Impact of Direct Marketing Activities on Company Reputation Transfer Success

Impact of Direct Marketing Activities on Company Reputation Transfer Success: Empirical Evidence from Five Different Cultures

Corporate Reputation Review (2010) 13, 20 – 37.doi: 10.1057/crr.2010.5

 

If a company specialized in hospital medical devices wants the clients to buy its new pharmaceutical products, how would the company successfully introduce the new product category with its existing brand name as a brand extension? It is not difficult for a company who has a favorable reputation. A peer reviewed hypothesis testing article presents direct marketing activities impact on reputation transfer. This article is important because the author provides empirical evidence on the significance of different cultural dimensions on companies' reputation, reputation transfer and brand extensions.

 

This article tested four different hypotheses. The first hypothesis is that " There is a positive relationship between the perceived fit of the new product range and the successful transfer of reputation in the pharmaceutical industry." The second hypothesis is that " Customer satisfaction has a strong, positive effect on reputation and is influenced by Word of Mouth(WOM)". The third hypothesis is that " Direct marketing media have a substantial impact on company reputation and reputation transfer". The fourth hypothesis is that "The impact of different cultural dimensions on the reputation construct is expected to differ significantly among the surveyed countries". The surveyed countries are Germany, Finland, Spain, Russia, and Australia, all with different scores on culture differences in the categories: Individualism vs Collectivism, Masculinity vs Femininity, Power distance and Uncertainty avoidance (all the aspects are part of Hofstede's cultural dimensions). The direct marketing activities included fairs, symposia, visits of sales representatives, brochures, internet and mailings. The paper studies the impact of culture on purchase behavior of consumers of pharmaceutical products.

 

The result of this study shows that the perceived fit of new products to the existing product range has substantial impact on reputation transfer in feminine countries rather than masculine countries. The perceived fit can significantly enhance company's reputation. The reputation is also highly impacted by personal recommendations of product through word of mouth and customer satisfaction in collectivist countries. Additionally, the influence of company's reputation is significant for the countries with high power distance and high masculinity scores.

 
Culture environment differs from country to country, practicing executives and managers should know how to adjust the direct marketing activities by matching different culture to generate good reputation in international marketing.

 

Blog Post 2

This blog post is intended to fulfill a requirement for Professor Voelker’s Strategic Management Seminar course (MGMT 6731) at University of Houston Clear Lake this Fall 2012 semester.  The requirement in question is to provide a review of a peer reviewed academic article associated with an assigned topic area, in the case relating strategic management and innovation.  To fulfill this requirement I have chosen what I have found to be a very interesting article from The Journal of Product Innovation Management published by de Brentani, Kleinschmidt, and Salomo in 2010 entitled “Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm” the copyright for which is held by the Product Development and Management Association.   

The purpose of this article is to advance the understanding of how certain resources available to a firm may interrelate with choices of strategy in the domain of new product development aimed at global markets and thereby impact resulting performance.  The reason why this is important to leaders is that they will come to better understand potential factors and their interrelationships that need full consideration when making decisions for improving firm performance.  Primary focus is on factors potentially posing underlying advantages a firm may possess and potential strategies a firm may leverage to effectively field new products in the global market place..    

The type of research involved with this article both hypothesis testing as well as model advancing.  The article specifies that it draws on what is called “the resource-based view” (Brentani, p. 143)   The article also references prior work relating new product development strategy.  The emphasis in this article is integrating key aspects from the resource-based view with strategic choices for new product development as applied to the global market place.  The authors propose a three part model relating “behavioral environment” with “global new product development strategy” and how in doing so that impacts resulting “global new product development program performance.”  The model is designed in a fashion that provides testing antecedent relationships between the individual aspects composing the factors and firm performance. Behavioral environment is broken into two parallel subcategories, namely “global innovative culture” and “senior management involvement.” Global new product development strategy is broken into two parallel subcategories, namely “global presence strategy” and “global harmonization strategy.”  And global new product development program performance is broken into three subcategories with a parallel and serial relationships implied, namely “time to market” is in parallel with “windows of opportunity” and both together are in series with “financial outcome.”    (Brentani, p. 146)  Altogether there are eleven different hypotheses tested.  Four hypotheses test the relationships between the two behavioral element subcategories and two global new product development subcategories. Six hypotheses test the relationships between the global new product development subcategories and the global new product development program performance subcategories.  And two hypothesis test the relationship in global new product development program performance subcategories between time to market and windows of opportunity with that of financial outcome. 

Key findings from testing the eleven hypotheses is that most presented held true and supported the there was an antecedent relationship between the firm’s resources, the strategies chosen for new product development in the global market place and resulting performance.  The two hypotheses that were not supported by the data included the relationship between global product harmonization strategy and time to market as well as the relationship between global presence strategy and financial outcome.  The former is likely due to the complications that arise when try to appropriately roll out a product in ways that leverage advantage coming form standardization yet allowing for tailing necessary to accommodate local preferences.  The later may be from that having new product deployed everywhere in the global marketplace does not necessarily correlate directly with significant improvements to a firm’s bottom line.  

