nep-mkt New Economics Papers
on Marketing
Issue of 2007‒11‒24
nine papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Perfect and Dynamic Segmentation via the Internet By Matthias Huehn
  2. Entrepreneurship, Brands and the Development of Global Business By Teresa da Silva Lopes; Mark Casson
  3. The Marginal Willingness-to-Pay for Health Related Food Characteristics By Thunström, Linda
  4. Pricing-to-market and the failure of absolute PPP By George Alessandria; Joseph Kaboski
  5. Who Prices Locally? Survey Evidence of Swiss Exporters By Andreas M. Fischer; Matthias Lutz; Manueal Wälti
  6. A fractional optimal control problem for maximizing advertising efficiency By Igor Bykadorov; Andrea Ellero; Stefania Funari; Elena Moretti
  7. The real thing: a profile of the coca cola company By Hartogh, Matthew
  8. Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead By Vyas Preeta H.
  9. Market Dominance and Behaviour-Based Pricing under Horizontal and Vertical Differentiation By Gehrig, Thomas; Shy, Oz; Stenbacka, Rune

  1. By: Matthias Huehn (Faculty of Management Technology, The German University in Cairo)
    Abstract: The paper starts from the hypothesis that traditional approaches to segmentation are seriously flawed because the object of segmentation, the consumer, has dramatically changed over the past 30 years. The New Consumer actively defies segmentation attempts by marketing professionals and thus makes a new approach to marketing strategy necessary. The paper suggests to let the consumers segment themselves instead of doing market research. Thereby the filter between consumer and company is dropped. Self-segmentation is not as radical as it may sound and the paper shows in which industries it has been in use for over thirty years. Companies using self-segmentation let their customers choose/mix their own value proposition from the company’s offerings. This means that they open up the company to the consumers and that the consumers become involved in the value creation process. Thus, self-segmentation, building on Prahalad/Ramaswamy’s co-opting customer competence concept, is more than a marketing tool, it necessitates a re-structuring of organisational structures and a rethinking of the role of marketing as a value-creating activity.
    Keywords: Marketing strategy, segmentation, market research, value proposition, new consumer, mass customisation
    JEL: M31 L22
    Date: 2007–11
  2. By: Teresa da Silva Lopes; Mark Casson
    Abstract: This paper provides an account of how entrepreneurs have contributed to the development of successful global brands in consumer goods industries in the twentieth century and why so few independent brands survived the merger waves of the 1980s. The industries analysed are those where the promotion of the brand relies principally on advertising rather than the technology embodied in the product. Drawing on cross-industry and cross-country comparisons of brands in consumer goods, and using a ‘stretched’ definition of the entrepreneur, the paper highlights the entrepreneurial and innovative strategies pursued by brand managers. It emphasises the role of distinct types of entrepreneurs and marketing knowledge in the creation and development of brands in successful global businesses.
    Date: 2007–09
  3. By: Thunström, Linda (Department of Economics, Umeå University)
    Abstract: With food, consumers often face a trade-off between taste and nutrition. A priori, it is not obvious which would be more important to the average consumer, so it is an empirical question how consumers value food characteristics that simultaneously affect taste and nutritional value. In this paper, Swedish consumer preferences regarding food characteristics in breakfast cereals, hard bread and potato products are analyzed. In particular, the value consumers attach to fat, fibre, salt and sugar is studied, as well as the value of easily accessible nutritional information provided by a nutrition symbol. The equations estimated are derived from a hedonic price model. The price data originates from a household panel and scanner data, whereas the corresponding data on food characteristics was collected manually in supermarkets or from producers. The value consumers attach to food characteristics are found to vary by product and the results also imply that these values could be sensitive to changes in the combination of characteristics in a product.
    Keywords: hedonic pricing; willingness to pay; food characteristics
    JEL: D10 I10
    Date: 2007–11–16
  4. By: George Alessandria; Joseph Kaboski
    Abstract: The authors show that deviations from the law of one price in tradable goods are an important source of violations of absolute PPP across countries. Using highly disaggregated export data, they document systematic international price discrimination: at the U.S. dock, U.S. exporters ship the same good to low-income countries at lower prices. This pricing-to-market is about twice as important as any local non-traded inputs, such as distribution costs, in explaining the differences in tradable prices across countries. The authors propose a model of consumer search that generates pricing-to-market. In this model, consumers in low-income countries have a comparative advantage in producing non-traded, non-market search activities and therefore are more price sensitive than consumers in high-income countries. They present cross-country time use evidence and evidence from U.S. export prices that are consistent with the model.
