The Study Of The Relationship Among Interaction Orientation, Market Environment, Strategy Type And Business Performance

As the rapid development of information technology and the significant changes of customer roles, the original boundaries between firms and customers are slowly disappearing, the interactivity between firms and customers is constantly increasing, and the customer focus era is coming(Yadav and Varadarajan ,2005; Ramani and Kumar, 2008). Prahalad and Ramaswamy (2004) proposed that a deeply rooted traditional concept in firms---create value and then exchange with customer is constantly under the challenge of knowledged customer, and the"co-create value"system which take customers and customer experience as the center is gradually becoming the key factors for the firms to improve their competitiveness .The effective and efficient management of interactions and the interfaces at which these interactions occur are increasingly being recognized as sources of lasting competitive advantage (Rayport and Jaworski 2005). Based on the new development of marketing theory and practice, Ramani and Kumar (2008) firstly develop the interaction orientation theory which covers the key thinking of customer participation, value co-creation, market orientation and customer relationship management. Ramani and Kumar (2008) proposed that interaction orientation reflects a firm's ability to interact with its individual customers and to take advantage of information obtained from them through successive interactions to achieve profitable customer relationships, Interaction orientation has already became an important source for firms to obtain lasting competitive advantage and superior business performance in interactive environment (Ramani and Kumar, 2008).However, the current research on interaction orientation still exist some disadvantages. First,studies shows that interaction orientation has positive effect on business performance (Ramani and Kumar,2008), but some scholars'demonstrate that the market environment and organization's strategy type would influence the strength of the relationship between strategy orientation and business performance (Kohli and Jaworski, 1990; Matsuno and Mentzer, 2000; Olson, Slater, and Hult, 2005). However, so far there was no study to research or explore the moderate effect of market environment and strategy type on interaction orientation——business performance relationship.Second,the study of interaction orientation and the relationship between interaction orientation and business performance is just limited to the North America, the relevant theory and empirical research is still very lack in China. In addition, current interaction orientation researches pay more attention to the relationship between the interaction orientation and business performance, the in-depth analysis of the theoretical basis for interaction orientation is rare.Therefore, in an attempt to fill in the above gaps, this study reviews the relevant literatures and develops an research framework which include the interaction orientation, market environment, strategy type and business performance. Then through the in-depth interview and questionnaire survey, this research collected 124 hotels'data which relevant to their interaction orientation behaviors, and based on the survey data, we use the descriptive statistics and regression analysis method to measure the degree of the hotels'interaction orientation and test the relationship among the interaction orientation, market environment, strategy types and the business relationship.According to the empirical results, his paper draws the following conclusion:(1) The interaction orientation level in hotle service sector is relative high.Interaction orientation reflects a firm's ability to interact with its individual customers and to take advantage of information obtained from them through successive interactions to achieve profitable customer relationships. The result shows that in the implementation of interaction orientation in hotel service sector, their interaction response capacity is comparatively low, followed by customer value management and customer concept, and the customer empowerment is comparatively scoring highest .That means in the hotel service sector, the customer concept and customer empowerment has been got fully recognized and reflect in the marketing activity ,the interaction response capacity and customer value management need to be developed and improved.(2)Interaction orientation has significant positive effect on firm's customer level profit performance and firm's customer level relational performance. The research results show that by setting up marketing beliefs based on individual customer, fully customer empowerment, and cultivating superior interaction response capacity and customer value management ability, the firms can not only effectively identify profitable customers, converting the unprofitable customer to profitable customer, but also maintain long-term relationship with the customer, and achieve higher customer satisfaction, customer ownership and customer positive word-of-mouth.(3) The firm's customer level relational performance has significant positive effect on firm's customer level profit performance. The study results are consistent with the theory of relationship marketing, namely through improving the service quality and establishing continuous relationships with customer, firms can realize the customer lifetime value maximization, and finally achieve the target customer retention.(4)The competitive intensity has moderate effect on the relationship between the interaction orientation and the firm's customer level profit performance. The results show that, for the hospitality industry, when the competition intensity is high, due to the interaction orientation firms have good customer concept and interaction response capacity, they can timely and accurately different them from competitors according to the characteristics and needs of individual customers, so they can attract profitable customers and keep the long-term relationship with customers. However, when the competition intensity in the industry is too high, the prices war will largely damage the relationship between firms and profitable customers, and attracted more unprofitable customers, therefore, in competition strength very extreme cases, the relationship between interaction and the business performance will be reversed.(5)The strategic type has the obvious moderate effect on the relationship between interaction orientation and firm's customer level profit performance, has partial moderate effect on the relationship between interaction orientation and firm's customer level relational performance. Specifically, for"prospector"and"analyzer", interaction orientation has positive effect on customer level profit performance and relational performance, for"reactor", the effects of interaction orientation on business performance are not significant. The research results show that for the"prospector"and"analyzer", implanting interaction orientation can not only achieve customer satisfaction, customer ownership and customer positive word-of-mouth, but also attract and maintain profitable customer. Therefore, Interaction orientation has already became an important source for firms to obtain lasting competitive advantage and superior business performance in interactive environment.The conclusions of our research not only enrich and perfect the development of interaction orientation theory, but also through an empirical research tested the relationship among interaction orientation ,market environment, strategy type and business performance, and supply a theory guidance and support for the implementation of interaction orientation in china. The contribution and meanings of this study are mainly manifested in the following aspects:First, develop and test the applicable scope and conditions for interaction orientation theory, demonstrate that the moderate effect of market environment and strategy type on the relationship between strategy orientation and business performance.The result shows that the competitive intensity has moderate effect on the relationship between the interaction orientation and the firm's customer level profit performance. The strategic type has the obvious moderate effect on the relationship between interaction orientation and firm's customer level profit performance, has partial moderate effect on the relationship between interaction orientation and firm's customer level relational performance. The conclusions enrich and perfect the development of interaction orientation theory.Second, develops a research framework which includes the interaction orientation, market environment, and strategy type, business performance. And based on the research framework, this research take hotel service sector for example and test the relationship among interaction orientation, market environment, and strategy type and business performance. Ramani and Kumar (2008) proposed that if we can study interaction orientation theory in a single industry, we will capture an in-depth understand of interaction orientation. Therefore, taking multiple firms in a single industry for sample to test the research framework will supply suitable theory guidance for the firms in hotel service sector. For the hotels in different levels, their interaction orientation level will different. Through the understanding of interaction orientation theory, the different hotel will get insight to their interaction orientation level and development stage, and provide the future direction of their marketing efforts. Meanwhile, according to the research results of the empirical analysis, we know when the strategy type is different; the relationship between interaction orientation and business performance is different. Therefore, based on the research results, different firm can control their marketing activity according their strategy type, and maximum the benefit of interaction orientation. In addition , the study of interaction orientation and the relationship between interaction orientation and business performance is just limited to the North America, the relevant theory and empirical research is still very lack in China. Therefore, take the enterprise in China for samples and test the relationship between interaction orientation and business performance is very important, it can not only supply some theory guidance for their practice, but also retest the applicability of interaction orientation theory in china.Third, interaction orientation as a new marketing theory under the value co-creation marketing paradigm, the relevant research is very lack. In order to capture an in-depth understand of interaction orientation, our research supply an in-depth and comprehensive review and analysis of the theory fundament for interaction orientation. Meanwhile, based on the literature review of strategic orientation research, this study develop an research framework which include interaction orientation, market environment, strategy type and business performance, it made an important contribution to enrich and perfect the development of interaction orientation theory.