Customers, Markets, and Five Archetypical Value Creation Logics: A Review of Demand-Side Research in Strategic Management

Abstract

Scholars have examined the role of customer preferences, and demand-side characteristics more generally, in varied core strategy areas like market entry and timing, diversification, positioning, resource reallocation, and firm adaptation, among many others. We review this diverse demand-side literature and develop an empirical classification that identifies five archetypical customer value-creation logics seen in the literature to date. To apply each of these logics, a firm must look downstream with the intent of matching, leveraging, adapting, learning, or shaping customer preferences or market characteristics to create value for customers. For each value-creation logic, we detail the logic itself, how the demand side is characterized, how specific strategic decisions allow for value creation following the logic, literature gaps in the logic, and opportunities for future research. Opportunities include extending the work on existing logics, examining the combined effects of multiple logics, identifying understudied demand-side characteristics, and studying strategy applications for which demand-side attributes have received comparatively little attention to date. These include business models, corporate social responsibility (CSR), corporate governance, and demand-side shocks. Finally, we address implications for managerial practice.