculation of Competitive Superiority (e.g. Firm A)

= [7.74% + 3.43% + (-1.44%)] / 3

= 3.24%

53

APPENDIX F

TABLE 12: CHANGES IN COMPETTIVE SUPERIORITY OVER DIFFERENT

PHASES

From To Transition of phase

Number of superior firms that maintain

leadership positions

Percentage of superior firms that

maintain leadership positions

Period 2 Period 3 Initial to Uncertainty

7 out of 16 43.75%

Period 4 Period 5 Uncertainty to Growth

11 out of 16 68.75%

Period 6 Period 7 Growth to Mature

10 out of 16 62.5%

54

This shows the change in competitive superiority of a

particular market leader from one period to the

other period in an example - the Southeast industry.

REFERENCES

Andras, T., & Srinivasan, S., “Advertising Intensity and R&D Intensity: Differences Across Industries and Their Impact on Firm's Performance”. International Journal of Business and Economics, (2003), 2(2), pp. 167-176.

Armstrong, J. S. and Collopy, F., “Competitor Orientation: Effects of Objectives and Information on Managerial Decisions and Profitability”. Journal of Marketing Research, (May 1996), 33(2), pp. 188-199.

Aron, O.'C. and Jay, W., “The Effects of Perceived Industry Competitive Intensity and Marketing-Related Capabilities: Drivers of Superior Brand Performance”. Industrial Marketing Management, In Press, Corrected Proof, Available online 4 June 2009, ISSN 0019-8501, DOI: 10.1016/j.indmarman.2009.04.002.y

Arrow, K. J., Aspects of the Theory of Risk Bearing, Helsinki Yrjo Jahnssonis, Saatio (1965).

Auster, E. R., “The Relationship of Industry Evolution to Patterns of Technological Linkages, Joint Ventures, and Direct Investment Between U.S. and Japan”. Management Science, (June 1992), 38(6), pp. 778-792.

Baum, J. A. C. and Korn, H. J., “Competitive Dynamics of Interfirm Rivalry”. Academy of Management Journal, (April 1996), 39(2), pp. 255-291.

Boonghee Y., Naveen D. and Sungho L., “An Examination of Selected Marketing Mix Elements and Brand Equity”. Academy of Marketing Science Journal, (2000), 28(2), pp. 195-211.

Boulding, W., Lee, E. and Staelin, R., “Mastering The Mix: Do Advertising, Promotion, and Sales Force Activities Lead to Differentiation”. Journal of Marketing Research, (May 1994), 31(2), pp. 159-172.

55

Boulding, W., Morgan, R. and Staelin, R., "Pulling the Plug to Stop the New Product Drain”. Journal of Marketing Research, (February 1997), 34(1), pp. 164-176.

Bowman, D. and Gatignon, H., “Determinants of Competitor Response Time to a New Product Introduction”. Journal of Marketing Research, (February 1995), 32(1), pp. 42-53.

Carpenter, G. S. and Lehmann, D. R., “A Model of Marketing Mix, Brand Switching, and Competition”. Journal of Marketing Research, (August 1985), 22(3), pp. 318-329.

Chen, M. –J., Smith, K. G. and Grimm, C. M., “Action Characteristics as Predictors of Competitive Responses”. Management Science, (March 1992), 38(3), pp. 439-455.

Chen, M.-J. and MacMillan, I. C., “Nonresponse and Delayed Response to Competitive Moves: The Roles of Competitor Dependence and Action Irreversibility”. Academy of Management Journal, (August 1992), 35(3), pp. 539-570.

Chen, M.-J. and Miller, D., “Competitive Attack, Retaliation and Performance: An Expectancy-Valence Framework”. Strategic Management Journal, (1994), 15(2), pp. 85-102.

Chen, M.-J. and Hambrick, D. C., “Speed, Stealth, and Selective Attack: How Small Firms Differ From Large Firms In Competitive Behavior”. Academy of Management Journal, (April 1995), 38(2), pp. 453-482.

Chen, M.-J., “Competitor Analysis and Interfirm Rivalry: Toward a Theoretical Integration”. Academy of Management, The Academy of Management Review, (January 1996), 21(1), pp. 100-134.

Chen, M.-Jer., Su, K.-H. and Wenpin T., “Competitive Tension: The Awareness-Motivation-Capability Perspective”. Academy of Management Journal, (February 2007), 50(1), pp. 101-118.

56

Chen, M. -J., “Competitive Dynamics Research: An Insider's Odyssey”. Asia Pacific Journal of Management, (March 2009), 26(1), pp. 5-25.

