nep-mkt New Economics Papers
on Marketing
Issue of 2008‒01‒26
twelve papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. The Dynamics of Price and Advertising as Signals of Quality By Musa Ayar
  3. The notion of “SERVICES” in modern economy By Ciochina, Iuliana; Iordache, Carmen; Panoiu , Laura; Decuseara, Razvan
  4. Price Variation Antagonism and Firm Pricing Policies By Pascal Courty; Mario Pagliero
  5. To know and satisfy tourist clients’ needs – a premise for achieving superior quality services By Iordache, Carmen; Ciochina, Iuliana; Decuseara, Razvan; Chitu, Ramona
  6. Do Consumers Care about How Prices Are Set? By Pascal Courty; Mario Pagliero
  7. Do Legal Standards Affect Ethical Concerns of Consumers? By Dirk Engelmann; Dorothea Kübler
  8. Greek companies exporting to South-East European markets By Panagiotis Liargovas; Konstantinos Skandalis
  9. Regulation, generic competition and pharmaceutical prices: Theory and evidence from a natural experiment By Kurt R. Brekke; Tor Helge Holmås; Odd Rune Straume
  10. Segmentação de Mercado e modelos mistura de regressão para variáveis normais By Ana Oliveira-Brochado; Francisco Vitorino Martins
  11. Finding missing markets (and a disturbing epilogue) : evidence from an export crop adoption and marketing intervention in Kenya By Karlan, Dean; Gine, Xavier; Ashraf, Nava
  12. Does Responsive Pricing Smooth Demand Shocks? By Pascal Courty; Mario Pagliero

  1. By: Musa Ayar (University of Western Ontario)
    Abstract: A monopolist introduces a new product of either low or high quality. It advertises to make consumers aware of the product and signals product quality using both price and advertising. When consumption does not re- veal product quality, price is higher and advertising is lower than they would be if product quality is observable. Price rises and advertising falls as the fraction of aware consumers increases. When consumption reveals product quality, price is higher and advertising is lower than they would be if prod- uct quality is observable. Price declines as the fraction of aware consumers increases and advertising follows an inverted U shape. We ¯nd support for these empirical predictions from a data set on Direct-to-Consumer advertis- ing on pharmaceutical drugs.
    Keywords: quality; signaling; pricing; advertising
    JEL: D82 L15 M37
    Date: 2007
  2. By: Maud ROUCAN-KANE; Whitney O. PEAKE (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: Although the marketing mix has been covered in great detail in many veins of literature, very little information exists regarding the mix of marketing tools within the agriculture industry serving U.S. agricultural producers. Using a survey conducted by AgriMarketing magazine in June 2006, a two-fold analysis is undertaken. This study attempts to determine the differences in the use of marketing tools by industry and simple regression analysis is conducted to determine promotional factors that produce a significant impact on sales. Both mass media and other promotional tools were found to be the most consistently significant factor impacting sales of firms in the study.
    Keywords: marketing mix, agribusiness, promotion, agriculture, marketing, mass media. expenditures
    JEL: Q13 C20
    Date: 2007
  3. By: Ciochina, Iuliana; Iordache, Carmen; Panoiu , Laura; Decuseara, Razvan
    Abstract: The notion of “service” is a very important one, with an increasing role in an expanding economy which becomes the condition of sustainable and long-term development. The technical services that must be assured differ according to the type of product. In Romania, the market economy towards which we are moving today is characterized by an abundant production, an intensive national and foreign competition, a supplying facility all over the region. Through their decisions, consumers and users direct production, encouraging thus distributors through their forms of distribution. In all companies the commercial function includes a series of activities that concentrate on "obtaining an optimal market quota, achieving benefits indispensable for an efficient activity, and meeting consumers and users' requirements ". This conception identifies with the marketing one, and the services become an integral part of the dynamics that characterizes the actions which complete the proper commercial administration. The company must pay much attention to all these, the services being considered successful facts and elements that generate actions which must be included in activities such as selling, advertising and promoting.
