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EFFECTS OF MARKETING ADAPTATION STRATEGY ON CUSTOMER RESPONSE, MARKETING EXCELLENCE AND MARKET PERFORMANCE OF FOOD PRODUCT BUSINESS IN THAILAND

Sumittra Jirawuttinaunt, Mahasarakham University, Thailand Phapruke Ussahawanitchakit, Mahasarakham University, Thailand ABSTRACT The purpose in this study is to examine the relationship between marketing adaptation strategy that influences product diversity, competitive flexibility, customer response, marketing excellence and market performance. It also investigates the moderating effects of customer learning, competitive intensity and demand turbulence. The model is tested using data collected from mail survey questionnaires of 196 food product business in Thailand by utilizing the contingency conceptual framework. The results indicate that marketing adaptation strategy is partially supported for the hypotheses derived from the conceptual model. Customer response has significant relationship with market excellence. Similarly, marketing excellence is also significantly relating to market performance. Interestingly, customer learning is the moderator between customer response and market excellence. However, the moderator effects between market excellence and market performance is not supported. Thus, contribution and suggestions for future research are also provided. Keywords: Marketing Adaptation Strategy, Product Diversity, Competitive Flexibility, Customer Response, Customer Learning, Marketing Excellence, Market Performance 1. INTRODUCTION Recent global crisis has caused a drastic change in the marketing environment. Particularly, for the change in customer and competition, firms need to adapt themselves to ensure the survival and success in business performance (Kwahk and Lee, 2008). The ability of a firm to generate or create a position in a market is at the core of strategy development. It is widely believed that differentiation allows a firm to fully exploit its competitive advantage, and hence to achieve a high level of return (Yeung and Lau, 2005). Moreover, it is obvious that globalizations and rapid changes have made marketing strategy increasingly important for competitive advantage (Albaum and Tse, 2001). Therefore, firms should adapt and respond to the changing by developing or creating new idea into market in order to seek new opportunity and achieve success. Many studies suggest that marketing adaptation is one of the essentials for a good performance (Buckley and Horn, 2009; Cavusgil and Zou, 1994; Navarro et al., 2010; Oktemgil and Greenley, 1997). For this reason, top executive of organization need to understand how their firm can achieve a competitive advantage and obtain superior performance over their competitors by adapting themselves to the uncertain industry environment and responding to new market. According to the rapid growth of business, Thailands food product industry has developed rapidly throughout the past decade and is one of the most developed countries in South East Asia (BOIT, 2009), thus, the slowdown in economic activity and the slump in export sectors opens more chances for Thai food product industry to survive the global crisis. Under these situations, food product business not only attempts to establish more adequate marketing program but also develop marketing strategies to increase superior performance. It is necessary to adapt marketing strategy that supports the changing environment and response to customer. Therefore, this study focuses on Thai food product industry as a target group. This is because the food product sector makes a major contribution to Thailands economic recovery (BOIT, 2009) and creates new market strategy to respond to appropriate of customers. As we have known that Thailands increased awareness of world food tastes and preferences has stimulated significant changes in the attitudes and consumption patterns of Thai consumers. Hence, the study of adaptation marketing strategy framework is contributed to better understanding an effect on the achievement of adapting marketing tactics. The purpose of this study is to examine the influences of marketing adaptation strategy on marketing excellence and market performance. The key research questions are as follows: 1) how marketing adaptation strategy is related to product diversity, competitive flexibility and customer response; 2) how marketing adaptation strategy, customer response and marketing excellence affect market

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performance; 3) how customer learning moderates the relationships between customer response and marketing excellence; and 4) how competitive intensity and demand turbulence moderate between marketing excellence and market performance. This study is organized as follows. First, it reviews relevant literature in the area and streams of marketing adaptation strategy and its related literature, the links between the concept of marketing adaptation strategy to all of variables, and develop the key research hypotheses of those relationships. Second, it describes the details of research methods, including data collection, measurement, and statistics. Third, it gives the analysis results and discussion. Finally, it summaries the findings of the study, points out both theoretical and managerial contributions, suggests for further research and the presents limitation of the study. 2. RELEVANT LITERATURE REVIEW AND RESEARCH HYPOTHESES This study challenges to conceptually link marketing adaptation strategy of firm to product diversity, competitive flexibility, customer response, marketing excellence and market performance. In addition, the study investigates external environment (i.e. customer learning, competitive intensity and demand turbulence) as a moderator of the relationship between customer response, marketing excellence and market performance. In this study, we purpose that all of constructs have a positive impact except moderator effect is negative. Thus, the conceptual and linkage model presents the relationship between all of constructs, as shown in Figure 1 below. FIGURE 1 MODEL OF THE RELATIONSHIP BETWEEN MARKETING ADAPTATION STRATEGY AND ITS CONSEQUENCES
MK Adaptation Strategy
Exploration of new market Efforts to diversity product development Development of MK program Awareness of customer differences
H1a-c H5