Chiayu T., “Balancing Exploration and Exploitation Capabilities in High Technology Firms: A Multi-Source Multi-Context Examination”. Industrial Marketing Management, In Press, Corrected Proof, Available online 19 September 2009, ISSN 0019-8501, DOI: 10.1016/j.indmarman.2009.07.001.

Choi, Y. R., Lévesque, M. and Shepherd, D. A., “When Should Entrepreneurs Expedite or Delay Opportunity Exploitation”. Journal of Business Venturing, (May 2008), 23(3), pp. 333-355.

Chris, Z. and James, A., “Growth Outside the Core”. Harvard Business Review, (December 2003).

Daniel, A. L. and James G. M., “The Myopia of Learning”. Strategic Management Journal, (February 2007), 14(S2), pp. 95-112.

David S. and Gatignon, H., “Research Issues at the Boundary of Competitive Dynamics and Market Evolution”. Marketing Science, (Winter, 2005), 24(1), pp. 165-174.

Day, G. S. and Wensley, R., ”Assessing Advantage: A Framework For Diagnosing Competitive Superiority”. Journal of Marketing, (April 1988), 52(2), pp. 1-20.

Day, G. S. and Nedungadi, P., “Managerial Representations of Competitive Advantage.” Journal of Marketing, (April 1994), 58(2), pp. 31-44.

Derfus, P., Maggitti, P., Grimm, C. and Smith, K., “The Red Queen Effect: Competitive Actions and Firm Performance”. Academy of Management Journal, (February 2008), 51(1), pp. 61-80.

Elie, O. and Miklos, S., “R&D, Marketing, and The Success of Next-Generation Products”. Marketing Science, (Summer 2003), 22(3), pp. 355-370.

57

Fernández, Z. and Usero, B., “Competitive Behavior in the European Mobile Telecommunications Industry: Pioneers vs. Followers”. Telecommunications Policy, (August 2009), 33(7), pp. 339-347.

Franco, M., “Innovation and the Dynamics and Evolution of Industries: Progress and Challenges”. International Journal of Industrial Organization, (August 2007), 25(4), pp. 675-699.

Frederick, E. W. Jr., “Understanding the Relationships Among Brands, Consumers, and Resellers”. Academy of Marketing Science Journal, (December 2000), 28(1), pp. 17-23.

Gary, L. F., "Organizing and Managing Channels of Distribution”. Academy of Marketing Science Journal, (1999), 27(2), pp. 226-240.

Gerstner, E. and Hess, J. D., “Pull Promotions and Channel Coordination”. Marketing Science, (Winter 1995), 14(1), pp. 43-60.

Golder, P. N. and Tellis, G. J., “Pioneer Advantage: Marketing Logic or Marketing Legend”. Journal of Marketing Research, (May 1993), 30(2), pp. 158-170.

Harrigan, K. R., “Strategies for Declining Industries”. Journal of Business Strategy, (1980), 1(2), pp. 20-34.

Ireland, R. D. and Justin, W. W., “Strategic Entrepreneurship: Creating Competitive Advantage Through Streams of Innovation”. Business Horizons, (January-February 2007), 50(1), pp. 49-59.

Ireland, R., and Webb, J., “Crossing the Great Divide of Strategic Entrepreneurship: Transitioning Between Exploration and Exploitation”. Business Horizons, (September-October 2009), 52(5), pp. 469-479.

Izabela, L. S. and Kare, S., “The Impact of Market Orientation on Product Innovativeness and Business Performance”. International Journal of Research in

58

Marketing, (December 2003), 20(4), pp. 355-376.

James, G. M., “Exploration and Exploitation in Organizational Learning”. Organization Science, (February 1991), 2(1), pp. 71-87.

Jan-Benedict, E. M. S., Vincent, R. N., Dominique, M. H. and Marnik, G. D., “Competitive Reactions to Advertising and Promotion Attacks”. Marketing Science, (Winter 2005), 24(1), pp. 35-54.

John, W. P., “Risk Aversion in the Small and in the Large”. Econometrica (pre-1986), (January-April 1964), 32(1,2), pp. 122.

Jyh-Shen, C., Lei-Yu W. and Min-Chieh C., “Antecedents of Retailer Loyalty: Simultaneously Investigating Channel Push and Consumer Pull Effects”. Journal of Business Research, (April 2010), 63(4), pp. 431-438.

Kathleen, M. E. and Jeffrey, A. M., “Dynamic Capabilities: What Are They”. Strategic Management Journal, (October 2000), 21(10-11), pp. 1105-1121.

