Debanjan Mitra

What Is Quality? An Integrative Framework of Processes and States

Quality is a central element in business strategy and academic research. Despite important research on quality, an opportunity for an integrative framework remains. The authors present an integrative framework of quality that captures how firms and customers produce quality (the quality production process), how firms deliver and customers experience quality (the quality experience process), and how customers evaluate quality (the quality evaluation process). The framework extends the literature in several ways. First, the authors describe important linkages between the three processes, including links reflecting the role of co-production. Second, they point to overlooked aspects of the quality processes that influence how quality is conceptualized and should be managed. These include customer heterogeneity in measurement knowledge and motivation; the role of emotion in quality production, experience, and evaluation; and a new typology of attributes. Third, they propose a quality state residing within each quality process and describe what gives rise to these states, which will enhance decision makers’ ability to measure and manage quality processes. Finally, they offer theoretical and managerial implications derived from their integrative quality framework including 20 strategies to increase customer satisfaction.

Whose Culture Matters? Near-Market Knowledge and Its Impact on Foreign Market Entry Timing

Market entry decisions are some of a firms most important strategic choices. Although some recent studies have begun to consider the impact of learning and experience on foreign market entry, no study has examined the impact of a firms own operations in similar markets on subsequent entry decisions. In this study, the authors introduce the concept of near-market knowledge to reflect the knowledge firms generate by operating in markets that are culturally and economically similar. The authors compile extensive data on the complete foreign market entries of 19 multinational firms. They use a hazard model on 722 entry observations to evaluate the impact of the dynamic near-market knowledge measures and other economic and cultural variables on foreign market entry timing. In contrast with much previous research, the authors find that cultural distance from the domestic market is not a significant factor. However, the authors find significant effects for the new measures of near-market cultural and economic knowledge and for several other economic variables as well. The authors discuss the implications of these findings for further research and management practice.

Deconstructing the Pioneer's Advantage: Examining Vintage Effects and Consumer Valuations of Quality and Variety

Several studies have demonstrated an order-of-entry effect on market share, suggesting that pioneers outperform later entrants. However, other research has pointed out the limitations of these studies and found evidence that many pioneers fail or have low market share. Given this background, the purpose of this research is to understand the conditions under which pioneers are more likely and also less likely to have an advantage. We propose a game-theoretic model that includes important sources of pioneer advantages as well as disadvantages. Specifically, we incorporate a pioneer advantage due to preemption in markets with heterogeneous tastes. In addition, we incorporate a potential pioneer disadvantage due to technology vintage effects, where later entrants utilizing improved technology can have lower costs and higher quality. The model allows us to evaluate the extent of vintage effects necessary to overcome a pioneers advantage. Key relationships are found between the magnitude of the pioneer advantage or disadvantage and consumer valuations of product attributes (e.g., variety and quality). We empirically validate the model with vintage effect data in 36 product categories, and measures of consumer valuations of product variety and quality for 12 of these 36 categories. The results show that pioneers do better in product categories wherevariety is more important and worse in categories where productquality is more important. Pioneers in categories with high vintage effects are shown to have lower market shares and higher failure rates. Similar results appear when analyzing persistence of market leadership over time, further validating our models major implications. We also present two case studies that illustrate key elements of the model.

Findings---Innovations' Origins: When, By Whom, and How Are Radical Innovations Developed?

Innovation research tends to consider only the post-commercialization period or examine a few innovations through case studies. In this study, we examine 29 radical innovations from initial concept to mass-market commercialization. We find that these innovations were developed over an average of at least 50 years and divide this long development period into four distinct stages---conceptualization, gestation, early incubation, and late incubation. We find that the duration of a stage is longer when different firms lead product development at the beginning and end of the stage. These changes in product development leaders happen frequently, e.g., 76% of firms that were first to commercialize an innovation failed to launch it in the broader market. We also find that the time-to-takeoff for a product category is significantly related to the duration of the preceding late incubation stage. In addition, we find four different ways in which radical innovations borrow from prior seemingly unrelated innovations. We report many other findings on when (duration times), by whom (product development leaders), and how (technology borrowing) radical innovations are developed.

Metrics---When and Why Nonaveraging Statistics Work

Good metrics are well-defined formulae (often involving averaging) that transmute multiple measures of raw numerical performance (e.g., dollar sales, referrals, number of customers) to create informative summary statistics (e.g., average share of wallet, average customer tenure). Despite myriad uses (benchmarking, monitoring, allocating resources, diagnosing problems, explanatory variables), most uses require metrics that contain information summarizing multiple observations. On this criterion, we show empirically (with people data) that although averaging has remarkable theoretical properties, supposedly inferior nonaveraging metrics (e.g., maximum, variance) are often better. We explain theoretically (with exact proofs) and numerically (with simulations) when and why. For example, when the environment causes a correlation between observed sample sizes (e.g., number of past purchases, projects, observations) and latent underlying parameters (e.g., the likelihood of favorable outcomes), the maximum statistic is a better metric than the mean. We refer to this environmental effect as the Muth effect, which occurs when rational markets provide more opportunities (i.e., more observations) to individuals and organizations with greater innate ability. Moreover, when environments are adverse (e.g., failure-rich), nonaveraging metrics correctly overweight favorable outcomes. We refer to this environmental effect as the Anna Karenina effect, which occurs when less-favorable outcomes convey less information. These environmental effects impact metric construction, selection, and employment.