Product Diversity

Customer Learning
H9

Competitive Intensity
H10

H2a-c

Customer Response
H3a-c H6

H7

Marketing Excellence

H8

Market Performance

H11

H4a-c

Competitive Flexibility

Demand Turbulence

Control Variables - Firm age - Firm size - Firm capital

According to marketing adaptation strategy and its surrounding environment, this study adapts contingency theory which explains that performance is a function of the congruence between an organization and its environment, strategy and structure (Miles and Snow, 1978). Firms must adjust its strategy according to the environmental constraint. Thus, firms must match their strategic decision to environmental condition which firms property adapts their strategies to their environmental contexts to be able to achieve optimal performance (Ginsberg and Venkatraman, 1985). Some researches draw contingency in definition as any variable that moderates the effect of an organizational characteristic on firm performance (Morton and Hu, 2008). Therefore, all relationship in the conceptual model is theorized to depend on external factor, namely customer learning, competitive intensity and demand turbulence. 2.1 Marketing Adaptation Strategy Adaptation strategy is defined as specific ways in which the firm makes adjustments as it seeks to survive and capitalize on external situations (Schindehutte and Morris, 2001). Such adjustments can be made in a variety of products, market and resource management areas (Ginsberg, 1988).

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Moreover, marketing adaptation means adapting to make appropriate changes and match local perspectives (Jain, 1989) and called localized customization, differentiation or individualization (Nasir and Altinbasak, 2009). In previous research, adaptation of a marketing strategy is related to the adaptation of diverse aspects of the marketing mix such as product, promotion, price and distribution (Szymanski, Bharawaj and Varadajan, 1993). According to Kotey and Meredith (1997), marketing adaptation strategy is a greater emphasis on product improvement, quality, new product development and customer service. In this study, adaptation marketing strategy refers to the ability of firms to analyze situation and determine direction to adapt or customize marketing activities matching customers needs and market demands. We propose marketing adaptation strategy in four dimensions: exploration of new market, efforts of diversity product development, development of marketing program and awareness of customer differences. Exploration of new market. Exploration of new market can be defined as firm expected to meet the unique requirements of different markets or to match market opportunity (Kashani, 1989). An alternative to customization is to limit the target to a small identifiable segment that leads to market niche and new customer (Schindehutte and Morris, 2001). The effect on product development, pricing and margins, marketing sales, and sales management will help to attain more resources for growth in new markets (Meyer, 1999). Moreover, design flexibility, dimensional control and tolerance control are also identified as being strengths important for creating variety of products in new markets. Prior study suggests that competing in rapidly changing markets often requires the ability to quickly develop and deploy new offering (Carillo, 2005). Nonetheless, when firm perceives for product differentiation, firm can react to changing of demand uncertainty by providing the product diversity and gaining more customers in enhancing of competitive flexibility (Liu and Wei, 2003). Moreover, the study of Laitinen (2000) shows that new product development and marketing and acquisition of new customers are the most successful adaptation strategy. Therefore, when firms emphasize to explore new market, they will drive flexible marketing activity, diversify product that leads to customer response and create a means of attracting new customer. Thus, it leads to the hypotheses proposed as below: Hypothesis 1a: Exploration of new market has a positive relationship with product diversity. Hypothesis 1b: Exploration of new market has a positive relationship with competitive flexibility. Hypothesis 1c: Exploration of new market has a positive relationship with customer response. Effort to diversity product development. Product diversity development is defined as a firms consistent and planned activities to meet local consumers preferences and values by the activities with product differentiation. Differentiation can be based upon design, brand image, technology, features and packaging (Frambach, et al., 2003). Moreover, diversification provides the synergy in different lines of business and different markets that create new product or service form to customer by emphasizing the creation process to respond to customers requirement (Fang et al., 2007). Among consumer goods, nondurable goods require greater adaptation than those durable because nondurable goods appeal to tastes, habits and customs. An alternative is to create variety of products in target market to a small identifiable segment. As product life cycle becomes shorter and shorter, products are necessity to improve the design specification based on customers needs (Alizon, Shooter and Simpson, 2007). Moreover, rapidly evolving technologies, global competition, and sophisticated customers have contributed to an increase in product variety in industries. In addition, excellent management of product variety has increasingly become a source of competitive advantage (Ramdas, 2003). Thus, it leads to the hypotheses proposed as below: Hypothesis 2a: Effort to diversity product development has a positive relationship with product diversity. Hypothesis 2b: Effort to diversity product development has a positive relationship with competitive flexibility. Hypothesis 2c: Effort to diversity product development has a positive relationship with customer response.