Keller, K. L., “Conceptualizing, Measuring, and Managing Customer-Based Brand Equity”. Journal of Marketing, (January 1993), 57(1), pp. 1-22.

Ken, G. S., Walter, J. F. and Curtis, M. G., “King of the Hill: Dethroning the Industry Leader”. The Academy of Management Executive, (May 2001), 15(2), pp. 59-70.

Ken, M. and John, T. M., “The Effects of Strategy Type on the Market Orientation-Performance Relationship”. Journal of Marketing, (October 2000), 64(4), pp. 1-16.

Kyriakos K. and Christine M., “Tradeoffs in Marketing Exploitation Srategies: The Overlooked Role of Market Orientation”. International Journal of Research in Marketing, (September 2004), 21(3), pp. 219-240.

Laforet, S., “Size, Strategic, and Market Orientation Affects on Innovation”. Journal of Business Research, (July 2008), 61(7), pp. 753-764.

59

Lee, C. Y., “Competition Favors the Prepared Firm: Firms' R&D Responses to Competitive Market Pressure”. Research Policy, (June 2009), 38(5), pp. 861-870.

Lieberman, M. B. and Montgomery, D. B., “First-Mover Advantages”. Strategic Management Journal, (Summer 1988), 9(Special Issue), pp. 41-58.

Linda, A. and Henrich, R. G., “A Behavioral Theory of the Firm - 40 Years and Counting: Introduction and Impact”. Organization Science, (May-June 2007), 18(3), pp. 337-349.

Levy, M., Webster, J. and Kerin, R. A., “Formulating Push Marketing Strategies: A Method and Application”. Journal of Marketing, (Winter 1983), 47(1), pp. 25-34.

Lewis, K. S. L., Frank, A. and Alexander, R., “Development of Archetypes of International Marketing Strategy”. Journal of International Business Studies, (July 2006), 37(4), pp. 499-524.

Luo, Y. and Chen, M., “Does guanxi Influence Firm Performance”. Asia Pacific Journal of Management, (1997), 14, pp. 1-16.

Majumdar, S. K. and Venkataraman, S., “New Technology Adoption in US Telecommunications: The Role of Competitive Pressures and Firm-Level Inducements”. Research Policy, (November 1993), 22(5,6), pp. 521-536.

Marius, T. H. M. and Leon, A. G. O., ”Firm Behaviour and Innovative Performance An Empirical Exploration of the Selection-Adaptive Debate”. Research Policy, (January 2000), 29(1), pp. 41-58.

Mark, B. and Margaret, A. P., “Competitor Identification and Competitor Analysis: A Broad-Based Managerial Approach”. Managerial and Decision Economics, (2002), 23(4,5), pp. 157-169.

60

Margaret, A. P., “The Cornerstones of Competitive Advantage: A Resource-Based View”. Strategic Management Journal (1986-1998), (1993), 14(3), pp. 179-191.

Mike T. and Bob S., “The Challenge of Sustaining the Research and Innovation Process”. World Patent Information, (September 2005), 27(3), pp. 212-226.

Mikhail, M. K., “Competition, Matching, and Geographical Clustering At Early Stages of the Industry Life Cycle”. Journal of Economics and Business, (May-June 2004), 56(3), pp. 177-195.

Miller, D. and Chen, M.-Jer., “Sources and Consequences of Competitive Inertia: A Study of the U.S. Airline Industry”. Administrative Science Quarterly, (March 1994), 39(1), pp. 1-23.

Neil A. M., Rebecca J. S. and Douglas W. V., “Linking Marketing Capabilities with Profit Growth”. International Journal of Research in Marketing, (December 2009), 26(4), pp. 284-293.

Nutt, P. C., “Framing Strategic Decisions”. Organization Science, (February 1998), 9(2), pp. 195-216.

Park, C. W., Jaworski, B. J. and Macinnis, D. J., “Strategic Brand Concept-Image Management”. Journal of Marketing, (October 1986), 50(4), pp. 135-145.

Peter, S. H. L. and Dick, R. W., “Explaining Competitive Reaction Effects”. International Journal of Research in Marketing, (June 2001), 18(1,2), pp. 119-137.

Peter, W. R. and Raphael, A., “The Dynamics of Innovative Activity and Competitive Advantage: The Case of Australian Retail Banking, 1981 to 1995”. Organization Science, (March-April 2003), 14(2), pp. 107-122.

61

Pilar, C. and Ana, I. R., “The Impact of Market Characteristics and Innovation Speed on Perceptions of Positional Advantage and New Product Performance”. International Journal of Research in Marketing, (March 2006), 23(1), pp. 1-12.

