Toward Further Understanding the Market‐sensing Capability–Value Creation Relationship

Abstract

Earlier writings have speculated that the components of customer focus may have differential effects on customer value. This research is responsive to this call as it identifies the behavioral and cultural components that underlie a market‐sensing capability (i.e., customer focus), and undertakes a finer‐grained examination of the impact of the routines through which customer focus is manifested. Specifically, this research investigates the market learning activities (ML) that can affect the depth of the understanding achieved regarding the buyer's requirements and usage context, and the customer‐oriented practices (CO) that can affect the breadth of potential solutions generated to address those requirements. Given the possibility that some buyers may have more sophisticated needs, the role of a customer's performance standards is also considered as a moderating variable. Based on data collected from computer and electronics manufacturers via two separate surveys, the results support that a supplier's ML and CO, respectively, affect perceived customer value. The results also show that a customer's performance standards do not moderate the ML–customer value relationship. Regardless of whether the customer's performance standards (along the lines of product quality, defect rates, and on‐time delivery) are high or low, the seller must be adept at discerning changes in the buying firm's requirements and operational realities. Thus, market learning practices are needed across all customers in order for the supplier to remain synchronized with market changes and deliver superior value to them. Additionally, the results support that the positive association between a seller's CO and perceived customer value is stronger when buyers have more demanding performance standards. The generation of a broader array of potential solutions that is commensurate with a more outward focus is likely to be needed to satisfy customers with more stringent requirements. The disaggregated approach taken in this research contributes to theory by (1) providing greater insight into the domain of the customer focus construct, (2) tracing the mechanisms through which customer focus is reified, and (3) evaluating the possibility that the components of customer focus may have differential effects on customer value. The main practical implication stems from the proposal that market sensing can serve as a core competence and thereby provide the foundation for differential advantage.

Determining the antecedents of dynamic supply chain capabilities

“…Such market sensing activities allow supply chain partners to develop the structures, technologies and policies needed to respond to market changes in an efficient manner (Ngai et al, 2011). Market sensing becomes a dynamic capability, when the intended use is to affect change within the firm's tangible and intangible assets, such as absorbing novel technological information when developing new products (Bharadwaj & Dong, 2013). Market sensing becomes a dynamic supply chain capability when supply chain partners actively scan the market for new knowledge and innovation and use this information to alter the supply chain's resource base (Aslam et al, 2018;Tse et al, 2016).…”

“…Yet, innovative ideas do not always originate from within firm boundaries but often stem from external sources, such as suppliers (Bidault et al, 1998;Powell et al, 1996). Entrepreneurial managers that can extend market scanning activities beyond firm boundaries, to include suppliers, are better able to identify promising innovations, and can absorb this information and match it with the knowledge assets of employees (Bharadwaj and Dong, 2013;Cousins et al, 2011). The foundation for dynamic capabilities is set when a manager combines innovative assets with the knowledge resources of the firm to achieve fit with the changing business environment (Teece et al, 1997).…”

“…Morgan, 2012). Systematically undertaking market-sensing activities allows supply chain partners to remain synchronized with marketplace changes (Bharadwaj and Dong, 2013). Supply chain agility is defined as a firm's ability, in conjunction with its key suppliers and customers, to quickly and effectively react to changes in its environment (Blome et al 2013(Blome et al , p. 1295.…”

Unlocking the power of big data in new product development

“…Companies that are able to recognise customers' latent needs and to have this data inform new product features or entire products will be much more likely to develop successful novel products (Sarin and O'Connor 2009;Robert and Candi 2014). As long as managers are able to identify the needs of customers, they will be capable of creating enhanced, customer-centred new products (McKinsey 2009;Noble et al 2012;Bharadwaj and Dong 2014).…”

Toward a Differentiated Understanding of the Value‐Creation Chain

“…We investigate ‘customer value perceptions’ as ‘judgments or assessments of what a customer perceives he or she has received from a seller in a specific purchase or use situation’ (Flint, Woodruff and Gardial, , p. 103). In line with service‐dominant logic, value perceptions refer to the customer's evaluation and determination of the product's value proposition in comparison to competing offerings (Bharadwaj and Dong, ; Vargo and Lusch, ; Woodruff, ). While studies focusing on this construct rightly suggest a rich conceptualization (Holbrook, ; Sánchez‐Fernández and Iniesta‐Bonillo, ; Sheth, Newman and Gross, ), we needed a relatively parsimonious and aggregated conceptualization owing to our taxonomic approach, which requires focusing on a limited set of cluster variables to be able to identify meaningful clusters that are easy to interpret.…”