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Development of marketing program. Leonidou et al., (2002) conceptualize development of marketing program as the degree to which firm can create variation of marketing development in terms of its core and expand marketing programs to accommodate differences in environmental forces, consumer behavior, usage patterns and competitive situations. Albaum and Tse (2001) and Lages, Abrantes and Lages (2008) described marketing program as related to adaptation of various aspects of the marketing mix such as product, promotion, price and distribution. Marketing program is not a method for increasing sales but the goal of marketing program is to create customer or to set the stage for making the sale (Graham, 1998). Business can also achieve greater efficiency in current operation to increase profit margin when they share customers, facilities and marketing programs with other business units (Szymanski, Bharawaj and Varadajan, 1993). Furthermore, Oktemgil and Greenley (1997) indicate that firms with adaptation strategy exhibit higher marketing orientation than those firms with lower adaptation strategy. As a result, the mission of marketing program is to establish an environment in which contributes to customers success. The successful marketing program can evaluate in several aspects such as being differentiated from the competition, creating new business, keep the company in the minds of customers, and giving the company strong hold on the marketplace and effective customer-oriented and customer retention (Graham, 1998). Thus, it leads to the hypotheses proposed as below: Hypothesis 3a: Development of marketing program has a positive relationship with product diversity. Hypothesis 3b: Development of marketing program has a positive relationship with competitive flexibility. Hypothesis 3c: Development of marketing program has a positive relationship with customer response. Awareness of customer differences. Awareness of customer differences refers to the ability of consciousness the difference in customer concerning requirement and expectation for creation in terms of product features and benefits. These differences may depend on demographic, psychographic, or behavioral characteristics. Gustaffson et al. (1999) show that success in customerfocused development requires a deep understanding of customer needs, expectations, and preferences. Recent research has pointed out that different versions of product or service may be evaluated differently based on the value they provide to different customer segments (Varian 1998). In addition, firms that have managed to alter their product offerings to accommodate identified customer differences stand a good chance of increasing benefits of customer (Johnson and Aruthanes, 1995). Thus, if firms seek for information of customers and understand their differences, needs and expectation, they can respond to customer correctly by variety product which increases competitive flexibility. Therefore, based on literature above, it leads to the hypotheses proposed as follows: Hypothesis 4a: Awareness of customer differences has a positive relationship with product diversity. Hypothesis 4b: Awareness of customer differences has a positive relationship with competitive flexibility. Hypothesis 4c: Awareness of customer differences has a positive relationship with customer response. 2.2 Product Diversity Product diversity is defined as the degree of relatedness among various product segments (Qian, 2002) by offering differential product, new strange and various products into market. Khalid (2006) considers indicating variety and multi-formality into its products with the quality of being different in marketplace. Firm with marketing adaptation strategy is associated with number of available products (Hendel and De Figueiredo, 1997). Product differentiation is the difference of product or brand of competitor that is relevant, meaningful and valuable to customer (McQuiston, 2004). The work of Sukpanich and Rugman (2007) shows that at high levels of intra-regional sales, small levels of product diversity can generate returns to firms but high levels of product diversity may hurt their performance. Hsu (2005) provides that they attribute product diversity-based changes can improve

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the competitive advantage. In addition, Tallman and Li (1996) suggest that firms have exploited the synergies of product diversity can provide to the needs of diverse groups of customers. Ramdas (2003) explains that the variety of product features such as components, brands, packaging, marketing channels, warranties and levels of after sales support can be just as important as creating perceived variety and be of value to the customer. If firms perceive product differentiation in competitive market especially market requirement, they will develop differential products for customer in order to create customer attraction and increase competitiveness (Thipsri and Ussahawanitchakit, 2009). Thus, it leads to the hypothesis proposed as follow: Hypothesis 5: Product diversity has a positive relationship with customer response. 2.3 Competitive Flexibility Competitive flexibility refers the quick response to competition changes, regulatory changes and competitive opportunities (Butler, Leong and Everett, 1996) whereas Peeks (2008) defined it as the ability for a company to produce non-standard orders to introduce new products and to accelerate and decelerate production quickly that directly related to three competitive objectives, specifically cost, quality, and delivery. In this study, competitive flexibility refers to firms ability to quickly and continuously respond to customers needs and wants that increase competitive opportunity. To take advantage, companies offer customized and adaptable products and services to be more flexible and competitive (Ozar, 2002). Firms that have the flexibility to respond to new competitive behaviors are at a definite advantage, thus, they can easily redeploy critical resources and use the diversity of strategic options available to compete effectively (Ashok and Kunal, 2003). Moreover, competitive flexibility emphasizes on answering to the unique needs of consumers, business partners, and institutional constituents (Alien and Pantzalis, 1996). Thus, many companies are offering flexible products and services to their customers for competitive flexibility. If firms are to remain competitive, they need to be responsive to the requirements of the market environment. Firms can enhance their market responsiveness if they follow flexible strategies (Ozer, 2002). Thus, it leads hypothesis proposed as below: Hypothesis 6: Competitive flexibility has a positive relationship with customer response. 2.4 Customer Response Customer response is defined as firm seeking and keeping in mind of all customer needs and wants, expectation, and then to provide product and support service. In order to achieve and maintain competitive success in todays turbulent marketplace, top management must spend time learning about customers needs and searching information to find the way to respond to the needs and expectation of customer correctly and rapidly. The component of customer response to marketing activities, defined in terms of customer evaluation, preference, and behavior based on the marketing mix activity (Johne, 1999). Prior research shows that firm with customer response can allow an organization to differentiate its product and service from competitors, sustain customer loyalty and extend the value to its customers (Magretta, 1998). Likewise, Keller (1993) suggests that this consumer response to a brand is reflected in their responses to marketing activities, such as price, promotion, or distribution of the product. Daugherty, Sabath and Rogers (1992) found that customer responsiveness by quick response and speed is delivery positive effect user satisfaction. The work of Zahay and Griffin (2004) suggest that firm that develops customer information system can increase customer-based performance and can move toward strategic excellence and increase business growth. Norborn et al. (1990) find that firms that close to customers and demonstrate an external market orientation is perceived to have a high degree of marketing effectiveness. Thus, it leads to hypothesis proposed as follow: Hypothesis 7: Customer response has a positive relationship with marketing excellence. 2.5 Market Excellence Marketing excellence refers to the ability of the firm to encompass superiority in understanding markets, making strategic choice, delivering value and monitoring value greater than the competition. Jagersma (2006) argues that marketing excellence is best-practice strategic marketing to create successful strategic business marketing specialists, shape the industries, focus on price to influence customer choices, define their business by the product they make can build a flexible strategic options and channels most profitable. Laitinen (2000) indicates that the most successful adaptation strategies are investment in new product development and marketing and in the acquisition of new customers.

