nep-mkt New Economics Papers
on Marketing
Issue of 2007‒04‒28
nine papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. The Process of Marketing Segmentation Strategy Selection By Ionel Dumitru
  2. Pozitioning Strategies Used in Strategic Marketing By Ionel Dumitru
  3. Using Customer Relationship Trajectories to Segment Customers and Predict Profitability By Mark Tanya; Niraj Rakesh; Dawar Niraj
  4. The dynamics of television advertising with boundedly rational consumers By Gomes, Orlando
  5. Ethical issues relating to the use of the Internet and the implications for managers and business practice By Mihai Orzan
  6. Consumer Information and Pharmaceutical Prices: Theory and Evidence By Granlund, David; Rudholm, Niklas
  7. Minimum quality standards and consumers’ information By Paolo G. GARELLA; Emmanuel PETRAKIS
  8. Price Competition in Markets with Customer Testing: The Captive Customer Effect By Hoppe, Heidrun C.; Lehmann-Grube, Ulrich
  9. Pricing strategies by European Low Cost Carriers. By Claudio A. Piga; Enrico Bachis

  1. By: Ionel Dumitru (School of Marketing, Academy of Economic Studies)
    Abstract: The process of marketing segmentation strategy selection represents the essence of strategical marketing. We present hereinafter the main forms of the marketing statategy segmentation: undifferentiated marketing, differentiated marketing, concentrated marketing and personalized marketing. In practice, the companies use a mix of these marketing segmentation methods in order to maximize the proffit and to satisfy the consumers’ needs.
    Keywords: segmentation strategy, differentiated marketing, strategic marketing, concentrated marketing
    JEL: M31
    Date: 2007–04
  2. By: Ionel Dumitru (School of Marketing, Academy of Economic Studies)
    Abstract: The consumer’s perception of the marketing company’s activities is represented by the positioning strategy. The positioning process consists of approaching the market’s segments in different ways, with deferent’s offer, using three fundamentals strategies: strengthen the current company position, competition free segments identification and repositioning the competition using an aggressive marketing strategy.
    Keywords: Positioning strategy, marketing strategy, strategic marketing, differentiate strategy
    JEL: M31
    Date: 2007–04
  3. By: Mark Tanya; Niraj Rakesh; Dawar Niraj (METEOR)
    Abstract: A central premise of relationship marketing theory is that economic benefits flow fromretaining customers. However, the early research focus on the duration of the relationship may obscure other important aspects of the interactions with the customer that drive profitability. Borrowing from the branding literature, where different types of customer relationships have been described (but not empirically examined), we study the patterns of business customers’ buying behavior, or trajectories that characterize customer-firm relationships over time, and their impact on profitability. We develop a finite mixture model relating customer relationship trajectories to profitability over a three year period. Our analysis yields five segments, or types of customer-firm relationships, for this dataset. We find key determinants of profitability vary across types of customer relationship. Interestingly, in none of these segments does duration predict profitability.
    Keywords: marketing ;
    Date: 2007
  4. By: Gomes, Orlando
    Abstract: The paper adapts a static model of television advertising into a dynamic scenario. In its original form, the model consists on a profit maximization problem of a television network working in a competitive environment. The network sells commercial time to advertisers and tries to minimize the effects of viewers’ aversion to ads. Viewers are assumed heterogeneous with regard to the preferences over the types of products companies sell through ad time. Into this framework we introduce an intertemporal rule reflecting the possible preference changes of consumers (these are boundedly rational and their utility for different types of products varies over time). The introduction of the intertemporal rule originates interesting dynamic results, namely in what concerns the evolution over time of crucial variables like the total time of broadcasting that networks allocate to advertising or the amount of revenues that satisfies the profit maximization condition. As in the original model, attention will be given to the possibility, that cable television allows, of ad addressability.
    Keywords: Television advertising; Networks’ profit maximization; Heterogeneous viewers; Ad addressability; Bounded rationality; Nonlinear dynamics.