    Keywords: marketing; service; client
    JEL: M31 L84
    Date: 2008–01–20
  4. By: Pascal Courty; Mario Pagliero
    Abstract: Pricing schemes that vary prices in response to demand shocks may antagonize consumers and reduce demand. At the same time, consumers may take advantage of the opportunities offered by price changes. Overall, the net impact of varying price on demand is ambiguous. We investigate the issue empirically, exploiting a unique dataset from a firm that has experimented with different pricing schemes. Each scheme is characterized by how much prices respond to demand variations. Holding average price and other variables constant, we find that demand is higher when prices vary more. The evidence suggests that the antagonism effect cannot be first order.
    Keywords: Consumer demand, responsive pricing, fairness
    JEL: D01 D12 L86
    Date: 2008
  5. By: Iordache, Carmen; Ciochina, Iuliana; Decuseara, Razvan; Chitu, Ramona
    Abstract: Clients’ satisfaction should be the main objective of any tourist company, and this involves a good knowledge of consumers’ expectations. Offering a high quality service is obviously based on fulfilling some requirements through which the service touches the level desired by the consumer. Knowing the consumers’ needs and expectations, as well as the perceptions related to the supplied service, should represent the quality management objectives of the services provided, that is, the conditions of providing performing tourist services. The tourist orientation can assure a high level of satisfaction and it involves the identification of his desires and requirements with regard to the services offered, his proper informing, facilities and possibilities to choose the service that corresponds the best to his expectations. In order to win the clients’ trust in the services offered – modifying the clients area of tolerance (that is, to enlarge it) the trained staff of service companies should be more sensitive to the clients needs, suggestions, dissatisfactions and preoccupations. A highly important condition for achieving the objectives of satisfying clients is the service company employees’ satisfaction. The trained staff is responsible to offer high quality services and satisfaction to the consumer, the latter’s behavior being able to increase or decrease the name of the service company. The staff’s efficient leading objective – and of the service offering process – can be achieved by a successful practicing of internal marketing, that has in view developing the staff motivation and its stimulation in the effort to offer high quality services. The fundamental strategy of internal marketing is to form faithful clients from its own employees. Satisfying internal clients’ requirements, the service company increases its ability to satisfy successfully external consumers’ needs.
    Keywords: tourist; client; service
    JEL: L83
    Date: 2008–01–15
  6. By: Pascal Courty; Mario Pagliero
    Abstract: Using a survey approach, we ask consumers to reveal their preferences over pricing schemes that may differ in terms of the average price of consumption, the amount of price variation, and the probability of being rationed. We find that consumers dislike pricing schemes that vary prices more but that they are willing to trade off price variation and rationing. Surprisingly, they are not willing to trade off an increase in price variation for a decrease in expected prices. We discuss the implications of these findings for firm pricing policies.
    Keywords: Consumer demand, rationing, demand fluctuation, antagonism, fairness
    JEL: A12 D01 D12
    Date: 2008
  7. By: Dirk Engelmann; Dorothea Kübler
    Abstract: In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first part but with a minimum wage in the second part, and one treatment with a minimum wage at the outset that is abolished in the second part. In both treatments, wages decrease over time in the first part even though some consumers show an interest in fair wages. If a minimum wage is in place, wages decline even faster. Introducing a minimum wage in a mature market raises average wages, while abolishing it lowers them. We discuss the implications of our results, such as the crowding out of ethical behavior through legal regulation.
    Keywords: Fairness, Crowding Out, Consumer Behavior, Minimum Wage, Experimental Economics
    JEL: C91 J88 K31
    Date: 2008–01
  8. By: Panagiotis Liargovas; Konstantinos Skandalis
    Abstract: The purpose of this study is twofold. First, to conceptualize various internal, external and strategic factors explaining the motivation and the marketing strategy of Greek exporting firms based on a strategic management model. Second, to empirically test this model in the case of Greek exporting firms to South-East European markets. The analysis is accomplished through the observed behaviour of 41 listed firms in the Athens stock exchange involved in making exports to South-East Europe. It is based on a questionnaire which has provided several insights to export motivations and export marketing strategy elements. It uses principal component factor analysis technique in order to investigate common factors that might explain underlying beliefs about the perceived variables.