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Moreover, Smith (2007) asserts that a firm with excellent practice is addressed in terms of customerneed-oriented and places a premium on understanding what opportunities and threats arise from the external environment. In addition, Pieter (2006) argues that the marketing excellence at the value delivery is characterized by a concern for how the marketing mix creates value for the customer, rather than just selling the product. Jagersma (2006) shows that the strategic challenge in marketing excellence is strong customer orientation, updating the product development program and understanding the value of customers that can result in competitive behavior leading to superior performance. In addition, Stuart-Kregor (2006) concludes that the key drivers of company achieving true marketing excellence are related to levels of market performance. Thus, it leads to the hypothesis proposed as follow: Hypothesis 8: Marketing excellence has a positive relationship with market performance. 2.6 Moderating Effect of relationships Customer learning. Customer learning refers to the ability of organization to know the set of behavioral activities that generate knowledge pertaining to customer current and potential needs for new products that create high customer satisfaction. Customer learning is a separate object of perception which requires different set of cognitive activities to learn and understand market (Li, Nicholls and Roslow, 1999). In addition, a customer learning process allows firms to explore innovation opportunities arising from emerging demand. Li et al., (1999) view a customer learning process as consisting of three aspects: customer information acquisition, interpretation and integration whereas Hellman (2005) divides it into mental step: need, awareness, access, motivation, purchase, know-how, experience and retention or loyalty. The study of Li et al. (1999) shows that customer learning is positively related to new product success. Likewise, Zahay and Griffin (2004) find that customer learning is associated to customer-based performance. Furthermore, Li et al (1999) argue that as customers become more demanding, firms are prompted to focus more intensely on learning their needs and preferences for new products. In addition, Zahay and Griffin (2004) argue that customer learning is associated with performance in context of marketing strategy. Thus, it leads to the hypothesis proposed as below: Hypothesis 9: Customer learning positively moderate between the customer response and market excellence. Competitive intensity. Competitive intensity refers to competition level that firm faces in its industry (Zhao and Cavusgil, 2006). This study defines competitive intensity as degree of intense competition that firm confronts with industry such as intense to competition, tactics of competitor and increasing of competitors within industry. Competitive intensity has been involved with lower performances (Matusik and Hill 1998) that lead to rapid response to changes in a firms competitive environment (Zahra, 1996). Previous researchers studied the competitive intensity as moderating effect on the relationship between market orientation and new-to-the world product innovation (Augusto and Coelho, 2007). Zhou (2006) found that the competitive intensity has a negative relationship with new product performance. In this study, we apply competitive intensity as the moderator between market excellence and market performance. Under the situation of competitive intensity within industry, firm has pressure with increasing competition that customers have to satisfied with the need from many alternatives sources with aggressive competitors, therefore, we posit the hypothesis as below: Hypothesis 10: Competitive intensity negatively moderates between the marketing excellence and market performance. Demand turbulence. Demand turbulence is defined as an extensive market turbulence map instrument to determine the level and type of the market environmental turbulence (Santonen, 2004). According to Pine (1993), demand turbulence indicates the degree to which a company can control, stabilize and reduce uncertainty within its market. Organizations that operate in the more turbulent markets are most likely to modify their products and approaches to market rapid to adapt to the changed preferences of its customers than organization that operates in more stable markets. However, Pine (1993) found that market turbulence, which includes the demand and structural turbulence dimensions, should affect customization in the case of physical products. Market turbulence is also expected to increase the market orientation construct, which is closely related to customization (Lusch and Laczniak, 1987; Davis et al., 1991). Since the mass customization business model is closely related especially to customer orientation and interfunctional coordination (Narver and Slater, 1990). The study of Pine (1993) argued that the greater the perceived market turbulence

