Girish Ramani & V. Kumar
Executive Summary
Marketing managers are being required to demonstrate the profitability of their marketing actions down to the level of their individual customers and on an ongoing basis. At the same time, customers expect firms to increasingly customize their products and services to meet their demands. Firms still need to produce superior products, sell smarter, and understand the markets as a whole, but the ability of firms to orient themselves to interact successfully with their individual customers will differentiate them in the future. An interaction orientation reflects a firm’s ability to interact with its individual customers and take advantage of information obtained from them through successive interactions to achieve profitable customer relationships. First, the authors identify the components of interaction orientation: (1) customer concept, (2) interaction response capacity, (3) customer empowerment, and (4) customer value management. Second, they relate interaction orientation to both customer-level and aggregate-level performance measures. Third, they identify the antecedents of interaction orientation. Fourth, they examine the moderating effects of customer-initiated contacts and competitive intensity on the interaction orientation–performance linkage.
The results are based on a survey of top marketing managers. The findings from thus study have several implications for firms. Firms that depend on protected patents may not reap continued benefits. Firms must adopt customer-based performance metrics and institute employee rewards and incentives based on these metrics, instead of using aggregate-level measures, such as sales and market share growth, to evaluate marketing performance. Firms must develop their outsourcing capabilities by adopting sound contracting procedures so that they can offer diverse products and services that their individual customers desire. An interaction orientation is relevant not only to business-to-business industries but also to business-to-consumer industries. Firms should focus on building an interaction orientation regardless of whether the competitive intensity is high or low. The results from this study imply that the managerial benefits of adopting an interaction orientation are as follows: (1) The firm is able to attract and retain the most valuable customers, (2) the firm’s customers develop into a skilled resource for the firm, (3) the firm inoculates its customers from competitors by instilling a heightened sense of ownership of the firm among its customers, (4) the firm develops a dynamically shifting portfolio of products and services, (5) the firm develops the ability to foresee customer responses, and (6) the firm exhibits superior aggregate-level business performance because an interaction orientation results in a firm dynamically maximizing its profit function at every stage of activity across all its customers.
Biography
Girish Ramani is currently an assistant professor in the LeBow College of Business at Drexel University. He obtained his PhD from the University of Connecticut and his MBA from the Indian Institute of Management, Ahmedabad. His research interests are in the areas of marketing strategy, customer relationship management, and interactive marketing. He has extensive experience in the advertising industry and has been instrumental in the development of marketing and communication strategies for various multinational firms. In addition to Journal of Marketing, he has recently published in Journal of Service Research, Journal of Interactive Marketing, and Journal of Integrated Communications. Girish Ramani was the recipient of the Best Student Paper Award from the Interactive Marketing special interest group at the American Marketing Association Winter Educators’ Conference (2006). Currently, he is exploring the importance of customer-to-customer interactions in relation to firm performance.
V. Kumar has been recognized with more than 15 teaching and research excellence awards including the Paul H Root Award (two times) for the article published in Journal of Marketing that best contributes to the practice of marketing, and the Donald R. Lehmann Award (two times) for the best article published in the Journal of Marketing or Journal of Marketing Research over a two-year period. Recently, one of his articles in forecasting won the Outstanding Paper Award from the International Institute of Forecasters. He has published more than 75 articles in many scholarly journals in marketing, including the Harvard Business Review, Journal of Marketing, Journal of Marketing Research, Marketing Science, and Operations Research. He has coauthored multiple textbooks on marketing research. He has authored a book titled International Marketing Research, which is based on his marketing research experience across the globe, and his book Customer Relationship Management: A Databased Approach was recently released. His current research focuses on multichannel shopping behavior, international diffusion models, customer relationship management, customer lifetime value analysis, sales and market share forecasting, international marketing research and strategy, coupon promotions, and market orientation. He has taught in several universities and organizations worldwide. He was recently listed as one of the top-five ranked scholars in marketing worldwide. He has consulted for many global Fortune 500 firms. He received his PhD from the University of Texas at Austin.
Journal of Marketing, Vol. 72, No. 1, January 2008
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