Marketing strategy and firm value under commoditization

This paper examines how firms’ emphasis on different areas of marketing strategy contributes to firm value in the face of increasing product market similarity. We argue that tangible and intangible strategic differentiators of marketing play asymmetrical roles. Intangible differentiators (i.e., promotion and customer relationship management (CRM) features) are primarily non-transactional and more difficult for rivals to replicate. In contrast, tangible differentiators (i.e., product, price, and place features) are largely transactional and may not provide a sustainable competitive advantage in markets with high product similarity. To test these predictions, we develop and validate textual measures of each marketing strategy area. Consistent with the predictions of the contingency framework, the results show that greater emphasis on promotion and CRM has a stronger value-enhancing effect when the firm’s product space is characterized by high versus low similarity, whereas no such effect is observed for product, price, and place features. However, an important boundary condition exists: the stronger value-enhancing effect of intangible differentiation in high-similarity industries is attenuated when firms face high financial distress, which tends to increase uncertainty about the future benefits of these differentiators. Our findings provide new insights into the complex and dynamic nature of investors’ valuation of firms’ marketing strategies amid accelerating commoditization.