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is, the more likely the industry is moving toward customization. We argue that the better the customized products fit the customers needs and wants, the more stable and certain the demand level should be more stable and certain. Thus, we posit the hypothesis proposed as below: Hypothesis 11: Demand turbulence negatively moderate between the marketing excellence and market performance. 3. RESEARCH METHODS 3.1. Sampling and Data Collection The population of this study was obtained from the database of Department of Business Development, Ministry of Commerce Thailand. The sample is food product firms in Thailand. The key participants in this study were marketing executive or marketing managers. A mail survey was used for data collection. The questionnaire was sent to 1000 firms in Thailand. With regard to the questionnaire mailing, 48 surveys were undeliverable because some firms were no longer in business or had moved to unknown locations. Deducting the undeliverable from the original 1,000 mailed, the valid mailing was 952 surveys, from which 206 responses were received. Of the surveys completed and returned, only 196 were usable. The effective response rate was approximately 20.83%. According to Aaker, Kumar and Day (2001), the average response rate should be approximately 20%. Thus, the response rate of this research is considered acceptable. As estimated the non-response bias was calculated by comparison of first wave and second wave data respondents (Armstrong et al., 1977). We found no significant differences. Hence, it appears that non-response bias was not a major problem in our data. 3.2. Reliability and Validity Reliability of the measurements was evaluated by Cronbach Alpha coefficients. In the scale reliability, Cronbach Alpha coefficients are 0.810.89 as being greater than 0.60 (Hair et al., 2006). Factor analysis is employed to test the validity of data in the questionnaire. Items are used to measure each construct that is extracted to be one only principal component. Factor loading of each construct presents a value higher than 0.5. All factor loadings are 0.770.91 as being greater than the 0.4 cutoff and are statistically significant (Nunnally and Bernstein, 1994). Table 1 shows the results of both factor loadings and Cronbach Alpha for multiple-items scales used in this study. TABLE 1 RESULTS OF MEASURE VALIDATION Items Performance (PER) Exploration of new market (NM) Efforts of diversity product development (EP) Development of marketing program (MP) Awareness of customer differences (CD) Product diversity (PD) Competitive flexibility (CF) Customer response (CR) Marketing excellence (ME) Customer learning (CL) Competitive intensity (CI) Demand turbulence (DT) Factor loadings .85-.93 .87-.88 .80-.91 .77-.87 .81-.90 .83-.90 .88-.92 .79-.89 .82-.91 .87-.90 .82-.90 .89-.90 Cronbach Alpha .92 .85 .89 .85 .84 .86 .89 .86 .83 .86 .82 .87 Number of Item 5 3 4 4 3 4 4 4 3 3 3 3

3.3. Statistical Technique The ordinary least squares (OLS) regression analysis and hierarchical regression are used to test the hypothesis relationships and estimate factor affecting a firms new product performance. Because all dependent, independent, and control variables in this study were neither nominal data nor categories data, OLS is appropriate method for examining hypothesis relationships (Aulakh et al., 2000). In this study, the model of the aforementioned relationships is as follows: Equation 1: PD = 01 + 1 NM + 2 EP + 3 MP +4 CD+5 (FS) + 6 (FA) +7 (FC)+ 1

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Equation 2: CF = 02 + 8 NM + 9 EP + 10 MP +11 CD+12 (FS) + 13 (FA) +14 (FC)+ 2 Equation 3: CR = 03 + 15NM + 16 EP + 17 MP +18 CD+19 (FS) + 20 (FA) +21 (FC)+ 3 Equation 4: CR = 04 +22NM + 23 EP + 24 MP +25 CD+ 26 PD + 27 CF + 28 (FS) + 29 (FA) +30 (FC)+ 4 Equation 5: ME = 05 + 31 CR + 32 (FS) + 33 (FA) +34 (FC) + 5 Equation 6: ME = 06 + 35 CR +36 CL + 37 (CRxCL)+38 (FS) + 39 (FA) +40 (FC) + 6 Equation 7: PER = 07 + 41 ME + 42 (FS) + 43 (FA) +44 (FC)+ 7 Equation 8: PER = 08 + 45 ME +46 CI + 47 DT + 48 (MExCI) + 49 (MExDT)+ 50 (FS) +

51 (FA) +52 (FC) + 8


Where, NM is Exploration new market; EP is Efforts to diversity product development; MP is Development of MK program; CD is Awareness of customer difference; PD is Product diversity; CF is Competitive Flexibility; CR is Customer response; ME is Marketing Excellence; CL is Customer learning; PER is Market performance; CI is Competitive intensity; DT is Demand turbulence; FA is Firm Age; FS is Firm size and FC is Firm capital; is Error. 3.4. Variables Measurement All constructs in the model are measured with multiple-item scales. Each of these variables is measured by five-point Likert-type scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Most items are derived from the literature and face validity by scholar in academic. The variable measurements of dependent, independent, moderator and control variables are described as follows: Market performance is measured by firms perception about the outcomes of firm achieved goal in terms of market share, sale growth, acquiring new customer, increasing sales to existing customer and customer acceptance. This variable is developed from Vorhies and Morgan (2005). Five items are used to estimate the market performance. Marketing adaptation strategy is the main variable of this study developed as a new scale from the related literatures and its definitions. It consists of four dimensions: 1) Exploration of new market refers to the ability of firm to search about sources and methods to meet the unique requirements of different markets or to match new market opportunity. Three items are used to estimate the exploration of new market. 2) Effort of diversity product development refers to a firms consistent and planned activities to meet local consumers preferences and values by the activities with product differentiation. Four items are used to gauge the effort of diversity product development. 3) Development of marketing program refers to the degree to which firm can create variation of marketing development in terms of its core and augmented marketing programs to accommodate differences in environmental forces, consumer behavior, usage patterns and competitive situations. Four items are used to measure development of marketing program. 4) Awareness of customer differences refers to the ability of consciousness the difference in customer concerning requirement and expectation for creation thing in terms of product features and benefits. Three items are used to measure awareness of customer differences. Product Diversity refers to the degree of relatedness among various product segments by offering differential product, new strange and various products into market. This variable is developed as a new scale from the related literatures and its definition. Four items are used to measure the product diversity.

