ترجمه مقاله تاثیر چابکی سیستم های اطلاعاتی

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Industrial Marketing Management
journal homepage: www.elsevier.com/locate/indmarman
Review Paper
Customer information resources advantage, marketing strategy and business
performance: A market resources based view☆
Rajan Varadarajan
Department of Marketing, Texas A&M University, 4112 TAMU, College Station, TX 77843–4112, United States of America.
A R T I C L E I N F O
Keywords:
Competitive advantage
Market based resources
Customer information based resources
Customer insights
Outside-in and inside-out approaches to
strategy
A B S T R A C T
Chief among a firm's market-based resources are its relational resources such as brand equity, customer equity
and channel equity that result from its interactions with customers and marketing intermediaries, and intellectual resources – accumulated knowledge about entities in the market environment such as consumers, end
use and intermediate customers and competitors. In the evolving digital data rich market environment, customer-based resources, a subset of a firm's market-based resources, are becoming increasingly important as
potential sources of competitive advantage. Customer information assets refer to information of economic value
about customers owned by a firm. Information analysis capabilities are complex bundles of skills and knowledge
embedded in a firm's organizational processes employed to generate customer knowledge from customer information assets. Customer insights or knowledge is a firm's extent of understanding of customers that informs its
business decisions. Building on the resource-based, capabilities-based and knowledge-based views of the firm,
resource advantage theory of competition, and the outside-in and inside-out approaches to strategy, this article
presents a market resources-based view of strategy, competitive advantage and performance. The article presents
a framework delineating the relationship between a firm's customer information based resources, marketing
strategy and performance, and discusses implications for theory, research and practice.
1. Introduction
“What everyone ‘knew’ was that the quality parents most sought
from nappies was leak-free performance during activity – so that's what
all the innovation and communications rounded on. Focus groups
merely confirmed that prior ‘knowledge’. When Pampers turned to
ethnography, though, an ‘Of course!’ moment was revealed. What
counted for most in a home with a baby was sleep. Everyone craved it –
and wetness was often the reason they didn't get it. So Pampers innovated nappies with extra ‘dry layers’ for bedtime, and the entire
brand strategy was shifted to the attainment of ‘Golden sleep’”
(Edwards, 2013).
Kimberly-Clark Brazil (KCB), competing in one of the most commoditized consumer products, toilet tissue, against 50 other companies
and 200 brands, was in search of potential avenues for competitive
advantage through innovation. While investigating how Brazilian
shoppers took toilet tissue home, it observed that most of them lugged it
a long way on foot or via public transportation. This inspired KCB to
innovate by significantly compressing the rolls in a vacuum pack and
adding a plastic carrying strap to the package. Among the added
benefits of significantly compressing the rolls in a vacuum pack were
lower shipping costs, lower transportation related environmental impact, and a reduction in the amount of retail shelf space needed
(Mauborgne & Kim, 2017).
“Doubling down on your distinctive strengths not only helps you
fight disruption from upstarts, but it also enables you to disrupt an
industry on your own terms. That's exactly what Netflix did. In the late
1990s, the company competed directly with the Blockbuster retail
chain. In 2007, when streaming video became viable, Netflix rapidly
pivoted to offer that service. It … has pioneered the use of artificial
intelligence and machine learning to tailor its output to consumer interests. All along, its success has been enabled by a core distinctive
strength: the ability to understand what its customers want and do,
using in-depth analytics and the behavioral data it captures” (strategy
+business, 2017).
“Another blowout quarter from Alibaba highlights the Chinese ecommerce company's ability to harness its trove of data to boost
earnings… Its operating margin widened by 7 percentage points, which
management attributed in part to better use of data, as operating profit
almost doubled from a year ago. ... It attributes the revenue increase to
https://doi.org/10.1016/j.indmarman.2020.03.003
Received 16 January 2020; Received in revised form 29 February 2020; Accepted 7 March 2020
☆ Certain sections of this manuscript draw on the following commentary by the author on an editorial essay: Varadarajan (2018), “A Commentary on Transformative Marketing: The Next 20 Years,” Journal of Marketing, 82 (July), 15-18.
E-mail address: [e-mail].
Industrial Marketing Management xxx (xxxx) xxx–xxx
0019-8501/ © 2020 Elsevier Inc. All rights reserved.
Please cite this article as: Rajan Varadarajan, Industrial Marketing Management, https://doi.org/10.1016/j.indmarman.2020.03.003
more shoppers as well as its ability to deliver more relevant content to
them. …The company accounts for around three-quarters of online
retail sales in China and hence has a trove of data on consumer behavior. Such data allow Alibaba to display ads to shoppers that they will
most likely be interested in … Merchants are willing to pay higher
prices if they know the ads are likely to draw in sales. Better algorithms
allow Alibaba to earn more ad dollars without a similar rise in costs”
(Wong, 2017) (p. B12).
The above vignettes serve to highlight a long-standing business
practice, namely, the generation of customer insights to inform a firm's
business decisions. The first two vignettes are illustrative of the use of
methods such as ethnography, field and laboratory experiments, focus
groups, observations and survey research by firms to generate customer
insights. The last two vignettes are illustrative of customer insights
generation in the current internet enabled, interactive digital market
environment by leveraging a firm's customer information assets and
information analysis capabilities. In an interactive digital market environment, firms have the ability to generate customer insights about
individual customers in real time, integrate them with accumulated
insights, and leverage the insights to target specific customer segments
(individual customers) with customized (personalized) product offerings, price promotions, marketing communications, etc. Firms also have
the ability to generate customer insights in real time by conducting
numerous A-B experiments (e.g. customers' responsiveness to almost
equivalent price promotions framed differently such as “buy one-get
one free” versus “buy one-get one free for one cent”). The vignettes also
shed insights into recent customer insights related developments in
firms such as the following:
• A greater emphasis on developing in-house customer insights generation capabilities.
