nep-mkt New Economics Papers
on Marketing
Issue of 2006‒09‒30
five papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Some Patterns of Market Shares of Brands Within and Across Product Categories By Rajeev Kohli; Raaj Sah
  2. Information Congestion By Simon P. Anderson; André de Palma
  4. A Four-Dimensional Product Innovativeness Typology By Rosenø, Axel
  5. Piracy Accommodation and the Optimal Timing of Royalty Payments By Alan E. Woodfield

  1. By: Rajeev Kohli (Columbia University); Raaj Sah (School of Economics and Social Sciences, Singapore Management University)
    Abstract: This paper: (i) reports an empirical regularity in the market shares of brands; (ii) presents a theoretical framework for understanding the observed regularity; (iii) adduces additional empirical consequences of the framework, which are some counterintuitive relationships among market shares of brands across different product categories; and (iv) presents empirical evidence for these consequences, thus providing additional support for the theoretical framework. Our cross-sectional data on market shares consists of 1171 brands in 91 product categories of foods and sporting goods sold in the US. If we assign a lower rank to a brand with a higher market share, then the key empirical regularity is that, in each category, the ratio of market shares between two successively-ranked brands becomes smaller as one progresses from higher-ranked to lower-ranked brands. The power law represents these patterns well, in an absolute sense, and better than an alternative model, namely, the exponential form, which has been studied in the literature but without having been compared to any alternative. The latter form predicts that the ratio of the market shares of any two successively ranked brands is a constant. We present some potential implications of our findings for marketing practice and research. We also offer an interpretation of the previously known square-root relationship between market share and the order of entry of firms into an industry. The theoretical framework that we present for understanding the patterns reported here shares its foundation with that of the familiar Dirichlet-multinomial paradigm of brand purchases. This framework has some intuitive interpretations; it accommodates multiple product categories; and it allows for the entry and exit of brands over time.
    Date: 2005–03
  2. By: Simon P. Anderson; André de Palma
    Abstract: Advertising messages compete for scarce attention. ?Junk? mail, ?spam? e-mail, and telemarketing calls need both parties to exert effort to generate transactions. Message recipients supply attention depending on average message beneÞt. Senders are motivated by proÞts. Costlier message transmission may improve message quality so more messages are examined. Too many messages may be sent, or the wrong ones. A Do-Not-Call policy beats a ban, but too many individuals opt out. A monopoly gatekeeper performs better than personal access pricing if nuisance costs are moderate. The medium is the message with multiple channels, and there is excessive indiscriminate mailing.
    Keywords: information overload, congestion, advertising, common property resource, overÞshing, two-sided markets, junk mail, email, telemarketing, Do Not Call List, message pricing, the Medium is the Message, market research.
    JEL: D11 D60 L13
    Date: 2006–06
  3. By: Ana B. Casado (Universidad de Alicante); Francisco J. Mas (Universidad de Alicante); Hans Kasper (Maastricht University, Department of Marketing)
    Abstract: Research has shown that more than half of attempted recovery efforts only reinforce dissatisfaction, producing a ‘double deviation’ effect. Surprisingly, these double deviation effects have received little attention in service marketing literature. Yet no study has specifically investigated which are the main determinants of the formation of customer satisfaction judgments in double deviation contexts. To fill this gap, we develop and empirically test a model based on the existing service recovery literature. Specifically, we focus on two theoretical frameworks: social justice theory and theories of emotion. We examine the effect of anger with service recovery on satisfaction with service recovery, as well as the role of distributive justice on the elicitation of the specific emotion of anger with service recovery and satisfaction with service recovery. Results support the model and highlight the important role of specific recovery-related emotions in double deviation contexts. Implications for practice and future research are discussed. La investigación previa ha mostrado que más de la mitad de los esfuerzos de recuperación sólo refuerzan la insatisfacción, produciendo un efecto de desviación doble. Sorprendentemente, estos efectos de desviación doble han recibido muy poca atención en la literatura de marketing de servicios. Hasta la fecha, ningún trabajo ha investigado empíricamente cuáles son los principales determinantes en la formación de los juicios de satisfacción en contextos de desviación doble. Para cubrir este hueco, desarrollamos y analizamos empíricamente un modelo basado en la literatura de recuperación de servicios existente. Específicamente, nos basamos en dos esquemas conceptuales: la teoría de la justicia social y las teorías sobre emociones. Examinamos el efecto del enfado con la recuperación del servicio en la satisfacción con la recuperación del servicio, así como el papel de la justicia distributiva como activador de emociones específicas de enfado y como antecedente de la satisfacción con la recuperación del servicio. Los resultados confirman el modelo propuesto y ponen de manifiesto el importante papel de las emociones específicas relacionadas con la recuperación en contextos de desviación doble. Finalmente, se discuten las implicaciones de gestión y las líneas futuras de investigación.
