MARKET-SENSING CAPABILITIES, PROFITABILITY WITHIN STAGNANT INDUSTRIES AND CRAFTING OF CUSTOMER VALUE PROPOSITIONS

Jeffrey Yi-Lin Forrest (), Zaiwu Gong (), Edward Scott () and Gerardo Eloy Soto Ruiz ()
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Jeffrey Yi-Lin Forrest: Department of Accounting, Economics and Finance, Slippery Rock University, Slippery Rock, PA 16057, USA
Zaiwu Gong: College of Management Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China
Edward Scott: Department of Accounting, Economics and Finance, Slippery Rock University, Slippery Rock, PA 16057, USA
Gerardo Eloy Soto Ruiz: Marketing Department, Autonomous University of the West, Blvd. Lola Beltrán and Blvd. Mario Lopez Valdes, CP 80020, Culiacán, Sinaloa, Mexico

Review of Economic and Business Studies, 2020, issue 26, 53-76

Abstract: From the perspective of market competition, this paper investigates the impact of market-sensing capability on a company, and sources profits within a slow growth industry. As an example, our results are applied to demonstrate how effective customer value propositions can be formulated. Among others, it is shown that market-sensing capability empowers a company to categorize customers, lower its operational costs while increase expected profits; that when an industry experiences slow growth, its member company’s profit can grow only through a combination of raising unit price and lowering unit cost; and how market knowledge and innovative understanding of market invitations potentially lead to effective CVPs. Instead of employing either a statistics-based approach or an anecdotal analysis, this work relies on the rigor of game theory so that all results established are generally true unless given conditions are violated. Managerial recommendations for decision makers and potential questions for future research are provided.

Keywords: customer relation; market invitation; market knowledge; market-level growth; Nash equilibrium; profit portfolio (search for similar items in EconPapers)
JEL-codes: M10 M31 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:aic:revebs:y:2020:j:26:forrestj

DOI: 10.47743/rebs-2020-2-0003

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