• A greater emphasis on big data and analytics enabled customer insights generation to complement the traditional approaches to customer insights generation (e.g. ethnographic research, experimental
research, focus groups, observational research and survey research).
• A greater emphasis on generating customer insights in real time
(Macdonald, Wilson, & Konus, 2012).
• A change in outlook from considering a firm's customer insights
related efforts as a cost of doing business to a potential source of
competitive advantage (Barton, Koslow, Dhar, Chadwick, & Reeves,
2016).
The first two vignettes also shed insights into the outside-in approach to strategy and innovation. Day and Moorman (2010) conceptualize the outside-in approach as strategy informed by market insights – an understanding of the changing needs of customers for
drawing out actionable ideas1,2. They note that, crucial to the outside-in
approach to strategy for creating and retaining customers, by delivering
superior customer value, is standing in the shoes of customers and
viewing everything the firm does through their eyes. In a related article,
Day and Moorman (2011) note that the history of successful firms and
brands begins with a strategy designed from the outside-in by focusing
on customer related questions such as (1) what do customers need, (2)
how and why are customers changing, and (3) what can we do to better
solve their problems and meet their emerging needs. In a related interview (Knowledge@Wharton, 2010), Day cautions that the inside-out
approach to strategy, by focusing on firm resources related questions
can inherently limit and slow its response to major changes in the
market. [Questions such as (1) what is the firm good at, (2) what are its
capabilities and products, and (3) how can the firm use its resources
more effectively and efficiently].
1.1. Outside-in and inside-out approaches to strategy in tandem
The customer resources-based strategies of firms in the current internet enabled, interactive digital market environment suggests that
strategy informed by the inside-out and outside-in approaches may be
operating in tandem, iteratively in firms. The ability of firms to accumulate valuable customer information assets in digital form, and the
imperative to develop new information analysis capabilities to discern
actionable customer insights from the accumulated information assets
is suggestive of a coalescing of the inside-out and outside-in approaches. The following hypothetical, albeit highly plausible, characteristics of a firm in reference to the questions that Day and Moorman
(2010) note as the principal focus of the inside-out approach to strategy
serves to illustrate this point.
• What is the firm good at? One of the things the firm is good at is
generating superior customer insights that inform its business decisions.
• What are the firm's capabilities? One of the capabilities of the firm is
its superior customer information analysis capability (i.e. the ability
to generate actionable customer insights by analyzing its customer
information assets).
• How can the firm use its resources more effectively and efficiently? The
firm can compete more effectively and efficiently by leveraging its
superior customer based information resources (customer information assets, information analysis capabilities, and customer knowledge or insights) to customize (personalize) the product offering and
specific marketing mix elements (e.g. advertising and pricing) to
specific customer segments (individual customers).
Extant literature also provides insights into the iterative nature of
the outside-in and inside-out approaches. For instance, in a commentary titled, “An Outside-In Approach to Resource-based Theories,” Day
(2014) notes that in order to augment and enhance their dynamic
capabilities, starting with an outside-in approach, firms should nurture
their adaptive capabilities. Day (2011) lists three adaptive capabilities
that can enable firms to adjust more quickly to fast-changing markets.
(1) Vigilant market learning – enhancing deep market insights with an
advance warning system to anticipate market changes and identify
unmet needs. (2) Experimenting – continuously learning from market
experiments. (3) Relationships – forging relationships with partners
closely attuned to market changes, such as those stemming from new
media and social networking technologies.
Building on extant literature, Mu (2015) conceptualizes marketing
capability from an outside-in perspective as a constellation of three
distinct capabilities that are interdependent and complementary –
market sensing, customer engaging, and partner linking. He reports
that, firms with superior inside-out marketing capability, by virtue of
their greater capacity to generate insights from market sensing, customer engaging and partner linking achieve higher levels of new product development performance. Mu, Bao, Sekhon, Qi, and Love (2018)
note that the outside-in marketing capability of firms serve as a precursor or basis for them to update their inside-out marketing capability
(a set of marketing-mix based capabilities and interrelated organizational routines). They report that outside-in marketing capabilities lead
to superior firm performance through their impact on inside-out marketing capabilities.
1 Day and Moorman (2010) conceptualize market insights as understanding of
the changing needs of customers for drawing out actionable ideas. Since the
term, “market,” broadly construed encompasses customers, competitors and the
marketplace at large, in this article, the term, “customer insights” is used.
2 Although the focus is on customers in plural (e.g. a firm's understanding of
customers such as their needs and wants, changes in them, and the reasons for
the changes), consistent with the terminology used in extant literature, the
terms customer information assets, customer information analysis capabilities
and customer insights are used.
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2
1.2. Market-based resources advantage and business performance
A question of enduring interest and the focus of a large body of
research in strategic marketing, strategic management and industrial
organization economics is, “what explains variance in firm performance
within and across industries.” In an attempt to shed additional insights
into this question, this article presents a customer information resources-based view of competitive advantage and business performance. It provides an exposition of heterogeneity in customer information resources (hereafter, customer resources – customer
information assets, customer information analysis capabilities, and
customer insights or knowledge) as partially accounting for heterogeneity in firm performance.
