nep-mkt New Economics Papers
on Marketing
Issue of 2006‒01‒01
twenty-one papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. The culture of market oriented organisations By Kasper,Hans
  2. La Market Basket Analysis nell’e-commerce By Marilena TUCCI
  3. Shelf Sequence and Proximity Effects on Online Grocery Choices By Breugelmans,Els; Campo,Katia; Gijsbrechts,Els
  4. Fast-Food Restaurant Advertising on Television and Its Influence on Childhood Obesity By Shin-Yi Chou; Inas Rashad; Michael Grossman
  5. B2c e-commerce adoption in inner cities: An evolutionary perspective By Ron A. Boschma; Jesse W.J. Weltevreden
  6. Market Information and Price Instability : An Insight into Vegetable Markets in Senegal By Hélène David-Benz; Idrissa Wade; Johny Egg
  7. Buying Organic Food in France : Shopping Habits and Trust By Lucie Sirieix; Brigitte Schaer
  8. Competition and price discrimination in the market for mailing lists By Ron Borzekowski; Raphael Thomadsen; Charles Taragin
  9. ?Surprise Gift? Purchases of Small Electric Appliances: A Pilot Study By Vanhamme, J.; Bont, C.J.P.M. de
  10. How Management Consulting Firms Influence Building and Leveraging of Clients? Competences: Towards a conceptual framework By Baaij, M.G.; Bosch, F.A.J. van den; Volberda, H.W.
  11. Price discrimination via the choice of distribution channels By Uwe Dulleck; Rudolf Kerschbamer
  12. What%u2019s Psychology Worth? A Field Experiment in the Consumer Credit Market By Marianne Bertrand; Dean Karlin; Sendhil Mullainathan; Eldar Shafir; Jonathan Zinman
  13. Missing data in optimal scaling By Pieralda FERRARI; Paola ANNONI
  14. Technology Timing and Pricing In the Presence of an Installed Base By QIU-HONG WANG; KAI-LUNG HUI
  15. Technology innovation and market turbulence: a dotcom example By Zhu Wang
  16. The evolution of the spatial digital divide: From internet adoption to internet use by french industrial firms By Danielle GALLIANO (LEREPS-GRES & INRA-ETIC ); Pascale ROUX (ADIS, Université Paris Sud )
  17. Network competition and merchant discount fees By Fumiko Hayashi
  18. Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel By Annabelle Gawer; Rebecca Henderson
  19. Internationalization and Performance: The Moderating Role of Strategic Fit By Fortanier, F.; Muller, A.R.; Tulder, R.J.M. van
  20. Impact of BSE and Bird Flu on Consumersf Meat Demand in Japan By Takashi Ishida; Noriko Ishikawa; Mototsugu Fukushige
  21. The return to retail and the performance of U.S. banks By Beverly J. Hirtle; Kevin J. Stiroh

  1. By: Kasper,Hans (METEOR)
    Abstract: This paper investigates the relationship between corporate culture and market orientation using a different methodology to those usually found done in empirical studies on this topic. Conventionally, one or two key informants provide information on the firm’s marketing practices in large scale quantitative cross-sectional studies; these few respondents provide their opinion on the firm’s actual marketing practices which are then considered as a reliable representation of both the (whole) firm’s culture and its market orientation. We have taken a different approach. Firstly, we chose to do multiple case studies in stead of cross sectional research. These case studies were small scale and qualitative; next a large(r) scale quantitative study was done within those organisations. Secondly, all employees in an organisation were invited to participate in the study: only then is it possible to measure culture as the shared beliefs in the company. Corporate culture itself as well as the marketing practices have been investigated as two separate constructs in our case studies. Both are measured via employee perceptions. Thirdly, we are looking at the possible configuration of market orientation and corporate culture. Almost all of the propositions generated are supported. The degree of openness appeared to be crucial to an organisation’s market orientation. Moreover, such a culture is also resultsoriented, employee-oriented and professional. It also has a balanced position on the two other dimensions: pragmatic/normative and loose/tight control. From the marketing perspective, the essential building blocks of a market oriented culture include: the internal cooperation, internal communication, drive to be the best, lack of pursuing self interest, learning from mistakes and from experiences in the market place, clarity about customer needs and better relative quality than competitors’. Because market orientation and corporate culture were measured as two distinct constructs, this study offers new insights in both domains as to what organisations should change to be(come) market oriented.
    Keywords: Strategy;
    Date: 2005
  2. By: Marilena TUCCI
    Abstract: In the first part of this paper we present an overview of e-comme rce and Internet characteristics. We explain why data mining play s a central role among the digital marketing technique: it is the tool to achieve customer knowledge, the key of success in the wi de but highly competitive world of Internet. In the second part we first introduce the Market Basket Analysis, a data mining tec hnique used to analyze customer purchasing patterns and reveal pr oducts that are often bought together. Then we present an example of application of this technique by looking for associations in a test dataset of purchases of an on-line supermarket. The busin ess objective is to implement the best strategy in promoting prod ucts in the on-line store. We conclude suggesting a dynamic categ ory management strategy.
    Keywords: Market Basket Analysis, Association rules, Apriori, digital marketing
  3. By: Breugelmans,Els; Campo,Katia; Gijsbrechts,Els (METEOR)
    Abstract: Research on traditional store shelf effects has shown that a product’s absolute and relative shelf position may strongly affect consumer choices. In this paper, we examine whether such shelf effects are still at play in an online grocery store. While traditional ‘eye-level’ placement is no longer predominant, we find that a product’s choice probability increases when presented on the first screen or located near focal (highly-preferred) items. Our results further demonstrate that these primacy and proximity effects depend on assortment size and composition. Larger and more difficult to process assortments complicate the choice process, thereby stimulating the use of shelf-based simplifying choice heuristics.
    Keywords: marketing ;
    Date: 2005
  4. By: Shin-Yi Chou; Inas Rashad; Michael Grossman
    Abstract: Childhood obesity around the world, and particularly in the United States, is an escalating problem that is especially detrimental as its effects carry on into adulthood. In this paper we employ the 1979 Child-Young Adult National Longitudinal Survey of Youth and the 1997 National Longitudinal Survey of Youth to estimate the effects of fast-food restaurant advertising on children and adolescents being overweight. The advertising measure used is the number of hours of spot television fast-food restaurant advertising messages seen per week. Our results indicate that a ban on these advertisements would reduce the number of overweight children ages 3-11 in a fixed population by 10 percent and would reduce the number of overweight adolescents ages 12-18 by 12 percent. The elimination of the tax deductibility of this type of advertising would produce smaller declines of between 3 and 5 percent in these outcomes but would impose lower costs on children and adults who consume fast food in moderation because positive information about restaurants that supply this type of food would not be banned completely from television.
    JEL: I10 I12
    Date: 2005–12
  5. By: Ron A. Boschma; Jesse W.J. Weltevreden
    Abstract: Internet makes it possible for consumers to shop without visiting a physical store. As online shopping is becoming more popular, this could have significant impact on in-store shopping. The extent to which consumers, producers and retailers make use of the Internet as a complementary channel or as a substitute for in-store shopping is fundamental for the way traditional retailing will be affected. It is only recently that geographers are becoming interested in the spatial consequences of this new form of commerce. From a traditional geographical perspective, one could expect that business-to-consumer (b2c) e-commerce could make physical shopping redundant, leading to a ‘death of distance’. There are, however, several factors that may limit this new form of commerce, such as logistical constraints (e.g., personal delivery of goods may be quite expensive), habits of people, and the need for social contact. The main goal of the paper is to draw some expectations concerning the relationship between b2c e-commerce and inner city retailing. Using new insights based on evolutionary economics, hypotheses will be developed concerning the impact of b2c e-commerce on consumers’ shopping behaviour, retailers’ store strategy, and the inner city retailing environment as a whole. We claim that habits may act as a constraint to change consumers’ shopping behaviour. In addition, routines can explain why retailers may be rather reluctant in exploiting this new channel of commerce, and why they are most likely to adopt rather conservative e-commerce strategies. We also explain how and why inner cities, as important retailing and consumption places, may affect the way actors deal with this new form of commerce. One may expect that especially in these localities, both stimulating and limiting factors of b2c e-commerce adoption are predominant, depending on the quality or the attractiveness of the inner cities, among other things.
    Keywords: evolutionary economics, e-commerce, urban economics
    Date: 2005–02
  6. By: Hélène David-Benz (CIRAD ; CA ; Montpellier, France); Idrissa Wade (INRA ; UMR MOISA ; Montpellier, France); Johny Egg (INRA ; UMR MOISA ; Montpellier, France)
    Abstract: Market gardening has been increasing fast in Senegal. But farmers face high marketing risks: daily price fluctuations exceed an average 20% for some products, seasonality is strong, anticipation based on prices leads to cyclic movements. Farmers and market operators have found various forms of coordination to manage uncertainty. “Coxers” are specifically dedicated to information gathering, either in rural or wholesale urban markets or to transport negotiation. Paid per unit handled, they limit their own risk, whereas they reduce uncertainty for their partners. In other cases, interlinked transactions permit to provide inputs to producers despite the deficient credit market; meanwhile, it secures merchants access to product. As it is the case in many other countries, information provided by MIS is of little help to Senegalese market gardeners. The updated and more targeted access to information through MANOBI services allows producers to improve their negotiation capacity. But it does not modify the existing coordination features, given that they are not only determined by needs in information (but also by social links, access to credit, payment modalities, transport facilities…).
    Keywords: Horticulture, Price analysis, Market instability, Information, Transaction costs
    JEL: D23 D82 O17 Q13
    Date: 2005–12–19
  7. By: Lucie Sirieix (Agro.M ; UMR MOISA ; Montpellier, France); Brigitte Schaer (Ecozept ; Montpellier, France)
    Abstract: In this paper we attempt to compare the responses of consumers and professionals to questions related to organic food retailing, in order to highlight the differences and the similarities of viewpoints between them and to understand the links between consumer perception of organic food and the sales channel. In order to do this, we analyse the results of three studies, two of them conducted with consumers, the third one with professionals. The first study deals with the links between consumer trust orientations and the frequentation of the different sales channels where organic food can be found. The results of this study conducted in France and Germany show that consumers in organic food stores put trust in their store but are neither the heaviest nor the most trusting consumers. Consumers in hypermarkets or supermarkets do not really trust the store, and only really trust the label. In the second study, respondents were asked what their preferred outlet for organic products would be and why. Results show that organic food consumers like being something more than an anonymous consumer when shopping. They seem to appreciate markets particularly, and appear to attach no particular value to organic food stores, nor to the acknowledged greater convenience of shopping in supermarkets. This study also raises interesting questions relating to the experience of purchasing in terms of shop image and atmosphere, and factors that contribute to consumer trust in organic foods. The third study is based upon two surveys (autumn 2003 and autumn 2004) among organic food stores in France, on market development and on actors’ perception of their situation and their customers. According to shopkeepers, customers of organic food stores are looking more for quality and competence, than for attractive prices, and attach more and more value to traceability and trustworthiness. This paper both shows important similarities and differences of viewpoints between consumers and organic food stores shopkeepers, and gives researchers and professionals a better insight into the links between consumer perception of organic food and the sales channel.
    Keywords: Organic food, consumer behaviour, sales channel, trust
    JEL: P Q Z
    Date: 2005–12–19
  8. By: Ron Borzekowski; Raphael Thomadsen; Charles Taragin
    Abstract: This paper examines the relationship between competition and price discrimination in the market for mailing lists. More specifically, we examine whether sellers are more likely to segregate consumers by offering a menu of quality choices (second-degree price discrimination) and/or offering different prices to readily identifiable groups of consumers (third-degree price discrimination) in more competitive markets. We also examine how the fineness with which consumers are divided corresponds to the level of competition in the market. ; The dataset includes information about all consumer response lists derived from mail order buyers (i.e. lists derived from catalogs) available for rental in 1997 and 2002. Using industry classifications, we create measures of competition for each list. We then use these measures to predict whether given lists utilize discriminatory pricing strategies. ; Our results indicate that lists facing more competition are more likely to implement second-degree and third-degree price discrimination, and when implementing second-degree price discrimination, to offer menus with more choices.
    Date: 2005
  9. By: Vanhamme, J.; Bont, C.J.P.M. de (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Understanding decision-making processes for gifts is of strategic importance for companies selling small electrical appliances as gifts account for a large part of their sales. Among all gifts, the ones that are surprising are the most valued by recipients. However, research about decision-making processes involved in surprise gift purchases is lacking. This article shows, for example, that design and money back guarantees are more important for the purchase of surprise gifts than other gifts. The brand name, however, appears to be less important. Also, surprise gifts are more often bought on the spot, without extended information search (similar to impulse purchases).
    Keywords: Surprise;Small Electrical Appliances;Decision-Making Process;Panel Data;Logistic Regression;Gift Purchase;
    Date: 2005–12–19
  10. By: Baaij, M.G.; Bosch, F.A.J. van den; Volberda, H.W. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The focus in research upon resources, dynamic capabilities and competences has challenged firms to apply these concepts to improve their competitive position. Management consulting firms may assist clients in these efforts. However, the roles that management consulting firms fulfill in these processes can differ considerably and are under-researched. Therefore, insight in these different roles and the impact of these roles on clients? competitive positioning in their industries is required. The purpose of this paper is to develop a conceptual framework that highlights the importance of distinguishing both roles and the implications for management consulting firms and for their clients. We illustrate the framework by elaborating on the relationship between both roles and the strategic renewal context of client firms. We conclude by pointing out the increasing importance of the competence leverage role of management consulting firms and how this development might contribute to a more hypercompetitive context for their clients.
    Keywords: Competence Building and Leveraging;Management Consulting;Strategic Renewal;Exploitation & Exploration;Knowledge Broker;
    Date: 2005–12–19
  11. By: Uwe Dulleck (Department of Economics, Johannes Kepler University Linz, Austria); Rudolf Kerschbamer (Department of Economics, University of Innsbruck, Austria)
    Abstract: This article studies the use of different distribution channels as an instrument of price discrimination in credence goods markets. In credence goods markets, where consumers do not know which quality of the good or service they need, price discrimination proceeds along the dimension of quality of advice offered. High quality advice and appropriate treatment is provided to the most profitable market segment only. Less profitable consumers are induced to demand a treatment without a serious diagnosis. If consumers differ in the probabilities of needing different treatments some consumers are potentially overtreated. By contrast, under heterogeneity in the valuations of a successful intervention some consumers are potentially undertreated. Our results help to explain the casual observation that in the early phase of the IT industry only low quality equipment was distributed via warehouse sellers while today it is quite common to see high quality equipment at discounters.
    Keywords: Price Discrimination; Distribution Channels; Credence Goods; Experts; Discounters
    JEL: L15 D82 D40
    Date: 2005–07
  12. By: Marianne Bertrand; Dean Karlin; Sendhil Mullainathan; Eldar Shafir; Jonathan Zinman
    Abstract: Numerous laboratory studies find that minor nuances of presentation and description change behavior in ways that are inconsistent with standard economic models. How much do these context effect matter in natural settings, when consumers make large, real decisions and have the opportunity to learn from experience? We report on a field experiment designed to address this question. A South African lender sent letters offering incumbent clients large, short-term loans at randomly chosen interest rates. The letters also contained independently randomized psychological "features" that were motivated by specific types of frames and cues shown to be powerful in the lab, but which, from a normative perspective, ought to have no impact. Consistent with standard economics, the interest rate significantly affected loan take-up. Inconsistent with standard economics, some of the psychological features also significantly affected take-up. The average effect of a psychological manipulation was equivalent to a one half percentage point change in the monthly interest rate. Interestingly, the psychological features appear to have greater impact in the context of less advantageous offers and persist across different income and education levels. In short, even in a market setting with large stakes and experienced customers, subtle psychological features appear to be powerful drivers of behavior. The findings pose a challenge for the social sciences: they suggest that psychological nuance matters but may be inherently difficult to predict given the impact of context. Successful incorporation of psychological features into field studies is likely to prove a vital, but nontrivial, addition to the formation of more general theories on when, why, and how frames and cues influence important decisions.
    JEL: C93 D12 D14 D21 D81
    Date: 2005–12
  13. By: Pieralda FERRARI; Paola ANNONI
    Abstract: We propose a procedure to assess a measure for a latent phenomeno n, starting from the observation of a wide set of ordinal variabl es affected by structured missing data. The proposal is based on Nonlinear PCA technique to be jointly used with an ad hoc imputat ion method for the treatment of missing data. The procedure is pa rticularly suitable when dealing with ordinal, or mixed, variable s, which are strongly interrelated and in the presence of specifi c patterns of missing observations
    Keywords: Nonlinear PCA, monotone missing data, ordinal variables, missing data passive
  14. By: QIU-HONG WANG (National University of Singapore); KAI-LUNG HUI (National University of Singapore)
    Abstract: This study relaxes the conventional assumption in the literature of new product introduction that all consumers possess nothing at the beginning of the game. We generalize consumers’ utility function to a market in the presence of an installed base and characterize its specific properties pertaining to various market contexts with different consumer heterogeneity and technology improvement. In such a general setting, we investigate various feasible combinations of timing, pricing and product line strategies that the seller can employ in a two-period game for selling the new product to consumers with different purchase history and heterogeneous preference on product quality. Our subgame-perfect- equilibrium results suggest that other than the upgrade policy, the seller can maximize her profits via intertemporal price discrimination, or delayed introduction, or pooling pricing, depending on the characteristics of market structure and technology improvement. Without the concern about cost, social welfare directly depends on whether the seller can sustain her monopoly power facing the mutual cannibalization between the old and new products and the mutual arbitrage between the heterogeneous consumers.
    Keywords: New product introduction, intertemporal price discrimination, delayed product introduction, installed base, upgrade policy
    JEL: L
    Date: 2005–12–19
  15. By: Zhu Wang
    Abstract: This paper explains market turbulence, such as the recent dotcom boom/bust cycle, as equilibrium industry dynamics triggered by technology innovation. When a major technology innovation arrives, a wave of new firms enter the market implementing the innovation for profits. However, if the innovation complements existing technology, some new entrants will later be forced out as more and more incumbent firms succeed in adopting the innovation. It is shown that the diffusion of Internet technology among traditional brick-and-mortar firms is indeed the driving force behind the rise and fall of dotcoms as well as the sustained growth of e-commerce. Empirical evidence from retail and banking industries supports the theoretical findings.
    Date: 2005
  16. By: Danielle GALLIANO (LEREPS-GRES & INRA-ETIC ); Pascale ROUX (ADIS, Université Paris Sud )
    Abstract: In this paper, we concentrate on different aspects of the « spatial digital divide » and seek to answer three questions : Are there still spatial inequalities in the adoption of these technologies ? Is there a so-called “second level” geographical divide characterized by important differences in the intensity of Internet use between firms that have adopted these tools? Do the appropriation processes and logic of diffusion of ICT adopters vary according to the type of area in which they are located (urban vs. rural areas)? To answer these questions we have constructed an original model of technological diffusion (of the type developed by Battisti and Stoneman, 2005) that merges two types of models: those that concentrate on epidemic effects, and the so-called equilibrium models that model the decision to adopt new technologies as the result of an economic calculation by firms, which depends on their internal characteristics and those of their competitive, industrial and local environment. This model uses data drawn from a recent national survey (“ICT and e-commerce” 2002). One of the main results is that, for a given size and sector, although there no longer are spatial inequalities in terms of ICT adoption in France, there are still important inequalities in firms’ processes of ICT appropriation and use.
    Keywords: Internet, inter-firm and intra-firm diffusion, rank and epidemic effects, agglomeration effects, spatial inequalities
    JEL: L2 O3 O18
    Date: 2005
  17. By: Fumiko Hayashi
    Abstract: Pricing in two-sided markets has not been fully understood yet. Especially, investigations of how competition in these markets affects the price structure or levels are still underway. This paper takes the payment card industry as an example of two-sided markets and examines whether two networks’ competition lowers one of the prices in the industry, merchant discount fees, and if it does, how much it lowers equilibrium merchant fees compared with the fee set by a monopoly network. If some cardholders hold only one card and the other cardholders hold two different cards, whether network competition lowers the fees and by how much the fees will be lowered depends on various factors, such as the share of multihoming cardholders in the total cardholder base, the merchants’ transactional benefit, each network’s net transactional benefit to its card users, the difference in the two networks’ cardholder bases, and the share of cardholders in the total customer base. Numerical examples with various parameter values suggest that typically, if the share of multihoming cardholders is 20 percent or less, networks can act as if they are monopolies; and if the share is around 50 percent, the average equilibrium merchant fee is reduced from the monopolistic merchant fee by 25 percent.
    Date: 2005
  18. By: Annabelle Gawer; Rebecca Henderson
    Abstract: This paper draws on a detailed history of Intel's strategy with respect to the complementary markets for microprocessors to explore the usefulness of the current theoretical literature for explaining behavior. We find that as the literature predicts, Intel invests heavily in these markets, both through direct entry and through subsidy. We also find, again consistent with the literature, that the firm's entry decisions are shaped by the belief that it does not have either the capabilities or the resources to enter all possible markets, and thus that it believes it is critical to encourage widespread entry. As several authors have pointed out, this imperative places the firm in a difficult strategic position, since it needs to attempt to commit to potential entrants that it will not engage in an ex-post "squeeze", despite the fact that ex post it has very strong incentives to do so. We find that the fact that the complementary markets in which Intel competes are complex, dynamic and multilayered considerably sharpens this dilemma. We explore the ways in which Intel attempts to solve it, highlighting in particular the organizational structure and processes through which they attempt to commit to making money in the markets which they choose to enter while also committing not to making too much. Our results have implications for both our understanding of the dynamics of competition in complements and of the role of organizational structures and processes in shaping competition.
    JEL: L0
    Date: 2005–12
  19. By: Fortanier, F.; Muller, A.R.; Tulder, R.J.M. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper explores the hitherto underemphasized role of strategic fit between organizational structure and integration-responsiveness pressures as moderator in the internationalization-performance relationship. We suggest a new way of measuring organizational structure (and consequently strategic fit) based on archival data rather than questionnaires, and include these in our regression analysis on a sample of 332 Fortune companies.
    Keywords: Strategic Fit;Performance;Internationalization;Internationalization-Performance Relationship;
    Date: 2005–12–19
  20. By: Takashi Ishida (Graduate School of Economics and Business Administration, Hokkaido University); Noriko Ishikawa (Graduate School of Science and Technology, Kobe University); Mototsugu Fukushige (Graduate School of Economics, Osaka University)
    Abstract: This paper investigates the impacts of the BSE and Bird Flu on consumersf meat demand in Japan using the Almost Ideal demand system. BSE and Bird Flu scares bring about a fall in demand for beef and chicken respectively, and an upturn in demand for pork and fishery products, both of which are substitutes for beef and chicken in Japan. We also find that a Bird Flu outbreak has a negative impact on the market share for beef, although a BSE outbreak raises consumer demand for chicken. Empirical results also show that both impacts do not persist permanently, but remain for a period that might depend on the characteristics of the disease, such as incubation period, cure rate and infection risk, and on the differences in the government response to the particular disease crises.
    Keywords: BSE, Bird Flu, Almost Ideal demand system, Meat Demand
    JEL: D12 Q13 L66
    Date: 2006–01
  21. By: Beverly J. Hirtle; Kevin J. Stiroh
    Abstract: The U.S. banking industry is experiencing a renewed focus on retail banking, a trend often attributed to the stability and profitability of retail activities. This paper examines the impact of banks' retail intensity on performance from 1997 to 2004 by developing three complementary definitions of retail intensity (retail loan share, retail deposit share, and branches per dollar of assets) and comparing these measures with both equity market and accounting measures of performance. We find that an increased focus on retail banking across U.S. banks is linked to significantly lower equity market and accounting returns for all banks but lower volatility for only the largest banking companies. We conclude that retail banking may be a relatively stable activity, but it is also a low-return one.
    Keywords: Banks and banking ; Retail trade ; Bank profits
    Date: 2005

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