There are several implications associated with this article that practicing executives should be aware of in their deliberations for how best to steer their firms.  First, there is relationship between the underlying resources that a company has at its disposal and the strategies they chose to deploy.  They need to be aware that not all strategies may fit their firm.  Second, while the paper presents two subcategories for the behavioral environment and two more subcategories for the global new product development strategy there are most likely others that are (or should be) of interest to the firm given their particular context.  Likewise, while time to market and windows of opportunity were also two subcategories in the performance factor area, there may be others that drive the resulting financial outcome.  And third, through reading this article a practicing executive will come to better appreciate what is entailed with a developing a culture embracing innovativeness as well as more fully understand how involvement of senior management can be leveraged.  I really liked those two specific examples chosen as the behavior environment subcategories and better understand why a firms specific resources facilitate creating strategic advantages.

Citation

de Brentani, U., Kleinschmidt, E., and Salomo, S. (2010).  Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm.  Journal of Product Innovation Management 27: 143-160.

Blog post 2

Innovation Blog Post 2:  Organizational incentive and effect on Innovation

This article, entitled “Do Organizational Incentives Spur Innovation” by Henrique M. Barros and Sergio G. Lazzarini, addresses whether there is a relationship between employee innovation and various incentives offered by the employer.  Since it is important to both remain competitive with other firms, as well as retain productive employees, it stands to reason a firm would benefit from rewarding employee innovation.  This article tests two different hypotheses regarding incentivizing innovation. 

The first hypothesis is stated in the article as “Firms that adopt incentive systems that include higher performance based pay will be more innovative.”  Hypothesis 2 is stated from the article as “Firms that adopt incentive systems associated with higher performance based promotion will be more innovative.” 

The method of testing the above hypotheses consisted of randomly surveying 370 firms across multiple functional areas.  Innovation was measured in survey form by questioning whether a relationship exists between innovation and increased revenue within the firm. 

Key findings regarding incentive pay and promotion in relation to innovation are consistent with past studies regarding pay, and shed new light regarding promotion.  According to the article’s findings, providing incentive pay for innovative employees provides marginal benefit to the firm, while promotion of said employee appears to have more of an impact.  The article also states that as a caveat, there is a level if diminishing returns regarding promotion.  Up to a certain point, innovativeness tends to level off, while this is dependent upon the type of firm, size, and scope. 

Implications for managers are vast.  This article supports the notion of maintaining open communication between management and employees.  It also helps to justify some level of research and development within the firm.  Training is also important, especially in quickly high-tech industries such as software and computers.  Employee retention and employee perceived equity are also improved when the employee is able to not only contribute to the firm’s success, but share in its rewards.  According to the article, implementing a promotion based program tied to innovation also fosters new ideas, providing a mutually beneficial relationship between the firm and the employees.  Recruitment is another factor positively related to promotion based innovation.  The article suggests that firms and their managers will see an increase in revenue tied to innovation by rewarding employees with both compensation and promotion for their innovative ideas once they prove to generate an increase in revenue.  The sharing of this increased revenue along with promoting those employees who are innovative is shown to be beneficial to all parties involved according to this article. 

Article reference: BAR, Rio de Janeiro, v. 9, n. 3, art. 4, pp. 308-328, July/Sept. 2012

www.anpad.org.br/bar

 

 

 

Introduction

Hi everyone.  My name is Justin Heard.  I am in my final semester here at UHCL in the MBA program.  I just recently switched from the MHA/MBA to the MBA.  I am currently working as a physical therapist in the home based/orthopedic environment and I like it a great deal.  I do, however, intend on exiting patient care and moving into a more admin/consultative role pretty soon.  I hope to learn a lot from everyone here, and hopefully I'll be able contribute as well from the health/clinical side of things.  I look forward to working with everyone.

Introduction

Hi everyone,

I'm Hui Liu (Luna). I am a graduate student majoring in Accounting.  This will be my last semester at UHCL. This past summer, I worked as an intern at a small but busy and fast paced  CPA firm. I learned quite a lot about how a small CPA firm operated. In addition, I've had several years of marketing experience in the pharmaceutical industry in China. In my opinion, Strategy Management will be the one of the most interesting course within the Accounting program. I hope this course will integrate accounting and management knowledge and enhance my strategic and critical thinking.

Luna

Introductions

Hi! My name is Joe. I'm in the last semester of my graduate studies at UHCL finishing up the MBA cirriculum with an expectation of graduating this December (2012).  While I'm just about at the completion point for my MBA program, I have been and probably will continue to be a part-time student going on to another advanced field of study that will help me be a more valuable contributor to my workplace and possibly open up new opportunties for my career.

I work in the aeropsace industry as an engineer.  I'm basically at the mid-point of my career.  I'm looking forward to continue applying the knowledge I've learned and skills I've developed towards the successful accomplishment of new projects for my employeer while improving the effectivness of our organization as the nature of our workplace changes in the coming years. 

I'm new to Blogging.  I'm hoping our Blog project this semester will help me to quickly become acquainted with Blogging environments.  Hopefully by the end of the semester I'll have developed sufficent skills with Blogging to leverage these forums in a way that allows me to efficiently stay on top of recent events and understand advancements if the fields of study that are most pertinent to my career.