A number of literature streams (e.g. strategic marketing, consumer
behavior and innovation) and sub-streams (e.g. market-based resources,
market orientation, outside-in approach to strategy, customer relationship management, and customer experience management) in
marketing focus on the role of customer insights in informing a firm's
business decisions (e.g. marketing and innovation decisions), and superior customer insights as a source of competitive advantage.
However, a void in the literature is a formal explication of the growing
importance of a firm's market-based resources advantage broadly, and
customer information resources based advantage specifically in the current
Internet enabled, interactive digital market environment. The objective
of this article is to fill this void. A framework delineating the relationship between a firm's customer information assets, information
analysis capabilities and customer insights, marketing strategy and
business performance is advanced. The proposed framework complements the framework presented in Srivastava, Fahey & Christensen
(2001). Srivastava et al. focus on how firms, by leveraging their marketbased assets and capabilities to deliver superior customer value, can
achieve a competitive positional advantage in the marketplace, and in
turn, superior financial performance.
The remainder of the article is organized as follows. First, an
overview of literature on customer resources and the resource-based,
capabilities-based and knowledge-based views of the firms is presented.
Next, definitions of customer information assets, customer information
analysis capabilities, and customer knowledge /customer insights are
proposed. Third, a framework delineating the relationship between a
firm's customer information resources, marketing strategy and performance is presented. Implications for theory, future research, marketing
practice and marketing education are discussed. In this article, the
terms, “customer insights” and “customer knowledge” are used interchangeably and equivalently. Customer insights or knowledge is conceptualized as “a firm's extent of understanding of its customers that
inform its business decisions such as product innovation decisions and
marketing strategy decisions.” Srivastava, Fahey & Christensen's (2001,
p. 781) use of the term, “insightful customer knowledge,” and Said,
Macdonald, Wilson, and Marcos' (2015) conceptualization of customer
insight as, “knowledge about customers that is valuable for the firm,” are
indicative of the terms being used equivalently in literature. However,
in recent years, customer insights seems to have gained greater traction
in marketing as evidenced by its widespread usage in both marketing
literature and marketing practice.
2. Market-based resources: an overview of relevant literature
2.1. Demand side and supply side insights and marketing strategy
The marketing strategy decisions of firms, at various organizational
levels (e.g. business, product category, product and brand), are informed by both demand side insights (customer insights) and supply
side insights. Demand side insights refers to a firm's understanding of
customers such as their (1) demographic, socio-economic and psychographic characteristics, (2) needs and wants, and (3) affects, cognitions
and behaviors. Over the years, a number of authors have highlighted
the importance of, and the need for consumer research based insights
for informing marketing strategy. For instance, Keller (1993) noted that
marketers need a more thorough understanding of consumer behavior
as a basis for making better strategic decisions. The need for consumer
research based insights for informing marketing strategy are also the
focus of a recent guest editorial essay by Hamilton (2016), and commentaries on the essay by Dahl (2016) and Deighton (2016). Hamilton
refers to strategy based on insights about consumers as consumer-based
strategy. However, commenting on the state of consumer behavior focused research in marketing, Houston (2016) notes that for the most
part, the body of research is agnostic regarding the implications of the
findings for marketing strategy. Supply side insights refers to a firm's
understanding of factors such as the structural characteristics of the
industry (e.g. market size, market growth rate, number of competitors,
industry concentration, entry barriers and exit barriers), the firm (e.g.
its resources and capabilities), and its competitors (e.g. their resources
and capabilities).
2.2. Market orientation
Customer centric concepts such as customer orientation, market
orientation and interaction orientation are the focus of a large body of
research in marketing. A common thread undergirding all of these
concepts is their focus on generating customer insights to inform a
firm's business decisions. For instance, Kohli and Jaworski (1990)
conceptualize market orientation as the organization wide generation
of market intelligence pertaining to the needs of current and future
customers, dissemination of the intelligence, and responsiveness to it.
Hunt and Morgan (1995) conceptualize market orientation more
broadly as encompassing intelligence generation about both customers
and competitors, dissemination and responsiveness. Specifically, they
conceptualize market orientation as the systematic (1) gathering of
information about customers and competitors, both present and potential, (2) analysis of information for the purpose of developing market
knowledge, and (3) use of the knowledge to guide strategy recognition,
understanding, creation, selection, implementation, and modification.
As evidenced by the above conceptualizations of market orientation,
customer insights (e.g. generation of knowledge about customers and
utilizing them for informing a firm's business decisions) is integral to all
of them. Customer insights is also the underlying focus a number of
other orientation constructs. For instance, Ramani and Kumar (2008)
conceptualize interaction orientation as the ability of a firm to interact
with individual customers, and leverage the information obtained from
them over the course of successive interactions to achieve profitable
customer relationships.
