The genesis of this book dates to 1964 when I was a doctoral fellow at the Marketing Science Institute, then located in Philadelphia . At that time Wroe Alderson was a member of the marketing faculty at the Wharton School and MSI's offices were just across the street from the old Dietrich Hall. Alderson's contributions to marketing knowledge are summarized in this Brief History of the Wharton Marketing Department.
As a young doctoral student I was in awe of Professor Alderson. Physically he was a large man. Intellectually, he was bigger than life. I often overheard long conversations with his students in the cubical next door to mine on the second floor of MSI's offices. Those conversations motivated me to study his now classic book Marketing Behavior and Executive Action. In that book he developed the concept of "differential advantage." To me it was one of the most compelling concepts I had ever encountered. Before and after that experience there were many others that were influential in the development of this book. A brief review of these is available on my Listmania.
These accumulated experiences converged 1983 when I published a paper on "Marketing Strategy and Differential Advantage" in the Journal of Marketing. In this paper I operationalized Alderson's concept of differential advantage and defined the strategic marketing cost function. In their rebuttals, five marketing scholars attacked these ideas with unusual ferocity. The last time I read my response to these attacks published in the Journal of Marketing in my 1985 paper on "Understanding Marketing Strategy and Differential Advantage" was when I decided not to include it in the 1989 second edition of Readings in Marketing Strategy co-authored with Jean-Claude Larreche and Edward C. Strong. I excluded my response because it summarized a controversy I thought was settled. However, I should have cited it because this paper answers questions that you might ask about one of the key constructs in my book: the enterprise marketing cost function. If you're interested in reading a paper that was another foundation of my book, here is a link to "The Net Present Value of Market Share" also published in 1985 in the Journal of Marketing.
Since these papers appeared I've spent a lot of time and effort applying the principles to the financial accounting data. I was motivated to do this by two things. First, if I tested my theories with audited financial accounting data they could not be dismissed so easily by those who simply didn't like them. Second, I believed the future of marketing strategy and corporate finance rested on their convergence.
My book is the culmination of these efforts. The data are available online to academics and students at over 150 universities world-wide through the Wharton Research Data Services (WRDS). Alternatively, professionals can access the same data through Standard & Poor's Research Insight or use the EDGARonline Professional I-Metrix suite if their company subscribes to either of these interactive online services. All my applications (from Amazon to Toyota, from eBay to Whole Foods Markets) are based on the audited financial statements of public companies reported to the U.S. Securities and Exchange Commission. This means they all may be replicated.
A PAGE TURNER?
What's a one-line description of the book? It would be something like "microeconomics applied to the financial accounting data of public companies to measure the quality of earnings and the riskiness of enterprise marketing opportunities." One of my students at Tulane last semester called it a real page turner … compared with his other textbooks!