Rajesh, K. C. and Gerard, J. T., “The Incumbent's Curse? Incumbency, Size, and Radical Product Innovation”. Journal of Marketing, (July 2000), 64(3), pp. 1-17.

Rajesh, K. C., Jaideep, C. P. and Kersi, D. A., “What Will the Future Bring? Dominance, Technology Expectations, and Radical Innovation’’. Journal of Marketing, (July 2003), 67(3), pp. 1-18.

Ramaswamy, V., Gatignon, H. and Reibstein, D. J., “Competitive Marketing Behavior in Industrial Markets”. Journal of Marketing, (April 1994), 58(2), pp. 45-55.

Rohit D. and Gatignon, H., “Competitive Analysis”. Marketing Letters, (July 1994), 5(3), pp. 271–287.

Sabine, K., Christian, H. and Thomas, S. R., “Retaliatory Behavior to New Product Entry”. Journal of Marketing, (October 1999), 63(4), pp. 90-106.

Seigyoung, A. and Bulent, M., “Balancing Exploration and Exploitation: The Moderating Role of Competitive Intensity”. Journal of Business Research, (December 2005), 58(12), pp. 1652-1661.

Shelby, D. H., “Resource-Advantage Theory: An Evolutionary Theory of Competitive Firm Behavior”. Journal of Economic Issues, (March 1997), 31(1), pp. 59-77.

Shetty, Y. K., “Aiming High: Competitive Benchmarking for Superior Performance”. Long Range Planning, (February 1993), 26(1), pp. 39-44.

Shortell, S. M. and Zajac, E. J., “Perceptual and Archival Measures of Miles and Snow's Strategic Types: A Comprehensive Assessment of Reliability and Validity”. Academy

62

of Management Journal, (December 1990), 33(4), pp. 817-832.

Siguaw, J. A., Brown, G. and Widing, R. E. II., “The Influence of the Market Orientation of the Firm on Sales Force Behavior and Attitudes”. Journal of Marketing Research, (February 1994), 31(1), pp. 106-116.

Sinkula, J. M., “Market Information Processing and Organizational Learning”. Journal of Marketing, (January 1994), 58(1), pp. 35-45.

Slater, S. F., “The Challenge of Sustaining Competitive Advantage”. Industrial Marketing Management, (January 1996), 25(1), pp. 79-86.

Smircich, L. and Stubbart, C., “Strategic Management in an Enacted World”. The Academy of Management Review, (October 1985), 10(4), pp. 724-736.

Stanley, F. S. and John, C. N., “Market Orientation and the Learning Organization”. Journal of Marketing, (July 1995), 59(3), pp. 63-74.

Stephen, A. R., “Some Stronger Measures of Risk Aversion in the Small and the Large with Applications”. Econometrica (pre-1986), (May 1981), 49(3), pp. 621-638.

Steven, K. and Kenneth, L. S., “Industry Shakeouts and Technological Change”. International Journal of Industrial Organization, (2005), 23(1,2), pp. 23-43.

Usero, B. and Fernández, Z., "First Come, First Served: How Market and Non-Market Actions Influence Pioneer Market Share”. Journal of Business Research, (November 2009), 62(11), pp. 1139-1145.

Walter, J. F., Ken, G. S. and Curtis, M. G., “The Role of Competitive Action in Market Share Erosion and Industry Dethronement: A Study of Industry Leaders and Challengers”. Academy of Management Journal, (August 1999), 42(4), pp. 372-388.

63

Weerawardena and Aron O.'C., “Exploring the Characteristics of the Market-Driven Firms and Antecedents to Sustained Competitive Advantage”. Industrial Marketing Management, (July 2004), 33(5), pp. 419-428.

William, T. R., “Marketing Mix Reactions to Entry”. Marketing Science, (Fall 1988), 7(4), pp. 368-395.

William T. R., Gurumurthy K. and Glen L. U., “First-Move Advantage From Pioneering New Markets: A Survey of Empirical Evidence”. Review of Industrial Organization, (February 1994), 9(1), pp. 1–23.

Zahra, S. A. and Chaples, S. S., “Blind Spots in Competitive Analysis”. The Academy of Management Executive, (May 1993), 7(2), pp. 7-28.

Zahra, S. A., “Environment, Corporate Entrepreneurship, and Financial Performance: A Taxonomic Approach”. Journal of Business Venturing, (July 1993), 8(4), pp. 319-340.

64

effects of competitive superiority on firms’ strategic behaviour across stages of industry...

Documents