Literature on market orientation also sheds insights into firm capabilities crucial to generating superior customer insights (Day, 1994;
Hunt & Morgan, 1995). For instance, in reference to differences between organizations in the extent to which they are market oriented,
Day (1994) notes that market oriented organizations are those with
superior skills in understanding and satisfying customers' needs, whose
principal features are (1) a set of beliefs that put customers' interest
first, (2) the ability to generate, disseminate and use superior information about customers and competitors, and (3) the coordinated
application of inter-functional resources to the creation of superior
customer value. Day further notes that superior understanding of customers' needs, competitors' actions and market trends enables a marketoriented firm to identify and develop capabilities that are necessary for
achieving superior long-term performance. In a similar vein, Hunt
(2012) notes that market oriented firms are those with organizational
capability to systematically (a) gather market intelligence pertaining to
current and future customers (i.e. their needs, wants, tastes, and preferences) and current and potential competitors (e.g. their strengths,
weaknesses, and market offerings), (b) disseminate the intelligence
across departments, and (c) respond to the intelligence in terms of
market offerings (e.g. goods and services). Kumar, Jones, Venkatesan,
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and Leone (2011) note that a market orientation stresses the importance of using information, and that the primary objective of market
orientation is delivering superior customer value based on the firm's
knowledge about customers and competitors. They further note that
developing and improving a firm's market orientation may enable the
firm to develop distinctive marketing capabilities (relative to competitors) as a potential source of sustainable competitive advantage. They
point out that market-oriented firms, by engaging in ongoing acquisition of information about customers and competitors and sharing this
information within the organization, are well positioned to develop an
organizational memory, and thereby, becoming a learning organization.
Extant research provides evidence suggestive of a positive relationship between customer insights and business performance, albeit,
in the context of closely related constructs (e.g. market orientation;
data-driven decision-making culture). Based on a meta-analysis of 418
effects from 130 independent samples reported in 114 studies, Kirca,
Jayachandran, and Bearden (2005) report a grand mean of 0.32 for the
correlation between market orientation and performance. In their review of research on market orientation and performance, Liao, Chang,
Wu, and Katrichis (2011) note that 36 empirical studies report a positive relationship, two no relationship, and none a negative relationship.
Based on a study of the performance consequences of a data-driven
decision-making culture (the extent to which a firm's decisions are based
on data and analysis versus experience and intuition) of 179 large firms,
Brynjolfsson, Hitt, and Kim (2011) report that firms that adopted “datadriven decision-making” achieved productivity that was five to 6%
higher than could be explained by other factors, including how much
the companies invested in technology. They note that a 5% increase in
output and productivity is significant enough to separate winners from
losers in most industries. They further note that to the extent a datadriven decision-making culture is found by firms to positively impact
their performance, the culture is likely to become more ingrained.
2.3. Market-based relational and intellectual resources
Srivastava, Shervani, and Fahey (1998) (p. 19) conceptualize
market-based assets as resources that arise from a firm's co-mingling
with entities in the external environment, and distinguish between relational and intellectual market-based assets. Relational market-based
assets are outcomes of a firm's relationship with key external stakeholders (e.g. assets such as brand equity, customer equity and channel
equity that are outcomes of a firm's relationship with external stakeholders such as end use customers and intermediate customers –
channel members). Intellectual market-based assets refers to knowledge
gained by the firm about the environment (e.g., state of market conditions) and the entities in the environment (e.g. competitors, customers, channel members and suppliers). While Srivastava, Shervani &
Fahey use the term, “market-based assets,” Kozlenkova, Samaha, and
Palmatier (2014) use the more encompassing term, “market-based resources.” In this article as well, the term “market-based resources” is
used to refer to various types of firm resources such as assets, capabilities and knowledge.
While the development of customer-based resources is a marketing
strategy objective, following successful development, the resources are
available to the firm to leverage for enhancing its marketing strategy
effectiveness and/or efficiency. The linkages in Srivastava, Fahey &
Christensen's (2001, Fig. 1, p. 782) framework for analysis of marketbased resources from (a) financial performance to investments in developing market-based resources, and (b) from investments in developing market-based resources to marketing-specific resources serve to
highlight the above characteristic of customer-based resources.
Information about customers is a customer-based asset that a firm develops and accumulates through its interactions customers. Along similar lines, while reputation for customer satisfaction is a customerbased asset that a firm can gainfully deploy, a prerequisite to
developing and accumulating the asset is the ability to deliver superior
customer satisfaction experiences, a capability that must first be developed. Rubera and Kirca (2017) note that the satisfaction effects from
innovative efforts are a market-based asset available to the firm for
improving that performance.
2.4. Resources, capabilities and knowledge based views of the firm
The resource-based view (RBV) of the firm posits that heterogeneous market positions result from effectively leveraging heterogeneous firm resources that are valuable, rare, inimitable and nonsubstitutable (VRIN resources) to achieve and sustain a competitive
advantage in the marketplace (Barney, 1991). In the RBV, firm resources refer to all assets, capabilities, organizational processes, firm
attributes, knowledge, and other factors controlled by the firm that it
can use to conceive and implement strategies to achieve a competitive
advantage in the marketplace. In the resource advantage (RA) theory of
competition, firm resources refer to all tangible and intangible entities
available to a firm (financial, physical, legal, human, organizational,
informational, and relational) that enable it to produce efficiently and/
or effectively a market offering of value to one or more market segments (Hunt & Morgan, 1995).
The capabilities-based view (CBV) of the firm distinguishes between
two broad types of firm resources (assets controlled by the firm), and
capabilities (ability of the firm to deploy its assets to a desired end)
(Amit & Schoemaker, 1993; Helfat & Peteraf, 2003). Makadok (2001)
(p. 389) defines capabilities as “embedded and non-transferable organizational resources that enable a firm to improve the productivity of its
other resources.” Day (1994) conceptualizes assets as resource endowments accumulated by a business, and capabilities as resources that
enable the business to bring these assets together and deploy them
advantageously.
