nep-mkt New Economics Papers
on Marketing
Issue of 2005‒07‒11
three papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Beyond promotion-based store switching: antecedents and consequences of systematic multiple-store shopping By Gijsbrechts,Els; Campo,Katia; Nisol,Patricia
  2. Advertising, intangible assets, and unpriced entertainment By Leonard I. Nakamura
  3. Competitor-oriented Objectives: The Myth of Market Share By Kesten C. Green; J. Scott Armstrong

  1. By: Gijsbrechts,Els; Campo,Katia; Nisol,Patricia (Tilburg University, Center for Economic Research)
    Abstract: In this paper, we demonstrate that single-purpose multiple store shopping is not only driven by opportunistic, promotion-based motivations, but may also be part of a longer term shopping planning process based on stable store characteristics. Starting from a utility-maximizing shopping behavior model, we find that consumers systematically visit multiple stores to take advantage of two types of store complementarity. With 'fixed cost complementarity', consumers alternate visits to highly preferred but high fixed cost-stores, with in-between trips to less appealing, low fixed cost- stores. This compromise strategy allows them to balance transaction and holding costs against acquisition costs. 'Category preference complementarity' occurs when different stores offer the 'best value' for different product categories. It is found to be an important driver of multiple store shopping, and a necessary condition for combined (chained) shopping trips. Tying these multiple store shopping motivations to characteristics of different grocery store formats leads to interesting new insights into the nature of retail competition and the strategic role of more quality-oriented retail marketing mix instruments.
    JEL: M31
    Date: 2005
  2. By: Leonard I. Nakamura
    Abstract: This paper addresses two aspects of advertising: its role in supporting entertainment and news, and its role as an investment. The author argues that in both roles advertising’s contribution to output is being undermeasured in the national income accounts. In some cases one unit of nominal advertising input should be counted as two units of real output. In rough orders of magnitude, he argues that it is plausible that two-thirds of advertising expenditure represents unmeasured contributions to output, and the level of real GDP should be increased accordingly.
    Keywords: Advertising ; Intangible property
    Date: 2005
  3. By: Kesten C. Green; J. Scott Armstrong
    Abstract: Competitor-oriented objectives, such as market-share targets, are promoted by academics and are common in business. A 1996 review of the evidence indicated that this violation of economic theory led to reduced profitability. We summarize the evidence as of 1996 then describe evidence from 12 new studies. All of the evidence supports the conclusion that competitor-oriented objectives are harmful. However, this evidence has had only a modest impact on academic research and it seems to be largely ignored by managers. Until this situation changes, we expect that many firms will continue to use competitor-oriented objectives to the detriment of their profitability.
    Keywords: Competition, Market Share, Objectives, Profitability.
    JEL: L21 M21 M31
    Date: 2005–07

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