Effects of Marketing Adaptation Strategy on Customer Response, Marketing Excellence and Market Performance of Food Product Business in Thailand

Jirawuttinaunt, Sumittra, Ussahawanitchakit, Phapruke, International Journal of Business Strategy

1. INTRODUCTION

Recent global crisis has caused a drastic change in the marketing environment. Particularly, for the change in customer and competition, firms need to adapt themselves to ensure the survival and success in business performance (Kwahk and Lee, 2008). The ability of a firm to generate or create a position in a market is at the core of strategy development. It is widely believed that differentiation allows a firm to fully exploit its competitive advantage, and hence to achieve a high level of return (Yeung and Lau, 2005). Moreover, it is obvious that globalizations and rapid changes have made marketing strategy increasingly important for competitive advantage (Albaum and Tse, 2001). Therefore, firms should adapt and respond to the changing by developing or creating new idea into market in order to seek new opportunity and achieve success. Many studies suggest that marketing adaptation is one of the essentials for a good performance (Buckley and Horn, 2009; Cavusgil and Zou, 1994; Navarro et al., 2010; Oktemgil and Greenley, 1997). For this reason, top executive of organization need to understand how their firm can achieve a competitive advantage and obtain superior performance over their competitors by adapting themselves to the uncertain industry environment and responding to new market.

According to the rapid growth of business, Thailand's food product industry has developed rapidly throughout the past decade and is one of the most developed countries in South East Asia (BOIT, 2009), thus, the slowdown in economic activity and the slump in export sectors opens more chances for Thai food product industry to survive the global crisis. Under these situations, food product business not only attempts to establish more adequate marketing program but also develop marketing strategies to increase superior performance. It is necessary to adapt marketing strategy that supports the changing environment and response to customer. Therefore, this study focuses on Thai food product industry as a target group. This is because the food product sector makes a major contribution to Thailand's economic recovery (BOIT, 2009) and creates new market strategy to respond to appropriate of customers. As we have known that Thailand's increased awareness of world food tastes and preferences has stimulated significant changes in the attitudes and consumption patterns of Thai consumers. Hence, the study of adaptation marketing strategy framework is contributed to better understanding an effect on the achievement of adapting marketing tactics.

The purpose of this study is to examine the influences of marketing adaptation strategy on marketing excellence and market performance. The key research questions are as follows: 1) how marketing adaptation strategy is related to product diversity, competitive flexibility and customer response; 2) how marketing adaptation strategy, customer response and marketing excellence affect market performance; 3) how customer learning moderates the relationships between customer response and marketing excellence; and 4) how competitive intensity and demand turbulence moderate between marketing excellence and market performance.

This study is organized as follows. First, it reviews relevant literature in the area and streams of marketing adaptation strategy and its related literature, the links between the concept of marketing adaptation strategy to all of variables, and develop the key research hypotheses of those relationships. Second, it describes the details of research methods, including data collection, measurement, and statistics. Third, it gives the analysis results and discussion. Finally, it summaries the findings of the study, points out both theoretical and managerial contributions, suggests for further research and the presents limitation of the study.

2. RELEVANT LITERATURE REVIEW AND RESEARCH HYPOTHESES

This study challenges to conceptually link marketing adaptation strategy of firm to product diversity, competitive flexibility, customer response, marketing excellence and market performance. In addition, the study investigates external environment (i.e. customer learning, competitive intensity and demand turbulence) as a moderator of the relationship between customer response, marketing excellence and market performance. In this study, we purpose that all of constructs have a positive impact except moderator effect is negative. Thus, the conceptual and linkage model presents the relationship between all of constructs, as shown in Figure 1 below.

[FIGURE 1 OMITTED]

According to marketing adaptation strategy and its surrounding environment, this study adapts contingency theory which explains that performance is a function of the congruence between an organization and its environment, strategy and structure (Miles and Snow, 1978). Firms must adjust its strategy according to the environmental constraint. Thus, firms must match their strategic decision to environmental condition which firms' property adapts their strategies to their environmental contexts to be able to achieve optimal performance (Ginsberg and Venkatraman, 1985). Some researches draw contingency in definition as any variable that moderates the effect of an organizational characteristic on firm performance (Morton and Hu, 2008). Therefore, all relationship in the conceptual model is theorized to depend on external factor, namely customer learning, competitive intensity and demand turbulence.