Vorhies, Morgan, and Autry (2009) draw attention to the role of
organizational capabilities in the deployment of its distinctive resources
as well as standardized resources (i.e. commonly available resources).
Their observation is particularly pertinent in the context of customer
insights generated by firms, based on customer related information
resources that may be available to both the firm and its competitors. For
example, in most frequently purchased consumer product categories, all
or most competing firms may be subscribing to the same market research data collected by a market research agency (e.g. customer demographics, purchase quantity, purchase frequency, price paid, store
type and location, trade and consumer sales promotion incentives associated with purchase). However, differences in the analytics capabilities of the personnel of competing firms will manifest as heterogeneity in customer insights. Day and Wensley's (1988) distinction
between superior skills (the distinctive capabilities of a firm's personnel
that set them apart from the personnel of competing firms), and superior
resources (the more tangible requirements for advantage that enable a
firm to exercise its capabilities) is instructive in this regard.
Rather than the mere possession of idiosyncratic resources and
static capabilities, the dynamic capabilities (DC) view of the firm considers a firm's ability to integrate, build and reconfigure competencies,
in response to a changing environment, as crucial to achieving and
sustaining a competitive advantage (Eisenhardt & Martin, 2000; Teece,
Pisano, & Shuen, 1997). Teece et al. (1997) (p. 516) define dynamic
capabilities as “the firm's ability to integrate, build, and reconfigure
internal and external competences to address rapidly changing environments.” Eisenhardt and Martin (2000) (p.1107) define dynamic
capabilities as “the organizational and strategic routines by which firms
achieve new resource configurations as markets emerge, collide, split,
evolve and die.” In reference to the distinction between “ordinary
capabilities” and “dynamic capabilities,” Teece (2014) notes that latter
enable firms to transform themselves through continuous renewal.
Technological advances undergirding faster generation of customer
insights at a lower cost, and related recent additions to the customer
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4
insights lexicon such as real time experience tracking (Macdonald et al.,
2012), and agile insights (Gordon, Liedtke, & Timelin, 2016) serve to
highlight the importance of dynamic capabilities. For instance, in reference to agile insights, Gordon, Liedtke & Timelin note that while
market research has traditionally been a linear and slow process, newer,
digitally enabled techniques offer greater flexibility, effectiveness and
speed. As cases in point, they highlight mobile ethnography, and online
focus groups that provide facial coding of emotional responses and
automatic transcription.
The knowledge-based view (KBV) of the firm posits that knowledge is
at the core of a firm's competitiveness, and the manner in which a firm
creates, acquires, assimilates and exploits knowledge leads to the
creation of new potential sources of revenues and persistence of performance differences among competing firms (Grant, 1996; Rubera,
Chandrasekaran & Ordanini,2016). A manner by which firms create
knowledge is by utilizing their information analysis capabilities to
process their information assets. In effect, in certain organizational
contexts, a firm's distinctive assets and capabilities are the basis for the
creation of a third type of firm resource, namely, knowledge. Case in
point, a firm's customer information assets and information analysis
capabilities are the basis for generation of customer insights. Definitions of customer information assets, information analysis capabilities
and customer insights, and a conceptual framework delineating the
relationships between them, marketing strategy and performance is
presented in the next section.
A number of recent articles provide valuable insights into the
growing importance of customer based information resources for effectively competing in the current internet enabled, digital interactive
marketing (e.g. Dawar, 2018; Hagiu & Wright, 2020). Dawar notes, as
consumers' attention shifts to artificial intelligence (AI) assistants, while
assets that were previously crucial (e.g. manufacturing capability and
brands) will diminish in importance, the value of a firm's customer
information based assets and the predictive ability of its AI assets will
grow in importance. Hagiu & Wright note that firms should objectively
assess how specific types of customer-based information can be potential sources of competitive advantage. They include the following.
(1) How much value would leveraging information about customers
add relative to the stand-alone value of a product? (2) How enduring is
the value of specific types of information about customers or how fast
would value deplete. (3) How difficult would it be for competitors to
imitate a firm's product improvements that are based on insights generated from proprietary customer information?
3. Customer information resources advantage, marketing strategy
and business performance: a market resources based view
3.1. Construct definitions
‘The lab is an ambitious expansion of Ms. Duckworth's work on grit.
Its mission is to ‘advance the science and the practice of character development.’ Her team, she says, relies on an “inclusive definition of
character from Aristotle: everything that allows a person to live a good
life. Not just grit but gratitude; not just gratitude but curiosity, imagination, social and emotional intelligence, empathy, kindness, delayed
gratification, self-control, growth mindset. The list is long.”’
(Hymowitz, 2017, p. A11).
Customer information assets is defined as “information of economic
value about customers owned by a firm.” In the Data-InformationKnowledge-Wisdom framework, Burton-Jones (1999) (p. 6) refers to
information as “processed data that is meaningful and of value.” Customer information analysis capabilities is defined as “complex bundles of
skills and knowledge embedded in a firm's organizational processes
used to generate customer insights from its customer information assets.” The proposed definition builds on Day's (1994) conceptualization
of capability as complex bundles of skills and knowledge embedded in a
firm's organizational processes by which it transforms available
resources into valuable outputs. It overlaps with Rubera,
Chandrasekaran, and Ordanini's (2016) (p. 170) conceptualization of
market information management capabilities as skills used by a firm to
develop and use market knowledge (i.e. customer knowledge and
competitor knowledge).
