Executing customer-focused marketing: Coordinating marketing across multiple products

Firms can generate higher profits by coordinating key marketing decisions across multiple products. Researchers have previously studied several specific cases of coordinated marketing, such as coordinated pricing of products in bundles, which exploit demand correlation among the products. In this research, we present a model to show that such coordination brings value—that is, marketers can increase profits by sharing information across product markets—even when demand is uncorrelated.; Finding a realistic organizational structure to manage the complex trade-offs required by coordination is difficult. Many firms resort to product-focused marketing organizations to manage complexity, but a strict product-focus prevents the firm from executing customer-focused marketing and addressing the needs of its customers across products and product lines. Other firms attempt different versions of a matrix organization, but few solutions are entirely satisfactory. This paper proposes an information-sharing mechanism that can be used to practically implement a customer-focused, coordinated marketing process, and that allows a firm to achieve the benefits of coordination without making unrealistic assumptions about the organization. Coordinating all marketing decisions simultaneously across products maximizes profits, but more realistic coordination mechanisms are able to achieve close to the optimal profit levels. Even with imperfect information about the potential profitability of customers, we can lower prices to reach a broader market and acquire more profitable customers.; This dissertation uses a marketing strategy experiment to test whether the proposed coordination mechanism can actually lead to higher profits than a myopic, product-focused approach. This study also varies the size of the product market, to test the scalability of the proposed coordination mechanism. The experimental results support the findings of the stylized model: coordination leads to lower product prices and increased profits to the firm; and our proposed coordination mechanism has experimental validity.