2.1 Marketing Adaptation Strategy

Adaptation strategy is defined as specific ways in which the firm makes adjustments as it seeks to survive and capitalize on external situations (Schindehutte and Morris, 2001). Such adjustments can be made in a variety of products, market and resource management areas (Ginsberg, 1988). Moreover, marketing adaptation means adapting to make appropriate changes and match local perspectives (Jain, 1989) and called localized customization, differentiation or individualization (Nasir and Altinbasak, 2009). In previous research, adaptation of a marketing strategy is related to the adaptation of diverse aspects of the marketing mix such as product, promotion, price and distribution (Szymanski, Bharawaj and Varadajan, 1993). According to Kotey and Meredith (1997), marketing adaptation strategy is a greater emphasis on product improvement, quality, new product development and customer service. In this study, adaptation marketing strategy refers to the ability of firms to analyze situation and determine direction to adapt or customize marketing activities matching customers' needs and market demands. We propose marketing adaptation strategy in four dimensions: exploration of new market, efforts of diversity product development, development of marketing program and awareness of customer differences.

Exploration of new market. Exploration of new market can be defined as firm expected to meet the unique requirements of different markets or to match market opportunity (Kashani, 1989). An alternative to customization is to limit the target to a small identifiable segment that leads to market niche and new customer (Schindehutte and Morris, 2001). The effect on product development, pricing and margins, marketing sales, and sales management will help to attain more resources for growth in new markets (Meyer, 1999). Moreover, design flexibility, dimensional control and tolerance control are also identified as being strengths important for creating variety of products in new markets. Prior study suggests that competing in rapidly changing markets often requires the ability to quickly develop and deploy new offering (Carillo, 2005). Nonetheless, when firm perceives for product differentiation, firm can react to changing of demand uncertainty by providing the product diversity and gaining more customers in enhancing of competitive flexibility (Liu and Wei, 2003). Moreover, the study of Laitinen (2000) shows that new product development and marketing and acquisition of new customers are the most successful adaptation strategy. Therefore, when firms emphasize to explore new market, they will drive flexible marketing activity, diversify product that leads to customer response and create a means of attracting new customer. Thus, it leads to the hypotheses proposed as below:

Hypothesis 1a: Exploration of new market has a positive relationship with product diversity.

Hypothesis 1b: Exploration of new market has a positive relationship with competitive flexibility.

Hypothesis 1c: Exploration of new market has a positive relationship with customer response.

Effort to diversity product development. Product diversity development is defined as a firm's consistent and planned activities to meet local consumers' preferences and values by the activities with product differentiation. Differentiation can be based upon design, brand image, technology, features and packaging (Frambach, et al., 2003). Moreover, diversification provides the synergy in different lines of business and different markets that create new product or service form to customer by emphasizing the creation process to respond to customer's requirement (Fang et al., 2007). Among consumer goods, nondurable goods require greater adaptation than those durable because nondurable goods appeal to tastes, habits and customs. An alternative is to create variety of products in target market to a small identifiable segment. As product life cycle becomes shorter and shorter, products are necessity to improve the design specification based on customers' needs (Alizon, Shooter and Simpson, 2007). Moreover, rapidly evolving technologies, global competition, and sophisticated customers have contributed to an increase in product variety in industries. In addition, excellent management of product variety has increasingly become a source of competitive advantage (Ramdas, 2003). Thus, it leads to the hypotheses proposed as below:

Hypothesis 2a: Effort to diversity product development has a positive relationship with product diversity.

Hypothesis 2b: Effort to diversity product development has a positive relationship with competitive …

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Publication information: Article title: Effects of Marketing Adaptation Strategy on Customer Response, Marketing Excellence and Market Performance of Food Product Business in Thailand. Contributors: Jirawuttinaunt, Sumittra - Author, Ussahawanitchakit, Phapruke - Author. Journal title: International Journal of Business Strategy. Volume: 11. Issue: 1 Publication date: April 2011. Page number: 1+. © 2008 International Academy of Business and Economics. COPYRIGHT 2011 Gale Group.

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