    Date: 2007
  5. By: Andreas M. Fischer; Matthias Lutz; Manueal Wälti
    Abstract: Survey information on Swiss exporters is used to test the hypothesis that firm-specific factors, in particular firm size, are important determinants of pricing--to-market (PTM). The survey asked exporters whether they set different prices across markets and, if so, whether price segmentation occurred because of pricing conditions in the local market or other factors. The empirical analysis is based on a probit model that regresses a binary-choice variable of PTM on firm size and other control variables. The main empirical finding is that firm size and PTM are positively and significantly correlated. A further result is that while firms whose main export market is in the Euro area are less likely to engage in PTM, firm size plays a bigger role for them. These results are robust across different PTM classifications, regression specifications, export destinations, and industrial sectors.
    Keywords: Pricing to markets, local currency pricing, firm size
    JEL: F10 F14
    Date: 2007–10
  6. By: Igor Bykadorov (Sobolev Institute of Mathematics, Novosibirsk); Andrea Ellero (Department of Applied Mathematics, University of Venice); Stefania Funari (Department of Applied Mathematics, University of Venice); Elena Moretti (Department of Applied Mathematics, University of Venice)
    Abstract: We propose an optimal control problem to model the dynamics of the communication activity of a firm with the aim of maximizing its efficiency. We assume that the advertising effort undertaken by the firm contributes to increase the firm's goodwill and that the goodwill affects the firm's sales. The aim is to find the advertising policies in order to maximize the firm's efficiency index which is computed as the ratio between "outputs" and "inputs" properly weighted; the outputs are represented by the final level of goodwill and by the sales achieved by the firm during the period considered, whereas the inputs are represented by the costs undertaken by the firm, fixed costs and advertising costs. The problem considered is formulated as a fractional optimal control problem. In order to find the optimal advertising policies we use the Dinkelbach's algorithm for fractional programming.
    JEL: C61 M37
    Date: 2007–11
  7. By: Hartogh, Matthew
    Abstract: Competition In its core competency, the Coca-Company has only one serious competitor, the PepsiCo Company, maker of Pepsi-Cola. Current market share of the two companies in the United States stands at 43.7% for Coca-Cola against 31.6% for PepsiCo. British firm Cadbury Schweppes comes in third in the American market with its 7UP and Dr. Pepper brands but does not have a head to head cola competitor for Coca-Cola. Supermarket “private label” cola brands are a substitute beverage for the big two but in terms of dollar sales, they do not cut greatly into their market share. According to the Beverage Digest 2001 survey, the top 4 brands continue to be Coke Classic, with a U.S. market share of 19.9%, Pepsi-Cola, with 13.2%, followed by Diet Coke with 8.8% and Mountain Dew (a PepsiCo product) with 6.9%.
    Keywords: Beverage; Coke; Coca Cola; Soft Drink; Business
    JEL: M3 M31 M14
    Date: 2007–01–01
  8. By: Vyas Preeta H.
    Abstract: Indian organised retail industry is poised for growth. Apparel sector in particular has a great opportunity with alignment of Indian economy to globalised markets. With the widespread use of sales promotions- short term activities which provide material inducements to consumers and trade it becomes imperative for managers to understand such practices and understand challenges. This study investigates sales promotion activities of six apparel stores in Ahmedabad market and compares them on various dimensions. It presents major findings and provides insights on consumer behaviour. Lifestyle, for instance, has a loyalty programme called `The Inner Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has `Club West' to woo the customers. Managerial challenges are posed in planning and implementing such activities. The paper concludes with future bright outlook.
    Date: 2007–11–20
  9. By: Gehrig, Thomas; Shy, Oz; Stenbacka, Rune
    Abstract: We evaluate behaviour-based price discrimination from an antitrust perspective by focusing on an industry with inherited market dominance. Under horizontal differentiation behaviour-based pricing does not by itself lead to persistence of dominance unless the dominant firm is protected by significantly higher switching costs than its small rival. This result continues to hold even if the dominant firm can use behaviour-based pricing to compete against an entrant with no access to consumers' purchase histories. Under vertical differentiation behaviour-based pricing enhances the dominance of the high-quality seller and, hence, consumer welfare.
    Keywords: behavior-based pricing; consumer loyalty; horizontal and vertical differentiation; market dominance; poaching; price discrimination
    JEL: D4 L1 L41
    Date: 2007–11

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