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Competitive Flexibility refers to the quick response to competition changes, regulatory changes and competitive opportunities. This variable is developed as a new scale from the related literatures and its definition. Four items are used to measure competitive flexibility Customer response refers to firm seeking and keeping in mind of all customer needs and wants, expectation, and then to provide products and support services. This constructed is measured by four items related to prior research (Jadesadalug and Ussahawanitchakit, 2009). Marketing excellence refers to the ability of the firm to encompass superiority in understanding markets, making strategic choice, delivering value and monitoring value greater than the competition. This variable is developed as a new scale from the related literatures and its definition. Four items are used to measure marketing excellence. Customer learning refers to the ability of organization to know the set of behavioral activities that generate knowledge pertaining to current customers and potential needs for new products that create high customer satisfaction. This variable is developed from Li, Nicholls and Roslow (1999). Four items are used to measure customer learning. Competitive intensity is measured by firms perception about intense of competition, tactics of competitor and increasing of competitors within industry. Three items are used adapted from Zhou (2006). Demand turbulence is measured by level and type of the market environmental turbulence to which a company can control, stabilize and reduce uncertainty within its market (Santonen, 2004). This variable is developed following Santonens (2004). Three items are used to measure the demand turbulence. The control variables include firm age, firm size and firm capital. Firm age was measured by the number of years. Firm size was measured by the number of employees in firms and firm capital was measured by amount of money a firm has invested in the business. Previous research has shown that the all control variables may influence the capacity of a firm to operate business in order to achieve performance (Ussahawanitchakit, 2005). 4. RESULTS AND DISCUSSION The descriptive statistics and correlation matrix for all variables are shown in Table 2. With respect to possible problems relating to multicolinearity, all the correlation coefficients of independent variables are smaller than 0.8, and all the VIF values are smaller than 10. The problem of multicolinearity of independent variables in this mode is therefore not significant (Hair, Black, Babin, Anderson, andTatham, 2006). Variance Inflation Factor (VIF) was used to check multicolinearity problem among independent variables. The VIF ranged from 1.07 4.54 are below the cut-off value of 10recommended by Neter, William and Michael (1985) meaning that the independent variables are not correlated with each other. Therefore, there are no substantial multicolinearity problems encountered in this study. As expected, control variables, firm size, and firm age are not significantly correlated to each equation model. 4.1. Influence of marketing adaptation strategy, product diversity and competitive flexibility Table 3 presents the results of OLS regression analysis of the relationships among marketing adaptation strategy, product diversity, competitive flexibility and customer response. Only one of marketing adaptation strategy, exploration of new market has a significant positive effect on product diversity (b1 = 0.21, p < 0.05). Thus, Hypothesis 1a is supported. For hypothesis 2, the effort to diversity product development has a significant positive influence on product diversity (b2 = 0.44, p < 0.001). Walters and Toyne (1989) proposes that firms adaptation strategy establishes a range of flexible product designs and option to meet the changes in the market. Then, firms products are variety creation and differentiating in market place. It implies that firms with the higher degree of effort to develop diversity of product appear to have greater product diversity. Thus, Hypothesis 2a is supported. Moreover, development of marketing program is positively related to competitive flexibility and customer response (b10 = 0.49, p < 0.001; b17 = 0.22, p < 0.05). Consistent with Albaum and Tse (2001), there is a positive relationship between level of adaptation and marketing mix component. Hence, Hypotheses 3b and 3c are supported. In contrast, development of marketing program is

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significantly negative related to product diversity (b3 = -0.14, p < 0.10). This result is consistent with Hsu (2005) and Qian (2002), they indicate that a negative relationship is expected during the initial stage and have been found U-shaped with product diversity because the greater marketing program occurs along, the firm may acquire degrees of cost with a weak connection to its primary line of business. In that case, diversity of product can lead to a greater of management control, coordination costs and inflexibility. Thus, Hypothesis 3a is not supported. However, also awareness of customer differences is positively associated on product diversity (b4 = 0.22, p < 0.05). It implied that success in customer-focused development requires a deep understanding of customer needs, expectations, and preferences leading to creating variety of products to match the customer difference. Thus, Hypothesis 4a is supported. TABLE 2 DESCRIPTIVE STATISTICS AND CORRELATION MATRIX

Variables MEAN SD NM EP MP CD PD CF CR ME CL CI DT FA FS FC

NM

EP

MP

CD

PD

CF

CR

ME

CL

CI

DT

FA

FS

FC

3.82 3.62 3.66 3.61 3.39 3.70 3.64 3.55 3.61 3.60 3.13 3.14 2.82 2.26 1.2 0.83 0.88 0.74 0.81 0.80 0.72 0.74 0.73 0.75 0.78 0.86 1.06 1.30 0 1 .78*** 1 .57*** .71*** 1 .65*** .80*** .79*** 1 .61*** .68*** .46*** .60*** 1 .35*** .47*** .60*** .52*** .54*** 1 .49*** .58*** .66*** .61*** .62*** .79*** 1 .53*** .56*** .65*** .61*** .58*** .65*** .78*** 1 .45*** .57*** .72*** .63*** .43*** .64*** .70*** .69*** 1 .30*** .38*** .32*** .34*** .30*** .18** .23*** .24*** .21*** 1 .22*** .27*** .10 -.15** .11 .07 -.07 -.13 .21
***