Customer insights is defined as “a firm's extent of understanding of
customers that informs its business decisions.” Customer insights is a
construct whose scope spans customers' attitudes, behaviors, beliefs,
demographics, desires, emotions, habits, involvement, lifestyles, motives, needs, perceptions, preferences, psychographics, tastes, values,
wants and more. Hence, the proposed inclusive definition. A brief discussion on the definitional elements and literature underpinnings of the
proposed definition follows.
Table 1 provides a summary of extant conceptualizations and definitions of customer insights and remarks concerning their merits and/or
shortcomings. While a number of conceptualizations and definitions
refer to understanding of customers, there seem to be differences in respect of the scope of the construct. For instance, Hillebrand et al. (2011)
(p. 595) define customer insights as “the degree to which a firm has an
understanding of current customer needs, the reasons behind these
needs, and how these change over time.” While customers' needs is an
important dimension of customer insights, most authors seems to view
it as a multidimensional construct. For instance, in reference to role of
customer insights in adapting to external change, in addition to customers' needs, Barton, Reeves, Lang, and Bergman (2016) also refer to
customers' behaviors, emotions, perceptions and preferences.
Extent of understanding of customers refers to a firm's level or degree
of understanding of customers in respect of those dimensions of customer insights which may be pertinent in a particular decision context
such as customers' attitudes, behaviors, beliefs, demographics, desires,
emotions, habits, involvement, lifestyles, motives, needs, perceptions,
preferences, psychographics, tastes, values, or wants. Business decisions
refers to a firm's decisions at various organizational levels (e.g. brand,
product, product category, business unit and firm) and functional areas
(e.g. marketing, finance and R&D). While the primary purpose of generating customer insights may be to inform (guide) a firm's marketing
decisions and innovation decisions, customer insights may also be an
important input to business decisions in other functional areas, and at
higher organizational levels (e.g. corporate level decisions such as
mergers and acquisitions, diversification and divestitures, and strategic
alliances and joint ventures). In this regard, Barton, Reeves, et al.
(2016) note that some firms may be overlooking the relevance of customer insights as an input for certain business decisions. They conceptualize customer centricity as the percent of a firm's business decisions that are influenced by customer insights, and customer insights
intensity as the firm's expenditure on customer insights as a percentage
of its sales revenue.
3.2. Conceptual framework
Fig. 1 presents a conceptual framework delineating the relationships
between customer information resources, marketing strategy and performance. As explicated in the framework, a firm, by effectively
leveraging its advantageous resource positions in customer information
assets (Box A1), and information analysis capabilities (Box A2), can
achieve an advantageous resource position in customer knowledge or
insights (i.e. superior customer insights) (Box A3). In turn, by effectively leveraging its advantageous resource position in customer insights to inform its marketing strategy decisions, the firm can achieve
greater marketing strategy effectiveness and efficiency, and thereby
superior marketing and financial performance. While the framework is
presented in the context of marketing strategy, it is adaptable to other
business decisions that are informed by customer insights such as innovation and customer relationship management. The framework is
applicable in both business-to-business and business-to-consumer markets.
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Customer insights or knowledge in the proposed framework is distinct from knowledge embedded in a firm's customer information
analysis related capabilities. The former refers to knowledge as understanding (knowing what something means) and the latter to
knowledge as knowhow (knowing how to do something) (see Kogut &
Zander, 1992). Bierly, Kessler, and Christensen's (2000) conceptualization of knowledge as the understanding of information and its
associated pattern corresponds with the former. The tacit nature of
organizational knowledge embedded in a firm's capabilities makes it
relatively difficult for competitors to diagnose and/or replicate (Teece
et al., 1997), and transfer from one firm to another without also
transferring ownership of the firm, or some self-contained subunit of
the firm within which the capabilities reside (Makadok, 2001).
All else being equal, the positive effect of customer insights advantage on marketing performance (i.e. increase in market share resulting in an increase in size of a firm's customer base in a growth
market) will in turn have a positive effect on customer information
assets. This effect is shown in the framework as a thick arrow link from
marketing performance to digital customer information assets (Box
A1.2). The dotted arrows in Fig. 1 denote a firm's assessment of gaps in
its customer knowledge that limit its ability to compete more effectively
and efficiently in the marketplace, and the underlying gaps in customer
information assets and customer information analysis capabilities.
Along the lines of heterogeneity among competitors in their customer
information assets, information analysis capabilities and customer
knowledge, there will also be heterogeneity among them in respect of
customer knowledge gaps they aware of (known unknowns), and gaps
they are unaware of (unknown unknowns).
In a digital data rich market environment, the ability of a firm to
accumulate more, better, timely, granular and proprietary information
about individual customers, and the ability to generate actionable
customer insights from its customer information assets can have a
transformative effect on its marketing strategy (i.e. a marked change in
how the firm competes in the marketplace). For instance, by effectively
leveraging superior customer insights, a firm can achieve greater marketing effectiveness and efficiency through personalization of the product offering and certain other elements of the marketing mix at scale.
Competitive advantage in resources (e.g. customer information assets
advantage, information analysis capabilities advantage and customer
insights/customer knowledge advantage) that a firm leverages to conceive and implement value-creating strategies is distinct from competitive positional advantage in the marketplace (i.e. cost leadership advantage and differentiation advantage). Cost leadership advantage
refers to being the lowest cost producer, and thereby possessing the
ability to compete on price, and realizing the highest profit margins
relative to competitors under conditions of the price of competing offerings being the same. Competitive differentiation advantage implies
the willingness of customers to pay a higher price (price premium) for
the firm's product offering in light of its unique or distinctive features
and the associated benefits. Understandably, competitive advantage in
resources is a prerequisite for achieving competitive positional advantage(s) in the marketplace. As Conner (1991) notes that distinctiveness a firm's product offering (competitive differentiation advantage), or its relatively lower cost (competitive cost advantage) are
linked directly to the distinctiveness of the inputs (resources) used to
produce the product. That is, a business' ability to attain and hold on to
Table 1
Customer insights: proposed definition and overview of representative conceptualizations and definitions in marketing literature.
