nep-mkt New Economics Papers
on Marketing
Issue of 2007‒03‒17
five papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. The Effect of Nicotine Replacement Therapy Advertising on Youth Smoking By Henry Saffer; Melanie Wakefield; Yvonne Terry-McElrath
  2. How Today?s Consumers Perceive Tomorrow?s By Rijsdijk, S.A.; Hultink, E.J.
  3. The Neuroscience of Consumer Decision-Making By Pirouz, Dante
  4. Do Loyalty Programs Really Enhance Behavioral Loyalty? An Empirical Analysis Accounting for Self-Selecting Members By Leenheer, J.; Heerde, H.J. van; Bijmolt, T.H.A.; Smidts, A.
  5. Understanding the Internet's relevance to media ownership policy: a model of too many choices By Nagler, Matthew

  1. By: Henry Saffer; Melanie Wakefield; Yvonne Terry-McElrath
    Abstract: This paper examines the effect of nicotine replacement therapy (NRT) advertising on youth smoking. NRT advertising could decrease smoking by informing smokers that the product can make quitting easier and thus inducing more smokers to try and quit. However, a moral hazard is created because NRT advertising increases the expectation that cessation is relatively easy. NRT advertising could thus induce youth to smoke, to smoke more and/or to delay quit attempts. Data from Nielsen Media Research (Nielsen) and the Monitoring the Future Surveys (MTF) have been used in the empirical work. The Nielsen data are matched to the MTF data by month, year and market. The availability of lagged advertising data allow for calculation of an advertising stock variable. The Nielsen data also measure exposure to national advertising on a local level which allows for use of national advertising data. An exogenous shock allows for bypassing problems of endogeneity. The results indicate that NRT advertising has no effect on participation but increases smoking by youth who do smoke. The elasticity of smoking with respect to NRT advertising is about .10 and the elasticity of smoking with respect to price is about -1.03. Since average youth smoking is about 5.77 cigarettes per day, an increase of 10 percent in NRT advertising would increase this average to about 5.82 cigarettes per day. It is also estimated that a ban on NRT advertising would be equivalent to a 10 percent increase in cigarette prices.
    JEL: I18
    Date: 2007–03
  2. By: Rijsdijk, S.A.; Hultink, E.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This manuscript investigates consumer responses to new smart products. Due to the application of information technology, smart products are able to collect, process and produce information, and can be described to ?think? for themselves. In this study, consumers respond to smart products that are characterized by two different combinations of smartness dimensions. One group of products shows the smartness dimensions of autonomy, adaptability and reactivity. Another group of smart products are multifunctional and can cooperate with other products. We measure consumer responses to these smart products in terms of the innovation attributes of relative advantage, compatibility, observability, complexity and perceived risk. A study among 184 consumers shows that products with higher levels of smartness are perceived to have both advantages and disadvantages. Higher levels of product smartness are mainly associated with higher levels of observability and perceived risk. The effects of product smartness on relative advantage, compatibility and complexity vary across product smartness dimensions and across product categories. For example, higher levels of product autonomy are perceived as increasingly advantageous while a high level of multifunctionality is perceived disadvantageous. The paper discusses the advantages and pitfalls for each of the five product smartness dimensions and their implications for new product development (NPD). The manuscript concludes with a discussion of the limitations of the study and it provides suggestions for further research.
    Keywords: Smart Products;Intelligent Products;Adoption;Consumer Evaluations;New Product Development;
    Date: 2007–01–22
  3. By: Pirouz, Dante
    Abstract: While there is an extensive history of neuroscience, only recently has the theory and the methods of this discipline been applied to answer questions about decision making, choice, preference, risk and happiness. This new area of research, coined neuroeconomics, seeks to reveal more about the neural functioning and associated implications for economic and consumer behavior. In this paper are some of the key developments in neuroeconomics research as they relate to consumer decision-making, culminating with a discussion of possible future research areas in marketing where this type of research could be applied with important managerial, policy and academic implications.
    Keywords: Consumer behavior; neuroscience; neuroeconomics; decision-making; trust
    JEL: M31
    Date: 2004
  4. By: Leenheer, J.; Heerde, H.J. van; Bijmolt, T.H.A.; Smidts, A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: One of the pressing issues in marketing is whether loyalty programs really enhance behavioral loyalty. Loyalty program members may have a much higher share-of-wallet at the firm with the loyalty program than non-members have, but this does not necessarily imply that loyalty programs are effective. Loyal customers may select themselves to become members in order to benefit from the program. Since this implies that program membership is endogenous, we estimate models for both the membership decision (using instrumental variables) and for the effect of membership on share-of-wallet, our measure of behavioral loyalty. We use panel data from a representative sample of Dutch households who report their loyalty program memberships for all seven loyalty programs in grocery retailing as well as their expenditures at each of the 20 major supermarket chains. We find a small positive yet significant effect of loyalty program membership on share-of-wallet. This effect is seven times smaller than is suggested by a na?ve model that ignores the endogeneity of program membership. The predictive validity of the proposed model is much better than for the na?ve model. Our results show that creating loyalty program membership is a crucial step to enhance share-of-wallet, and we provide guidelines how to achieve this.
    Keywords: Loyalty programs;Grocery retailing;Endogeneity;Tobit-II model;Attraction models;
    Date: 2006–11–01
  5. By: Nagler, Matthew
    Abstract: Does the Internet provide a failsafe against media consolidation in the wake of an easing of media ownership rules? This paper posits a model of news outlet selection on the Internet in which consumers experience cognitive costs that increase with the number of options faced. Consistent with psychological evidence, these costs may be reduced by constraining one’s choice set to “safe bets” familiar from offline (e.g., It is shown that, as the number of outlets grows, dispersion of consumer visitation across outlets inevitably declines. Consequently, independent Internet outlets may fail to mitigate lost outlet independence on other media.
    Keywords: Choice framing; Media ownership; Internet; Differentiated products; Location models
    JEL: L11 L86 D11
    Date: 2006–12–14

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