    JEL: L82 C61 M37
    Date: 2006–09
  5. By: Mihai Orzan (School of Marketing, Academy of Economic Studies)
    Abstract: The IT&C industry products are ubiquitous in modern society. However, their specificity led, for a long time, to a so-called “marketing blind-spot” in the IT industry, situation especially evident after the Microsoft devastating success from the early nineties. Microsoft was the first IT company to use large scale marketing techniques, among whom was an obscure (at the time) approach to qualitative marketing research known as “usability testing”. This technique was employed to determine if a user interface was appropriate and comfortable for its intended users. Usability testing adoption in the IT industry generated a wealth of information about how users interacted with IT products, information that is paramount in gaining an upper hand in today’s highly competitive Information Society.
    Keywords: Internet, usability, marketing research, website design
    JEL: M39
    Date: 2006–04
  6. By: Granlund, David (Department of Economics, Umeå University); Rudholm, Niklas (Department of Economics, Umeå University)
    Abstract: In this paper, the impact of increased consumer information on brand name and generic pharmaceutical prices is analyzed both theoretically and empirically. The theoretical results show that an increase in information is likely to reduce the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the paper, the introduction of the substitution reform in the Swedish pharmaceuticals market in October 2002 is used as a natural experiment regarding the effects of increased consumer information on pharmaceutical prices. The results clearly show that the reform has lowered the price of both brand name- and generic pharmaceuticals.
    Keywords: Pharmaceutical industry; generic competition; generic drugs; brand name drugs
    JEL: D80 D83 I11 L65
    Date: 2007–04–23
  7. By: Paolo G. GARELLA; Emmanuel PETRAKIS
    Abstract: The literature so far has analyzed the effects of Minimum Quality Standards (MQS) in oligopoly, using models of pure vertical differentiation, with only two firms, and perfect information. We consider products that are differentiated horizontally and vertically, with imperfect consumers' information, and more than two firms. We show that a MQS changes the consumers' perception of produced qualities. This increases the firms' returns from quality enhancing investments, notwithstanding contrary strategic effects. Our analysis justifies the use of MQS in industries where consumers cannot precisely ascertain the quality of goods, for instance pharmaceuticals or products with chemical components involved
    Keywords: Minimum Quality Standards, Imperfect Consumer Information, Oligopoly, Horizontal and Vertical Product Differentiation, Industry Regulation
    JEL: L0 L5
    Date: 2007–04
  8. By: Hoppe, Heidrun C.; Lehmann-Grube, Ulrich
    Abstract: We introduce product differentiation into the analysis of price competition in markets where suppliers test customers in order to assess whether they will pay for received goods or services. We find that, if the degree of differentiation is sufficiently high, suppliers may improve the average probability that their clientele will pay by charging higher prices. This helps suppliers to sustain high prices in equilibrium. Moreover, endogenizing locations in product space, we demonstrate that the high price level can be implemented in a pure-strategy subgame-perfect equilibrium with a high degree of differentiation. This is in contrast to the original Hotelling model with linear travel costs where a pure-strategy subgame-perfect equilibrium fails to exist.
    Keywords: Hotelling; Iterated elimination of strictly dominated strategies; Mixed strategy; Price competition; Testing
    JEL: D83 G21 L13
    Date: 2007–04
  9. By: Claudio A. Piga (Dept of Economics, Loughborough University); Enrico Bachis (Business School, Nottingham University)
    Abstract: We introduce an on-line pricing tactic where airlines post, at the same time and for the same flight, fares in different currencies that violate the law of One Price. Unexpectedly for an on-line market, we find that price discrimination may be accompanied by arbitrage opportunities and that both tend to persist before a flight’s departure. We find discrimination to be of a competitive type, although arbitrage opportunities are more likely in concentrated routes. Finally, the evidence suggests that discrimination may be used to manage stochastic demand.
    Keywords: on-line pricing; price discrimination; Law of One Price; sample selection; dispersion; airlines, exchange rate.
    JEL: L11 L13 L93
    Date: 2007–04

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