.18** .28*** -.01 -.10 .16 .13


**

.10 -.07 .23


***

.10 -.07 .24


***

.03 -.13 .30


***

.57*** 1 .10 .11 .09 .13 1 .45*** 1

.03 .23
***

.04 .35
***

.16

**

.19*** .14

.18** .23*** .10

.16** .18** .16** .20*** .28*** .58*** 1

* p < .10, ** p < .05, *** p <.01 4.2. Influence of product diversity, competitive flexibility and customer response Table 3 presents the results of OLS regression analysis of the relationship between product diversity, competitive flexibility and customer response (Hypotheses 5 and 6). The result indicates that product diversity and competitive flexibility have a significant and positive effect on customer response (b26=.21, p < 0.01), (b27=.53, p < 0.01). Similarly to Sukpanich and Rugman (2007), Liu and Wei (2003) argue that firms with product diversity and competitive flexibility enable to serve their customers better and increasing more customers in enhancing of competitive environment. Likewise, the study of Pelham (2000) found that market orientation elements for adaptation are based on creating value for customers, immediate response to competitive challenges and fast detection of changes in customer preferences. Thus, Hypotheses 5 and 6 are supported.

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TABLE 3: RESULTS OF OLS REGRESSION ANALYSISa Independent Variables Dependent Variables (Model) 1 2 3 PD CF CR Exploration of new market (NM) .20** -.05 .05 (.08) (.89) (.06) Efforts of diversity product development (EP) .44*** .02 -.03 (.11) (.11) (.08) Development of marketing program (MP) -.14* .49*** .22** (.09) (.09) (.07) Awareness of customer differences (CD) .22** .11 .10 (.10) (.11) (.08) Product diversity (PD) .22*** (.06) Competitive flexibility (CF) .53*** (.06) Firm age (FA) .12 -.05 .10 (.11) (.12) (.07) Firm size (FS) .13 .51 -.16 (.13) (.13) (.09) Firm capital (FC) .07 .09 .07 (.13) (.13) (.10) 2 .49 .42 .71 Adjust R a Beta coefficients with standard errors in parenthesis, * p < .10, ** p < .05, *** p <.01 TABLE 4 - RESULT OF HIERARCHICAL REGRESSION ANALYSISa Independent Variables Dependent Variables ME ME ME Customer response (CR) .76*** .58*** (.05) (.06) Customer learning (CL) .28*** (.06) CR x CL .07* (.04) Firm age -.43 -.10 -.01 (.14) (.10) (.10) Firm size .58 .17 .17 (.16) (.11) (.11) Firm capital .10 .03 .03 (.16) (.10) (.10) .09 .61 .66 Adjust R2 a Beta coefficients with standard errors in parenthesis, * p < .10, ** p < .05, *** p <.01 4.3. Influence of customer response and market excellence Table 4 presents the results of hierarchical regression analysis of relationship between customer response and market excellence (Hypothesis 7). The result shows that customer response is positively related to market excellence (b35=.58, p < 0.01). Similarly to Irwin, Zwick and Sutton (1999), Webster (1995) shows that close to customer is positively associated to market excellence and can gain sustainable competitive advantage. It implied that customer response can allow an organization to differentiate its products and services from competitors, sustain customer loyalty and extend the value to its customers. Thus, understanding the value of customer can result in competitive behavior which leads to superior performance and create successful strategic business marketing over competitor (Roselund et al., 2004). 4.4 Influence of market excellence and market performance Table 5 presents the results of hierarchical regression analysis of relationship between market excellence and market performance (Hypothesis 9). The result shows that market excellence is positively associated with market performance (b45=.66, p < 0.01). It implied that higher market excellence support achieves greater market performance. According to the mentioned existing literature, Webster (1995), Jagersma (2006) and Smith (2007) assert that market excellence build a flexible strategic options, channels most profitable and market performance. Moreover, market

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excellence is best-practice strategic marketing that improves competitive behavior which leads to superior performance. TABLE 5 - RESULT OF HIERARCHICAL REGRESSION ANALYSISa Independent Variables Dependent Variables PER PER PER Market excellence (ME) .68*** .66*** (.05) (.05) Competitive intensity (CI) .14* (.06) Demand turbulence (DT) -.04 (.06) ME x CI .12** (.06) ME x DT .03 (.06) Firm age -.46 -.17 .22 (.14) (.10) (.10) Firm size .58 .18 .23 (.16) (.12) (.12) Firm capital .36** .29*** .24** (.15) (.11) (.11) .15 .57 .58 Adjust R2 a Beta coefficients with standard errors in parenthesis, * p < .10, ** p < .05, *** p < .01 4.5 The interaction effects Table 5 shows the interaction effects. We take interaction between competitive intensity and demand turbulence as the moderator on market excellence and market performance. In addition, In Table 4, we take the interaction in customer learning as the moderator on customer response to market excellence. The results suggest that customer learning moderates between customer response and market excellence (b37=.07, p < 0.10). In addition, customer learning is positively associated with market excellence (b36=.28, p < 0.01). It assumes that customer learning can be an independent variable. It implies that understanding and learning customer is the key drivers to increase marketing excellence appropriate to their perception of marketing. Interestingly, competitive intensity positively significant moderated to market performance in contrast to hypothesis 10 (b48=.13, p < 0.05). It implies that competitive environment will enhance reacting to exiting trends and demands through current products; services and market are likely to improve their performance in competitive environments (Lumpkin and Dess, 2001). Therefore, in competitive environment, adaptation strategy improves and enhances tailoring of existing products (Miller, 1987) as well as increase a performance (Zahra and Bogner, 2000). Surprisingly, demand turbulence has no significant effect on market performance. Thus, Hypotheses 10 and 11 is not supported. However, the absence of a relationship of these moderating effects on market performance in this study could be explained by Hsu and Wang (2004) that when firms perceive product differentiation, firms can respond to changing of demand turbulence in market. 5. CONTRIBUTION AND FUTURE DIRECTIONS FOR RESEARCH 5.1 Theoretical Contributions and Future Suggestion for Research This study intends to provide a distinct understanding of the relationships between marketing adaptation strategy and its consequences (product diversity, competitive flexibility, customer response, market excellence) and market performance. The theory supports the practitioners and researchers are concerned that this study makes significant involvement to literature study of contingency theory to clarify how firm links the strategic decision and flexibility. Therefore, this study expands the aim of this theoretical perspective by applying them to the distinctive phenomenon. In addition, it examines the moderating role of constructs such as customer learning, competitive intensity and demand turbulence. According to the results of this study, the need for future research is obvious. Because this study reveals that competitive intensity has an opposite effect on hypothesis whereas demand turbulence has no significant effect on the model. Thus, future research is needed to use the other industries and collect data from larger population. Moreover, this study finds the appropriate strategy to develop new

