nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒05‒07
three papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Price Promotions: Enablers or Obstacles for Brand-Led Innovation Adoption – A Double-Hurdle Approach By Kuntner, Tobias; Teichert, Thorsten
  2. What is a Patent Worth? Evidence from the U.S. Patent “Lottery” By Joan Farre-Mensa; Deepak Hegde; Alexander Ljungqvist
  3. Price promotions and brand equity: the role of brand types By Kuntner, Tobias

  1. By: Kuntner, Tobias; Teichert, Thorsten
    Abstract: Innovative new products and a strong brand are essential assets to sustain and expand a company’s competitive position in the marketplace. Separate research in the innovation and marketing field has found that marketing instruments, such as price promotions, can influence both new product diffusion and brand image. However, a holistic, brand-oriented investigation of marketing drivers’ effects on new product diffusion is missing. This study aims to address this gap by investigating the effect of price promotions on new product diffusion from a brand manager’s perspective. The analytic basis is a large-scale panel data set that covers four established fast-moving consumer goods categories and the innovation activities of 177 brands across four years. A double-hurdle model is applied to separately explore the effects of price promotions on consumers’ decisions to try and to repurchase (i.e., adopt) a new product. The results show that prices promotions’ impact depends on the stage of the diffusion process: while frequent price discounts foster new product trial, they hinder the persistent adoption of new product launches. In addition, the findings reveal that a strong brand name fulfills a supporting (risk-reducing) function at the trial stage but becomes less important for persistent adoption. This study contributes to extant literature by enhancing understanding of the linkages between innovation and brand management. Furthermore, it advances methodology by applying a double-hurdle model that accounts for the two-step process of consumers’ adoption decisions. Finally, it extends current knowledge on price promotion and innovation adoption by revealing opposite effects in the two innovation stages. The findings imply that managers need to handle price promotions carefully: although discounts encourage initial product trial, they should be used sparingly in later diffusion stages.
    Keywords: new product introduction,brand management,price promotion,double-hurdle model
    Date: 2017
  2. By: Joan Farre-Mensa; Deepak Hegde; Alexander Ljungqvist
    Abstract: We provide evidence on the value of patents to startups by leveraging the random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first-time applications filed at the U.S. Patent Office since 2001, we find that startups that win the patent “lottery” by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow-on innovation. Winning a first patent boosts a startup’s subsequent growth and innovation by facilitating access to funding from VCs, banks, and public investors.
    JEL: D23 G24 L26 O34
    Date: 2017–03
  3. By: Kuntner, Tobias
    Abstract: Purpose – This study investigates whether the influence of selected marketing-mix elements on brand equity differs for different types of brands. The main focus is on price promotions’ influence. In addition, the impact of discount-store distribution is explored. Design/methodology/approach – This study applies fixed-effects regression to analyze German panel data, which includes 126 national brands in four product categories across five years. Findings – The results reveal that frequent price promotions and intensive discount-store distribution have a negative influence on brand equity. However, this effect differs across brand types: the higher a brand’s initial equity level, the more harmful is the impact of these marketing activities on brand equity. Research implications – This study shows that brand types play an important role in moderating the influence of marketing activities on brand equity. Thus, further research endeavors may generate new insights by accounting for these brand-related differences in their investigations. Practical implications – Managers of high-equity brands should avoid frequent price promotions and intensive discount-store distribution. In contrast, managers of low-equity brands may use these instruments more widely because their detrimental effects are less severe. Originality/value – Current research mainly focuses on improving the conceptualization of brand equity or exploring different kinds of marketing-mix elements. Findings on potential effect moderators are scarce. Thus, this study substantiates and extends existing findings by emphasizing the importance of distinguishing different brand types when investigating the effect of marketing-mix elements on brand equity.
    Keywords: Price promotion,Brand equity,Brand type,Panel data
    Date: 2017

This nep-ipr issue is ©2017 by Giovanni Ramello. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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