    Keywords: enfado con la recuperación del servicio, justicia distributiva, satisfacción con la recuperación del servicio, desviación doble, industria bancaria anger with service recovery, distributive justice, satisfaction with service recovery, double deviation, banking industry
    JEL: M31 G21
    Date: 2006–09
  4. By: Rosenø, Axel (Department of Informatics, Copenhagen Business School)
    Abstract: Product innovativeness is a key moderating variable for the study of innovation management (Song & Montoya-Weiss 1998, p. 124). For this reason, some empirical studies of innovation management examine new product processes, critical success factors, and market learning practices for incremental versus discontinuous new product projects (Song & Montoya-Weiss 1998; Atuahene-Gima 1995; Veryzer 1998a; Lynn et al. 1996; O’Connor 1998; Rice et al. 1998). By looking at both these types of new product development projects, empirical observations are likely to be more realistic than those of studies that do not discriminate between more or less innovative projects. Even so, a dualistic view of the matter does not capture the nuances (Green et al.1995)1 of the relationship between product innovativeness and innovation management practices. Hence, there is a need for richer innovativeness typologies that go beyond the dichotomous view and, thereby, lend themselves to a more finegrained study of innovation management practices for different types of new product projects. In fact, various innovativeness typologies exist that include more than two product types. Notably, the typology by Booz, Allen & Hamilton (1982)2 introduces two dimensions: newness to the market and newness to the company, resulting in six products types (with various combinations of high, medium and low newness). An alternative set of typologies differentiates between the product’s technological newness and its market newness, for example Abernathy & Clark’s (1985) typology with four new product types; Leonard-Barton’s (1995) five product types; and Veryzer’s (1998a) four types in a two-by-two matrix. Interestingly, these two meta-perspectives on product innovativeness (i.e. 1. new to the market and/or new to the company and 2. technological and/or market newness) are generally not included within the same typology in extant literature. For example, discussions of the technological and/or market newness of a product, often leave out the question of whether that newness is in the eyes of the industry and market (exogenous newness) or only for the focal firm itself (endogenous newness). More broadly, it can be stated that “…little continuity exists in the new product literature regarding from whose perspective this degree of newness is viewed and what is new (Garcia & Calantone 2002, p. 112).
    Keywords: None
    JEL: O30
    Date: 2005–09–19
  5. By: Alan E. Woodfield (University of Canterbury)
    Abstract: This paper generalizes the two-period model of Watt (2000) who demonstrates the possibility of optimal accommodation of a pirate when the royalty rate applying to a creation is uniform and second-period Cournot competition applies. Admitting nonlinear contracts with period-specific royalty rates that leave total payments unchanged, simulation analysis shows that a producer of originals does better to increase the royalty rate in period 1 and decrease the rate to a negative level in period 2, thereby more than offsetting the usual cost advantage available to a pirate. Watt's illustrative examples regarding piracy accommodation (but not piracy exclusion) are overturned when a nonlinear contract is chosen optimally, although accommodation remains optimal in some other cases. Further, where exclusion is impossible under uniform royalties, cases exist where exclusion is feasible under nonlinear royalties. Even so, accommodation may be a preferable strategy.
    Keywords: accommodating copyright piracy; nonlinear royalty contracts
    JEL: D43 K11 L13
    Date: 2006–02–01

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