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

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.