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Journal Selections from MSI

Why Firms Give Customers More Than They Need

With budgets tight, firms cannot afford to waste resources by adding more features to products than would be valued by customers.

The capability level of a product that a firm provides to a customer is an important marketing decision. Evidence suggests that firms routinely make products with capabilities that exceed their customers’ requirements.

Because of their own internal corporate culture, firms sometimes develop products with more capabilities than customers need. 

In an article in Journal of Marketing, Bryan Lukas, Gregory Whitwell, and Jan Heide investigate why this occurs. They demonstrate how a supplier firm's organizational culture can cause “overshooting” scenarios.  While firms frequently seek to promote basic values to guide organizational decision making, they may inadvertently foster mindsets that lead to product capability overprovision; mindsets such as innovation for its own sake or beating the competition at all costs. Some of these effects can be attenuated to the extent that the focal firm's basic values also reflect a customer orientation. 

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Why Do Customers Get More Than They Need? How Organizational Culture Shapes Product Capability Decisions by Bryan A. Lukas, Gregory J. Whitwell, and Jan B. Heide, Journal of Marketing (January 2013)

 

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