    Keywords: Export marketing, export motives, Greece, South-East European markets, factor analysis
    Date: 2008
  9. By: Kurt R. Brekke (Department of Economics, Norwegian School of Economics and Business Administration, and Health Economics Bergen); Tor Helge Holmås (Institute for Research in Economics and Business Administration, and Health Economics Bergen); Odd Rune Straume (Universidade do Minho - NIPE)
    Abstract: We study the impact of regulatory regimes on generic competition and pharmaceutical pricing using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. We exploit a detailed panel dataset at product level covering a wide set of off-patent drugs before and after the policy reform. Off-patent drugs not subject to reference pricing serve as our control group. We find that RP leads to lower relative prices, with the effect being driven by strong brand-name price reductions, and not increases in generic prices. We also find that RP increases generic competition, resulting in lower brand-name market shares. Finally, we show that RP has a strong negative effect on average prices at molecule level, suggesting significant cost-savings.
    Keywords: Pharmaceuticals, Regulation, Generic Competition.
    JEL: I11 I18 L13 L65
    Date: 2008
  10. By: Ana Oliveira-Brochado (EDGE, CESUR, DECIVIL-IST, Universidade Técnica de Lisboa); Francisco Vitorino Martins (EDGE, Faculdade de Economia da Universidade do Porto)
    Abstract: The purpose of this work is to provide an overview of what is perhaps the most common analysis context in market research – that of regression models for normally distributed data. In fact, examples of applications of these models continue to accumulate in the marketing literature, given their relative advantages. Moreover, these models are ease implemented due to its incorporation in many commercial packages of marketing research. We aim at presenting the background for the development of mixture regression models (switching regressions, clusterwise regression and finite mixture models) and review the formulation of the basic model and its main extensions in the context of panel data analysis and conjoint studies.
    Keywords: market segmentation, mixture regression models, normal data.
    JEL: C0 D0
    Date: 2008–01
  11. By: Karlan, Dean; Gine, Xavier; Ashraf, Nava
    Abstract: In much of the developing world, many farmers grow crops for local or personal consumption despite export options that appear to be more profitable. Thus many conjecture that one or several markets are missing. This paper reports on a randomized controlled trial conducted by DrumNet in Kenya that attempts to help farmers adopt and market export crops. DrumNet provides smallholder farmers with information about how to switch to export crops, makes in-kind loans for the purchase of the agricultural inputs, and provides marketing services by facilitating the transaction with exporters. The experimental evaluation design randomly assigns pre-existing farmer self-help groups to one of three groups: (1) a treatment group that receives all DrumNet services, (2) a treatment group that receives all DrumNet services except credit, or (3) a control group. After one year, DrumNet services led to an increase in production of export oriented crops and lower marketing costs; this translated into household income gains for new adopters. However, one year after the study ended, the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy European export requirements. DrumNet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans. The risk of such events may explain, at least partly, why many seemingly more profitable export crops are not adopted.
    Keywords: Crops & Crop Management Systems,Access to Finance,,Economic Theory & Research,Banks & Banking Reform
    Date: 2008–01–01
  12. By: Pascal Courty; Mario Pagliero
    Abstract: Using data from a unique pricing experiment, we investigate Vickrey’s conjecture that responsive pricing can be used to smooth both predictable and unpredictable demand shocks. Our evidence shows that increasing the responsiveness of price to demand conditions reduces the magnitude of deviations in capacity utilization rates from a pre-determined target level. A 10 percent increase in price variability leads to a decrease in the variability of capacity utilization rates between 2 and 6 percent. We discuss implications for the use of demand-side incentives to deal with congestible resources.
    Keywords: Consumer demand, responsive pricing, capacity utilization, price variability
    JEL: D01 D12 L11 L86
    Date: 2008

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