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direction of marketing adaptation strategy to increase market excellence and business growth. Hence, future research needs to conceptualize the measure of marketing adaptation strategy with other variables and with different samples. 5.2 Managerial Contribution This study can help CEOs (marketing director marketing partner/ top executive director) particularly, in food product business to understand how their firms can achieve market performance over their competitors. Growing competitiveness among companies is becoming increasingly difficult for companies to survive. Therefore, marketing adaptation strategy becomes an important issue for managers in rapidly changing environment. In the context of manufacturer sector, intense competition can make many firms attempt to look for strategy to develop variety products to attract the customer interesting. Thus, CEOs of organizations must be adapting themselves to the uncertain industry environment, understand the changing needs of customers and responding to new market entries. The CEO should effectively manage and utilize the components of marketing adaptation strategy in order to succeed. In the interest of adaptation strategy, marketing manager can implement the specific strategy of marketing program to customize customer needs to increase performance. Moreover, they should plan to expand other strategies to an advanced business operation in order to continuously maintain and accrue the level of business growth, competitive advantage, and competitiveness. To maximize the benefit of organizational strategy, CEOs should try other resources to support its effectiveness and create new opportunities in new market. The limitation of this study, of course, is that it deals with the data from single industry, e.g. food product industry in Thailand. Future research may focus on other industries to generalize the result of the study. In addition, the limit sample size may influence the power of statistical test. 6. CONCLUSION The study focuses on the effects of adaptation marketing strategy which influences product diversity, competitive flexibility, customer response, marketing excellence and market performance. The results reveal that marketing adaptation strategy is significantly positive related to product diversity, competitive flexibility and customer response. Afterwards, customer response is significantly positive associated with marketing excellence. Moreover, marketing excellence is significantly positive related to market performance. In addition, customer learning and competitive intensity are moderating effects of the relationship. Interestingly, competitive intensity is positively moderated between marketing excellence and market performance whereas demand turbulence has no significance on the model. Accordingly, these evidences will offer the direction and suggestion for Thai food product business to achieve adaptation of marketing strategy. REFERENCES: Aaker, A., David, V., Kumar and George S. Day. 2001. "Marketing Research," 7th edition, John Wiley and Sons, New York, NY. Alien L. and Pantzalis C. 1996. Valuation of the Operating Flexibility of Multinational Corporations. Journal of International Business Studies, 27 (4), 633-654. Albaum, Gerald. A. and Tse, David. K. 2001. Adaptation of International Marketing Strategy Components, Competitive Advantage and Firm Performance: A Study of Hong Kong Exporter. Journal of International Marketing, 9 (4): 59-81. Alberto-Castaeda, J. and Francisco, J. 2007. Montoro: The Effect of Internet General Privacy Concern on Customer Behavior. Electronic Commerce Research, 7(2): 117-141 Alizon, F., Shooter, S.B. and Simpson, T.W. 2007. Improving an Existing Product Family Based on Commonality and Diversity, Modularity and Cost. Design Studies, 28(4): 387-409 Armstrong, R. B., Ianuzzo, C.D. and Kunz, T.H. 1977. Photochemical and Biochemical Properties of Flight Muscle Fibers in the Little Brown Bat, Myotis lucifugus. J. Comp. Physiol. B., 119: 141154. Ashok, A and Kunal, B. 2003. Strategic Flexibility and Firm Performance: The Case of US Based Transnational Corporations. Global Journal of Flexible Systems Management, 4 (1 & 2):1-8 Augusto, M. and Coelho, F. 2007. Market Orientation and New-to-the-World Products: Exploring the Moderating Effects of Innovativeness, Competitive Strength, and Environment Forces. Industrial Marketing Management, 38: 94-108. Aulakh, M.S., Bodenbender, J., Wassmann, R. and Rennenberg, H. 2000. Methane Transport Capacity of Rice Plants. II. Variations Among Different Rice Cultivars and Relationship with Morphological Characteristics. Nutrient Cycling in Agro ecosystems, 58: 367-375.

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