Customer insights (customer knowledge): conceptualization / definitiona Remarks
Proposed Definition
Customer insights is “a firm’s extent of understanding of customers that informs its
business decisions.”
Extent of understanding: Level of / degree of / breadth, depth and scope of
understanding of customers.
The proposed definition is an inclusive definition. Here, a firm’s extent of
understanding of customers encompasses understanding of customers’ (a) needs and
wants and changes in needs and wants, (b) affects, cognitions and behaviors, (c)
profiles – demographics, psychographics and lifestyles, and more.
Customer insights is “an organization’s extent of understanding of customers that informs
its business decisions.”
By substituting “organization” for firm, the definition generalizes to both for-profit
and not-for-profit organizations.
Extant Definitions and Conceptualizations Collectively, extant definitions and conceptualizations of customer insights presented
here refer to customers’ needs and wants and changes in them, feelings, thoughts and
actions (affects, cognitions and behaviors), and lives. The proposed inclusive
definition encompasses all of the above and more.
Customer insight is knowledge about the customer that is valuable for the firm (Said et al.,
2015).
An inclusive definition that is similar to the definition proposed in this article. As
might be noted, in the other definitions summarized in the table, the term
“understanding” rather than “knowledge” is used. Hence, in the proposed definition,
the term “understanding” is used. Also, since, there are likely to be differences
between competing firms in their extent of understanding of customers, the term
“level of” is included in the proposed definition.
The degree to which a firm has an understanding of the needs of its current customers, the
reasons behind their needs, and how they change over time. (Hillebrand, Nijholt, &
Nijssen, 2011, p. 595)
A firm’s degree of understanding of the needs of its current customers, the reasons
behind their needs, and how they change over time are important dimensions of
customer insights. However, customer insights also encompasses a number of other
dimensions of knowledge about customers.
A revelatory breakthrough in a firm’s understanding of people’s lives that directs it in new
ways to serve its customers better. (Edwards, 2013)
The most valuable customer insights are likely to be revelatory breakthroughs in a
firm’s understanding of people’s lives that enables it in to serve its customers better,
and in new ways. However, even customer insights that are not revelatory
breakthroughs can enable a firm to serve its customers better and in new ways by
enhancing its understanding of people’s lives.
“A non-obvious understanding about a firm’s customers, which if acted upon, has the
potential to change their behavior for mutual benefit.” (Laughlin, 2014)
Not all customer insights are either likely to be, or need to be non-obvious
understanding. A better or clearer understanding of customers can also serve to
inform a firm’s business decisions for the mutual benefit of the firm and its customers.
“A deep understanding of a customer’s needs and behaviors - both known needs that the
customer can identify, and the latent needs that they cannot” (Neighbor & Kienzle,
2012, p. 3).
Certain customer insights are likely to be deep, others modest, and still others
superficial. The term “extent of” in the proposed definition captures such differences.
“A factual observation about customers’ thoughts, feelings or actions that reveals a clear and
material basis for communication.” (Anon 2014)
In addition to communication decisions, customer insights are also an important
consideration from the standpoint of a number of other business decisions in firms.
The fresh understandings of customers and the marketplace derived from marketing
information that becomes the basis for creating customer value and relationships.
http://the-definition.com/term/customer-insights
In addition to creating customer value and relationships, customer insights are also a
basis for communicating and delivering value to customers.
a The words highlighted in italics in the first column of this table only for added emphasis, and not in the original sources.
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6
profitable market positions (sustainability of competitive positional
advantages) depends on its ability to gain and defend advantageous
positions in important resources underlying their production and distribution. Drawing a clearer distinction between the two, Hunt and
Morgan (1995) use the terms comparative advantage in resources and
competitive positional advantage.
While the proposed framework builds on literature insights from the
resource-based, capabilities-based, and dynamic capabilities-based
views of the firm, it highlights an organizational context where a firm
leverages certain types of resources (customer information assets and
information analysis capabilities) to create another type of resource
(customer insights or knowledge), which it leverages to base its
strategy. The schematic representations of the essence of the resourcebased view, capabilities-based view, and customer insights-based view
/ customer knowledge-based view (i.e. a firm generating customer insights or knowledge as a resource by leveraging its customer information assets and information analysis capabilities) presented in Fig. 2A, B
and C, respectively provide additional insights into this issue. The
principal relationships delineated in Fig. 1 and Fig. 2C pertaining to a
firm's customer information assets, information analysis capabilities,
and customer knowledge can be formally be stated as follows:
Customer information assets advantage hypothesis: All else being
equal, customer information assets will have a positive effect on business performance, mediated by customer insights.
Customer information analysis capabilities advantage hypothesis: All
else being equal, customer information analysis capabilities will have a
positive effect on business performance, mediated by customer insights.
Customer insights advantage hypothesis: Resource advantage in customer information assets and customer information analysis capabilities, through their positive effects on customer insights, will have a
positive effect on firm performance. The effects will be stronger in internet enabled, interactive, and digital data-rich market environments.