A Comment on Price-Endings When Prices Signal Quality

Stiving (2000) proposes an interesting model to explain price-endings. His analysis shows that even when customer demand increases at 9-ending price points, certain firms that use high prices to signal quality are more likely to set those prices at round numbers. This comment raises two issues about the model. First, it appears that the original paper imposes a condition that has the effect of eliminating a broad range of legitimate separating equilibria from the analyses. Second, it appears that the original model does not include constraints to ensure that the demand for each market segment will be nonnegative. When these constraints on demand are included, one obtains different aggregate demand curves, which leads to different equilibrium prices. Using the revised model and analysis, we find that 71% of the prices end in 9 and only 12% in 0. This contrasts with only 3% ending in 9 and 58% ending in 0 for the original study. Therefore, 9-endings still prevail even though high prices can be used by firms to signal high quality.

A Theory for Market Growth or Decline

Market growth is fundamental to marketing. Frank Basss seminal diffusion theory explains growth in new product markets. We develop an analogous theory for established markets exhibiting sporadic growth or intermittent declines. Our theory suggests that market participants repeatedly take successful and unsuccessful actions that cause them to change or to mutate in myriad and often unpredictable ways. The environment sorts these mutations, determining winners and losers. Abundant mutations often cause different market participants to become winners, displacing past winners. Abundant mutations also often cause market growth because the natural selection mechanism leaves more surviving favorable mutations. So one nonobvious falsifiable implication of our theory is that displacement precedes growth and stability precedes decline. Another is that risk taking, diversity of opinions, and experimentation should precede growth. We develop a metric for measuring displacement. Using multiple publicly available data sets one including sales for top firms for 55 years and another including sales for all automobile models for 25 years, we find that our metric provides a practical way to measure the rate of mutation and confirm our theorys predictions. Our easily replicated tests show that our displacement metric can predict intermittent market growth or decline in very different contexts without the need for exogenous idiosyncratic explanations. Moreover, other alternative covariates trends, lagged growth, new product entry, macroeconomic indicators, etc. are unable to predict growth or decline.

Satisfaction (Mis)pricing Revisited: Real? Really Big?

The question of whether customer satisfaction is mispriced by the stock market has been debated over the past decade, yet it remains unintegrated with the broader asset pricing literature. The authors critique Fornell, Morgeson, and Hult (2016), focusing on that articles missed opportunities in addressing theoretical lacuna and empirical challenges that might establish the satisfaction mispricing anomaly. In doing so, they distinguish mispricing from value relevance, classify two broad avenues for satisfaction mispricing research, and detail the scope of future research under each avenue. They conclude by summarizing specific research opportunities and presenting implications for managers, investors, and educators that could lead marketing to become a net contributor to the marketing–finance dialogue.

New product development research: consolidating the present and guiding the future

New products are the lifeblood of organizations. Successful new products create new organizations, grow existing organizations, raise living standards, and generate wealth. Without new products, entrepreneurial ventures will never come to life and established firms will soon perish. Given the critical importance of new product development, marketing researchers have devoted considerable attention to investigating this topic. In this handbook, we bring together the world’s thought leaders on new product development with two overarching goals in mind. First, we seek to compile existing knowledge on new products research in a single source. We hope this will aid researchers and business practitioners in their efforts to become familiar with state-of-the-art knowledge in this area. The second overarching objective is to expand the boundaries of our knowledge. The authors of the handbook’s chapters identify numerous previously unaddressed research questions that provide opportunities to advance our understanding of new product development. Moreover, in this opening chapter, we outline broad areas of new product development research that are underrepresented in marketing. Each of these areas could benefit immensely from the insights a marketing perspective offers. Furthermore, in an effort to spur additional research, we developed a conceptual framework of the antecedents of new product performance. New product performance is the key outcome of the new product development process and can be measured by firm profits, market share, stock market return, survival rate, and other metrics. In this framework, we propose that new product performance is determined by markets, customers, organizations, and the environmental context within which these entities exist. We map the handbook chapters into this framework so that readers can understand where current research exists to inform these relationships. Moreover, this framework illustrates many additional opportunities for enhancing current knowledge on the antecedents of new product performance. Before describing these opportunities for new research, we begin our chapter with an overview of the handbook chapters. We organize these chapters into handbook parts according to the five common stages of the new product development process: