nep-mkt New Economics Papers
on Marketing
Issue of 2006‒09‒16
five papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Going where the Ad leads you: On High Advertised Prices and Search where to buy By Maarten C.W. Janssen; Marielle C. Non
  2. Selling to consumers with endogenous types By Boone,Jan; Shapiro,Joel
  3. Tell me which perfume you wear, I'll tell you how old you are: Modeling the Impact of Consumer age on Product choice By LAURENT, Gilles; LAMBERT-PANDRAUD, Raphaëlle
  4. Dynamic and Competitive Effects of Direct Mailings By Diepen, M. van; Donkers, B.; Franses, Ph.H.B.F.
  5. Demand for Internet Access and Use in Spain By Leonel Cerno; Teodosio Pérez Amaral

  1. By: Maarten C.W. Janssen (Faculty of Economics, Erasmus Universiteit Rotterdam); Marielle C. Non (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: The search literature assumes that consumers know which firms sell products they are looking for, but are unaware of the particular variety and the prices at which each firm sells. In this paper, we consider the situation where consumers are uncertain whether a firm carries the product at all by proposing a model where in the first stage firms decide on whether or not to carry the product. Firms may advertise, informing consumers not only of the price they charge, but also of the basic fact that they sell the product. In this way, advertising lowers the expected search cost. We show that this role of advertising can lead to a situation where advertised prices are higher than non—advertised prices in equilibrium.
    Keywords: consumer search; informative advertising
    JEL: D83 L11 L13 M37
    Date: 2006–08–25
  2. By: Boone,Jan; Shapiro,Joel (Tilburg University, Center for Economic Research)
    Abstract: For many goods (such as experience goods or addictive goods), consumers' preferences may change over time. In this paper, we examine a monopolist's optimal pricing schedule when current consumption can affect a consumer's valuation in the future and valuations are unobservable. We assume that consumers are anonymous, i.e. the monopolist can't observe a consumer's past consumption history. For myopic consumers, the optimal consumption schedule is distorted upwards, involving substantial discounts for low valuation types. This pushes low types into higher valuations, from which rents can be extracted. For forward looking consumers, there may be a further upward distortion of consumption due to a reversal of the adverse selection effect; low valuation consumers now have a strong interest in consumption in order to increase their valuations. Firms will find it profitable to educate consumers and encourage forward looking behavior
    Keywords: endogenous types;experience goods;addictive goods;price discrimation
    JEL: D42 D82 L12
    Date: 2006
  3. By: LAURENT, Gilles; LAMBERT-PANDRAUD, Raphaëlle
    Abstract: Perfumes introduced decades ago continue to compete against recently introduced perfumes. In this high involvement category, using a large survey and a conditional logit model, the authors show that the probability of choosing a long-established perfume, rather than a recently introduced one, increases enormously with consumer age. Furthermore, by comparing three possible underlying mechanisms, they demonstrate that an attachment model based on a consumer’s exposure to a perfume (preferences depend linearly on the length of time the consumer has known the perfume and can be developed at any age) fits better than an innovativeness model (younger people prefer recently introduced perfumes) or a nostalgia model (preferences are developed only during an early “sensitive period” of life). The authors draw managerial and research implications from their findings.
    Keywords: Consumer choice; elderly; older consumer; age; perfume; nostalgia; innovativeness; attachment; conditional logit
    JEL: D11
    Date: 2006–07–01
  4. By: Diepen, M. van; Donkers, B.; Franses, Ph.H.B.F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We propose a dynamic direct mailing response model with competitive effects, where purchase and promotion history are incorporated. We then map the dynamic competitive interactions amongst the firms sending the mailings. We investigate the short- and long-run impact of a direct mailing on the revenues of the firm sending the mailing and on the revenues of its competitors. The model accounts for unobserved heterogeneity across households. We estimate the model in the charitable giving setting, as sending direct mailings represents a large part of charitable fundraising activity. Households often receive direct mailings of different charities within a short period of time and competition is highly relevant. We construct a unique database by merging the databases of three large charity organizations in the Netherlands. This results in household level data on the direct mailings received and the donations made by each household to each charity. Our results show that charitable direct mailings are short-run complements, that is, the direct mailings tend to increase the total pie that is divided among the charities. At the same time, the charitable direct mailings are long-run substitutes. In the long run they fight for a piece of the pie that households have available for charitable giving.
    Keywords: Dynamics;Competition;Direct Mailings;
    Date: 2006–09–07
  5. By: Leonel Cerno (Universidad Europea de Madrid); Teodosio Pérez Amaral (Universidad Complutense de Madrid. Facultad de CC. Económicas y Empresariales. Dpto. de Economía Cuantitativa)
    Abstract: The goal of this paper is to analyze a new phenomenon: Internet demand in Spain. To do so, we use a new high quality data set and advanced econometric techniques for estimating Internet demand functions, incorporating the socio-demographic characteristics of the individuals. We begin with a graphic analysis of the data,searching for relationships between the different characteristics. Then we specify and estimate two econometric models, one for broadband access at home and another for Internet use intensity. We also find that 25.2% of the Spanish population accesses the Internet at home, but less than half uses broadband connection. This demand is positively related to income and other technological attributes and negatively related to socio-demographic attributes such as habitat and age. Our results are compatible with previous literature for other countries, although there is a important difference: broadband Internet connections are still considered as a luxury good in Spain.
    Date: 2005

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