4. Discussion
In reference to the question of, “what explains variance in firm
performance within and across industries,” this article presents an exposition of heterogeneity in customer information resources as an explanation for some of the heterogeneity in firm performance. That is, all
else being equal, by effectively leveraging its resource advantage in
customer information resources to implement strategies that offer superior value to customers, a firm can achieve and sustain competitive
positional advantage(s) in the marketplace, and in turn, superior financial performance. The effect of customer information resources
advantage on business performance will be greater in internet-enabled,
interactive, digital market environments. This brings to fore the question of “what explains heterogeneity in customer resources between
firms within and across industries.” A brief discussion on this issue
follows.
Potential factors underlying heterogeneity in customer information
assets and information analysis capabilities across firms include management prescience, absorptive capacity and imitability of assets stocks.
Cohen and Levinthal (1990) (p. 128) define absorptive capacity as “the
ability to recognize the value of new information, assimilate it, and
apply it to commercial ends.” Differences among competing firms in
their absorptive capacity will manifest as heterogeneity in customer
information assets and information analysis capabilities.
Dierickx and Cool (1989) note that the imitability of an asset stock
(i.e. the cost and the time it would take a competitor to imitate the asset
stock of the focal firm) is a function of the characteristics of the process
of accumulation of the asset stock. Time compression diseconomies refers
to diseconomies associated with attempting to duplicate certain asset
stocks accumulated by one firm over a longer period of time, by another
firm over a shorter period (Dierickx & Cool). Thus, all else being equal,
if Firm A maintains a given rate of spending over a particular time
interval on accumulation of customer information and Firm B maintains
twice the rate of spending over half the time interval, the former will
achieve a larger increment to its stock of customer information assets
compared to the latter. Asset mass inefficiencies refers to the impact of
the initial level of an asset stock on its further accumulation (Dierickx &
Cool). Thus, all else being equal, a firm's historical success resulting in a
favorable initial asset stock position (customer information assets;
Fig. 1. Customer information resources, marketing strategy and performance: a conceptual framework1,2.
R. Varadarajan Industrial Marketing Management xxx (xxxx) xxx–xxx
7
customer information analysis capabilities) will facilitate further accumulation of the asset stock at a lower cost than a competitor attempting to build from an initial low level of the asset stock. Interconnectedness of asset stocks refers to accumulating increments of one
stock being dependent on the initial stock position of another stock
(Dierickx & Cool). Thus, all else being equal, accumulating increments
of customer information assets is dependent on the firm's stock of
customer information analysis capabilities, and vice versa.
4.1. Implications for theory
In the resource-based view of the firm, resources encompasses all
assets, capabilities, organizational processes, firm attributes, knowledge, and other factors controlled by a firm that can be used to conceive
and implement strategies for competing effectively and efficiently
(Barney, 1991). The capabilities-based view of the firm distinguishes
between assets and capabilities. Assets are resource endowments accumulated by a firm, and capabilities are complex bundles of skills and
collective learning that enable the firm to bring these assets together
and deploy them advantageously (Day, 1994). This article makes a
theoretical contribution to the above stream of literature on firm resources, competitive advantage and performance by highlighting organizational contexts where a firm's resource advantage in certain resources are the basis for achieving a resource advantage in certain other
resources. Case in point, as highlighted in the article, is a firm achieving
a resource advantage in customer insights by leveraging its resource
advantage in customer information assets and information analysis
capabilities.
4.2. Implications for research
In the face of erosion of current sources of competitive advantage,
due to their neutralization by competitors, changes in consumers' preferences, and/or changes in the market environment, identifying and
developing new sources of competitive advantage is a competitive imperative for firms. With the evolution of market environment to an
Internet enabled and digital data rich market environment, some firms
had the prescience to invest in building customer information assets
and the development of customer information analysis capabilities in
order to be able to achieve and sustain a customer insights advantage. A
potential avenue for research is empirical investigation of the marketing and financial performance effects of advantageous resource positions in customer information assets, information analysis capabilities
and customer insights.
4.3. Implications for marketing education
The resource-based, capabilities-based and knowledge-based views
of the firm, and resource-advantage theory of competition are integral
to a number of marketing courses (e.g. marketing management; strategic marketing). By providing an exposition of above in the context of
customer information resources (customer information assets, customer
information analysis capabilities and customer insights), this article
contributes to advancing marketing education.
5. Conclusion
“The new source of competitive advantage is customer centricity:
deeply understanding your customers' needs and fulfilling them better
than anyone else.
You need data to accomplish this. Yet having troves of data is of
little value in and of itself. What increasingly separates the winners
from the losers is the ability to transform data into insights about
consumers' motivations and to turn those insights into strategy. This
alchemy requires innovative organizational capabilities that, collectively, we call the “insights engine.” (van den Driest, Sthanunathan, &
Weed, 2016 (p. 64).
Observations such as the above serve to highlight the importance of
customer information assets and information analysis capabilities for
generating actionable customer insights in the current internet enabled,
interactive and digital data rich market environment. All else being
equal, a firm in an advantageous resource position in respect of digital
Fig. 2. Customer information resources advantage and performance: alternative perspectives.
R. Varadarajan Industrial Marketing Management xxx (xxxx) xxx–xxx
8
customer information assets and information analysis capabilities will
be able to generate superior customer insights relative to its competitors. In turn, by effectively using the insights to inform its marketing
strategy decisions and implement them, the firm can achieve superior
marketing and financial performance.
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