Research summary: Prior theory suggests that the performance effects of a firm's diversification strategy depend on a firm's individual resources and capabilities and the setting within which it is operating. However, prior tests of this theory have examined the average diversification‐performance relationship across all firms, instead of estimating the diversification‐performance relationship at the individual firm level. Efforts to estimate this average relationship are inconsistent with a central assumption of much of strategic management theory—that firms maximize value by choosing strategies that exploit their heterogeneous resources and individual situation. By adopting an approach that allows an evaluation of the diversification‐performance relationship for individual firms, this article shows that firms, both focused and diversified, tend to choose that diversification strategy—focus, related diversification, or unrelated diversification—that maximizes value. Managerial summary: Instead of a universal diversification discount or premium, this article shows that the effect of diversification on performance is heterogeneously distributed across firms and that firms tend to be rational in their diversification decisions. Copyright © 2015 John Wiley & Sons, Ltd.

Category captainship (CC) is a retailing practice wherein a retailer collaborates with one of the manufacturers in a product category (referred to as the captain) to develop and implement a category management strategy. Although CC has been studied using both theoretical models and surveys, empirical evidence on the benefits and drawbacks of CC is scarce. The authors use a unique data set collected during a CC implementation to empirically examine the impact of CC on the retailer, the captain, and the other manufacturers in the category. The authors find that both the retailer's private label and the captain benefit from CC because of pricing and assortment changes. They also find that some competing manufacturers benefit from CC while others suffer. Specifically, the manufacturers that closely compete with the captain benefit, whereas the manufacturers that are in close competition with the private label suffer because the retailer protects its private label. The authors show that category sales would have been higher if the retailer had not protected its private label. This study sheds light on how joint consideration of assortment and pricing, the presence of a private label, and product characteristics may influence the outcomes of CC implementations.

Search engines record the queries that users submit, including a large number of queries that include brand names. This data holds promise for assessing brand health. However, before adopting brand search volume as a brand metric, marketers should understand how brand search relates to traditional survey-based measures of brand attitudes, which have been shown to be predictive of sales. We investigate the relationship between brand attitudes and search engine queries using a unique micro-level data set collected from a panel of Google users who agreed to allow us to track their individual brand search behavior over eight weeks and link this search history to their responses to a brand attitude survey. Focusing on the smartphone and automotive markets, we find that users who are actively shopping in a category are more likely to search for any brand. Further, as users move from being aware of a brand to intending to purchase a brand, they are increasingly more likely to search for that brand, with the greatest gains as customers go from recognition to familiarity and from familiarity to consideration. Additionally, users that own and use a particular automotive or smartphone brand are much more likely to search for that brand, even when they are not in market suggesting that a substantial volume of brand search in these categories is not related to shopping or product search. We discuss the implications of these findings for assessing brand health from search data.

The ability to demonstrate the impact of marketing action on firm financial performance is crucial for evaluating, justifying, and optimizing the expenditure of a firm's marketing resources. This presents itself as a formidable task when one considers both the variety and potential influence of marketing activity. We propose a hierarchical Bayesian model of simultaneous supply and demand that allows us to formally study the financial impact of a variety of marketing activities, including those that operate on different timescales. The supply-side model provides insight into how the firm allocates resources across its various subunits. We illustrate our approach in a services context by integrating data from three independent studies conducted by a large national bank. Our model allows customer and employee satisfaction to influence firm profitability by moderating the conditional relationship between the bank's operational inputs and its proclivity to produce revenue.customer satisfaction, employee satisfaction, endogeneity, resource allocation

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