Journal of Marketing

This article examines key success factors for designing and delivering combinations of goods and services (i.e., hybrid offerings) in business markets. Goods manufacturers, unlike pure service providers, find themselves in a unique position to grow revenues through hybrid offerings but must learn how to leverage unique resources and build distinctive capabilities. Using case studies and depth interviews with senior executives in manufacturing companies, the authors develop a resource–capability framework as a basis for research and practice. Executives identify four critical resources: (1) product usage and process data derived from the firm's installed base of physical goods, (2) product development and manufacturing assets, (3) an experienced product sales force and distribution network, and (4) a field service organization. In leveraging these specific resources, successful firms build five critical capabilities: (1) service-related data processing and interpretation capability, (2) execution risk assessment and mitigation capability, (3) design-to-service capability, (4) hybrid offering sales capability, and (5) hybrid offering deployment capability. These capabilities influence manufacturers’ positional advantage in two directions: differentiation and cost leadership. The authors propose a new typology of industrial services and discuss how resources and capabilities affect success across categories of hybrid offers.

This study explores the role of customers’ social network in their defection from a service provider. The authors use data on communication among one million customers of a cellular company to create a large-scale social system composed of customers’ individual social networks. The study's results indicate that exposure to a defecting neighbor is associated with an increase of 80% in the defection hazard, after controlling for a host of social, personal, and purchase-related variables. This effect is comparable in both magnitude and nature to social effects observed in the highly researched case of product adoption: The extent of social influence on retention decays exponentially over time, and the likelihood of defection is affected by tie strength and homophily with defecting neighbors and by these neighbors’ average number of connections. Highly connected customers are more affected, and loyal customers are less affected by defections that occur in their social networks. These results carry important implications for the theoretical understanding of the drivers of customer retention and should be considered by firms that aim to predict and affect customer retention.

Two-sided markets are composed of platform owners and two distinct user networks that either buy or sell applications for the platform. The authors focus on multihoming—the choice of an agent in a user network to use more than one platform. In the context of the video game console industry, they examine the conditions affecting seller-level multihoming decisions on a given platform. Furthermore, they investigate how platform-level multihoming of applications affects the sales of the platform. The authors show that increased platform-level multihoming of applications hurts platform sales, a finding consistent with literature on brand differentiation, but they also show that this effect vanishes as platforms mature or gain market share. The authors find that platform-level multihoming of applications affects platform sales more strongly than the number of applications. Furthermore, among mature platforms, an increasing market share leads to more seller-level multihoming, while among nascent platforms, seller-level multihoming decreases as platform market share increases. These findings prompt scholars to look beyond network size in analyzing two-sided markets and provide guidance to both (application) sellers and platform owners.

Seeding strategies have strong influences on the success of viral marketing campaigns, but previous studies using computer simulations and analytical models have produced conflicting recommendations about the optimal seeding strategy. This study compares four seeding strategies in two complementary small-scale field experiments, as well as in one real-life viral marketing campaign involving more than 200,000 customers of a mobile phone service provider. The empirical results show that the best seeding strategies can be up to eight times more successful than other seeding strategies. Seeding to well-connected people is the most successful approach because these attractive seeding points are more likely to participate in viral marketing campaigns. This finding contradicts a common assumption in other studies. Well-connected people also actively use their greater reach but do not have more influence on their peers than do less well-connected people.

The growing number of sales channels through which customers can make purchases has made it imperative for managers to understand how customers decide which channels to use. However, this presents a significant challenge because there is reason to believe the channel decision process evolves over the lifetime of the customer. The authors document the existence and nature of this phenomenon by analyzing the evolution of a customer's channel choice decision process from a trial stage to a posttrial stage. First, they analyze data for a book retailer and replicate their analysis using data from a durables and apparel retailer. Their results suggest that (1) customers’ decision processes do evolve, (2) a minority but sizeable segment changes decision processes within the observation period, and (3) customers who change do so from a decision process in which they are highly responsive to marketing to one in which they are less responsive. The authors illustrate and discuss the implications for both managers and researchers.

The strategic importance of business-to-business (B2B) relationships is well recognized, but their financial impact remains equivocal. This study links social capital from three types of B2B networks of young technology firms with their initial public offering (IPO) value. The authors identify three relevant types of absorptive capacity that facilitate the transformation of B2B social capital into IPO value. For the transformation to occur, the authors find that young firms need not only the opportunity to access the resources provided by B2B relationships but also the ability to leverage them through the complementary capability—namely, absorptive capacity. They test the hypotheses on a sample of 177 IPOs, and the results are robust to endogeneity concerns and alternative measures. As one of the first studies in marketing–finance interface to focus on young firms, the findings provide novel insights, such as the deleterious financial consequence of having marketing and research-and-development B2B relationships without the relevant absorptive capacity. The authors conclude with a discussion of managerial implications regarding communicating the value of absorptive capacity, disclosure of marketing-related information, and the importance of marketing for young technology firms.

Success of many products depends on how consumers learn to use them. This research suggests that initial product trial may lead to jumps in consumer learning. Such discontinuities in learning co-occur with the experience of insight—namely, a better conceptual understanding of how to use the product. Notably, such learning also positively affects downstream outcomes such as affect and usage intentions. Whereas exploration during initial trial facilitates insight-based learning, usage instructions seem to limit this type of learning. The implication for marketing managers is to structure initial trials in a manner conducive to exploration, thus leading to insight-driven learning and the associated positive outcomes.

Consumer regret can result in unfavorable outcomes for marketers. To prevent regret, many retailers promise to refund money to consumers who discover lower prices after purchase. The authors show that a refund's effect on felt regret depends on how consumers view these promises. If consumers mainly view them as protective tools (i.e., adopt a protection focus), postrefund regret is minimal. If consumers primarily view such promises as sources of information about the retailer's price status (i.e., adopt an information focus), regret persists even after refund. The authors show that regret persists with these consumers because finding a lower price results in a perception of trust violation. They find that subject to boundary conditions, using a disclaimer that states that the retailer does not claim to offer the lowest prices helps avoid this negative outcome for information-focused consumers. The authors contribute to the literature on outcome reversibility and regret by showing that outcome reversal does not necessarily obviate regret. In addition, they show that regulatory focus serves as the motivational basis for how consumers view refund promises.