Developing Market as a Source of Competitive Advantage : The Role of Management Tools

This study has explored 16 management tools and selected the key six; based on their innovation creation and customer satisfaction. The researcher’s objective was to provide executives and managers with the information they need to know and identify, so that they can integrate such tools to improve bottom line results to respond to the increased competition. The method used was based on tracking of tools used by companies (both service & manufacturing companies) in Neiva-Colombia. Statistical test using frequency tables were used to find out how satisfied executives and managers were with their results and under what circumstances do firms need to use such tools. Findings indicate that managers with average score of 84.2% believe that management tools such as price optimization model, customer segmentation; supportive organizational culture, employee engagement survey, benchmarking & Balanced Scorecard, and technology are the most influential tools in terms of innovation creation and customer satisfaction. It was discovered that in difficult economic climates, these tools allow companies to monitor, identify and ensure that they are doing the right things. Throughout the study, the author focuses on the uses of management tools in developing markets as a source of competitive advantage for New and Existing Products. © 2015 Elixir All rights reserved. Elixir Mgmt. Arts 88C (2015) 36316-36323 Management Arts Available online at www.elixirpublishers. com (Elixir International Journal) Tele: +57 310 279 0179 E-mail addresses: akwasiasiedu63@yahoo.com © 2014 Elixir All rights reserved Tele: +57 310 279 0179 E-mail addresses: akwasiasiedu63@yahoo.com © 2015 Elixir All rights reserved Asiedu Elvis/ Elixir Mgmt. Arts 88C (2015) 36316-36323 36317 He argues that right management tools enable firms to focus its efforts on identifying the unmet customer preferences to build their market as a source of competitive advantage. Cooper (1979) measured the success factors of new product development by analysing the variance between the successful projects and unsuccessful projects. The findings showed that the proficiency of information acquired through management tools during the market launch, and proto-test with customers played a major role on successful projects. He argued in 1980 that, the acquired information through management tools, most especially, on the knowledge of customers’ price sensitivity, understanding of buyer behaviour and knowledge of customers’ needs, specifications and wants for production; contributed immensely to the success factors of market development (Cooper, 1980). Brown & Scott (2005) argued that through outsourcing, a firm can avoid capital investment most especially under market uncertainty. This is because outsourcing release resources like people, capital and time to focus on core competencies and customer needs and wants. Core competences must also be difficult to copy by rivals and be willing to stand the test of time if a firm wants to develop its market share as a source of competitive advantage (Drejer, 2002). In that case, the core competence according to Alai et al., (2006) must be compatible with a firm’s vision and mission statement. The vision and mission statement of a firm clearly defines the firm’s objectives, and its approach towards the objects. This means that vision and mission statement can be used to motivate employees to work assiduously and productively by providing common goals and creating better communication with customers. Kotler (1996) assessed that cultural differentiation such as personal differentiation (competence, courtesy, credibility, reliability, responsiveness and communication), products differentiation (conformance quality, features, performance quality, durability, reliability, style and design); image differentiation (such as symbol, atmosphere, and events) and service differentiation (like delivery, installation, customer training, consulting service, repair etc.) are critical management tools in developing market as a source of competitive advantage. In trying to reduce 16 success variables into four (4) success dimensions on sales and market share performance, competitive performance, “other booster” and cost performance, De Brentani (1989) reported that balanced scorecarding, benchmarking, culture and customer segmentation played important role in developing market for the successful firms. Calantone & de Benedetto (1988) divided their results into marketing activities and technical activities. To them, the successful firms had effective marketing activities regarding marketing resources and skills, competitive and market intelligence and the technical activities involve technical skills, competitive and market intelligence. Parry & Song (1994) measured successful and unsuccessful markets on the basis of profitability by respondents. They ended their studies with a note that, the right use of management tools during the pre-development of market activities, pre-development of technical activities, market activities and technical activities helped the successful firms to develop their market. Jervis (1975) supported this during his empirical studies on the selection of successful (commercial standpoint) and unsuccessful product (firm) by respondents. The researcher concluded that, the successful firms had more power on management tools like business innovation, vision & mission statement, diverse experience, core competences, enthusiasm, and a higher status due to their strong change management programmes; than their unsuccessful counterpart firms. Asiedu (2015) argued that “firms that channel their management tools in developing market always find out what really satisfies, motivates, bothers and challenges customers”. Kleinschmidt & Cooper (1986) came up with four (4) success variables: (i) Overall success rate (profitability), playback period, domestic market and foreign market. These two scholars drew a correlation between thirteen (13) new products process activities and success. At the end of their studies, it was reported that there was positive impact on the overall success rate (profitability) due to the use of right management tools during the initial screening, detailed market research, preliminary market assessment, in-house product testing (quality), business & financial analysis, and formal market launch stage. Atuahene-Gima (1995) disclosed that, management tools enable firms to understand the collection and the use of market information, development of market oriented strategy and implementation of market oriented strategy to ensure competitive advantage. Balbontin et al., (1999) advocated this during his empirical selection of successful and unsuccessful projects by respondents. He supported that good proficiency of marketing, design activities, accurate market forecasts and predictions about customer requirements are success factors for developing market for products. Other issues to be considered when developing market include; the understanding of market share and markets growth, implicating empirical research, managing international realities, and using the right management tools such as portfolio models, scenario analysis, experience curves, market structure analysis and technological forecasting (Aaker et al., 2004). He argued that, customer segmentation, employee engagement surveys, technology and price optimization model perform such roles. Philips (2005) added that, price optimization model allows firms to develop their market based on the provided information on price strategy, product strategy, distribution strategy, product & sales strategy, internet and direct marketing strategy. Baker et al., (1986), Boyd (2007), and Kimi (2003) established that price optimization model (P.O.M) is a mathematical program that calculates how demand varies at different level of price and then puts that data together with information on inventory and cost levels to recommend prices that will position and develop market for the firm. Phillips (2005) and Sodhi (2007) believe that if a firm wants to position and develop its market share, it must use price optimization model to tailor pricing based on customer segments. To them the tool can be used to simulate how targeted buyers will respond to price changes. Baker (2006) & Kinni (2003) argued that the price optimization model assist firms to determine initial pricing, markdown or discount pricing and promotional pricing. Malcom McDonald (2015) agreed that the use of right tools help firms in their value creation process. To him, the tools are used to define markets and understand value, develop and prioritize the value propositions, plan and deliver the value as well as monitor the value delivered (see figure 1: The McDonald Value Process (2015). Asiedu Elvis/ Elixir Mgmt. Arts 88C (2015) 36316-36323 36318 Figure 1. The MaDonald Value Creation Process Contrary to the above assessment, Christensen (2013), and Peter Drucker (2014), argued that creative destruction lab (disruptive innovation) pushes firms beyond its incremental development stage. They believed that disruptive innovation lab must be activated when a firm faces new forms of competition that steal market share or reducing profitability. Keeley (2013) continued that a firm can apply disruptive innovation method when traditional innovation method is failing to deliver required results. However disruptive innovation is applied when management finds that the firm is growing complacent and needs bold innovations to transform the culture and raise the vision. Caudron et al., (2014) argued that digital transformation scrutinizes each link in the customer experience chain. It helps to explore new technology link to bolster the base business. Dyer et al., (2001) and Kaplan (2010) disclosed that, firms through organizational culture of strategic alliance can form alliance with a wide variety of players such as competitors, universities, cust