nep-mkt New Economics Papers
on Marketing
Issue of 2008‒02‒23
four papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Cause Related Marketing and Its Impact on the Purchasing Behavior of the Customers of Bangladesh: An Empirical Study By Mujahid Mohiuddin Babu and Md. Mohiuddin
  2. Existence Advertising, Price Competition, and Asymmetric Market Structure By B. Curtis Eaton; Ian MacDonald; Laura Meriluoto
  3. Consumer Learning and Heterogeneity: Dynamics of Demand for Prescription Drugs after Patent Expiration By Ching, Andrew
  4. Interactions between competition and consumer policy By Armstrong, Mark

  1. By: Mujahid Mohiuddin Babu and Md. Mohiuddin (East West University, Bangladesh; University of Dhaka)
    Abstract: Marketing, now, is not merely about only the market. The focal point is getting wider day by day. The companies are devising different schemes to contribute to societal development activities along with their attainment of corporate goals and objectives. Cause related marketing is one of those tactics that enables the marketers to involve the customers directly into the process. This study tries to portray whether the customers purchasing behavior or brand preference are influence by such marketing program. The demographic variables have great influence on the purchasing decision making process of customer. Whether that is also being influenced by companies cause related marketing program is also explored here. The findings have showed that a customer is influenced by the companies’ cause related marketing programs while adopting a new brand or executing its purchase intension and the customers prefer to support generally health and life saving issues.
    Date: 2008–02
  2. By: B. Curtis Eaton; Ian MacDonald; Laura Meriluoto
    Abstract: We examine a duopoly pricing game where some customers know of no firms, others know of only one firm, and some know of both firms. Firms have constant and identical marginal costs, sell homogenous goods and choose prices simultaneously. Customers observe the prices of the firms that are known to them. We show that there is no equilibrium in pure price strategies for this game. We find a mixed strategy equilibrium, and show that it has intuitively appealing comparative static properties. We then examine the two stage game in which firms advertise their existence in stage 1 to create their customer bases, and in stage 2 play the pricing game described above. The equilibrium to the two stage game is asymmetric, and far from the Bertrand equilibrium.
    Keywords: Existence advertising, price dispersion, Bertrand paradox, information, duopoly
    JEL: D43 D80
    Date: 2008–02–01
  3. By: Ching, Andrew
    Abstract: This paper investigates whether aggregate consumer learning together with consumer heterogeneity in price sensitivity could explain why (i) there is a slow diffusion of generic drugs into the market, and (ii) brand-name originators keep increasing their prices over time even after the number of generic entrants has become fixed. To examine these hypotheses, I estimate a structural demand model that incorporates consumer learning and heterogeneity in price sensitivity. By conducting a counterfactual experiment, which eliminates the uncertainty of generics, I find that learning plays a role in explaining the slow diffusion. By simulating the model, I find that the branded pricing pattern could be explained by: (a) the diffusion rate of generics for price-sensitive patients is faster than that for price-insensitive patients, causing the proportion of price-insensitive patients faced by brand-name firms to slowly increase over time; (b) the brand-name price elasticities of demand (evaluated at the observed prices) are often less than one and increase over time, suggesting that brand-name firms may set their prices lower than what they would do if they were myopic, in order to slow down the learning process for generic qualities. But such an incentive diminishes over time as the uncertainty slowly resolves.
    Keywords: Consumer Learning; Consumer Heterogeneity; Brand-name drugs; Generic Drugs; Patent Expiration; Demand Analysis
    JEL: I11 L65 D12 D83 C15 L15
    Date: 2008–02–16
  4. By: Armstrong, Mark
    Abstract: This paper discusses complementarities and tensions between competition policies and consumer protection policies. The paper argues that markets will often supply adequate customer protection without the need for extra public intervention. Special areas where intervention might be needed are discussed, including the need to combat deceptive marketing and the need to provide additional market transparency (about both headline prices and shrouded product attributes). A few instances are presented of how more intense competition can worsen the outcomes for (some) consumers. Situations in which poorly designed consumer policies can harm consumers are discussed, including how they can be used to protect incumbent suppliers, how they can relax competition between oligopolists, how they can reduce consumer choice, how they can focus on one aspect of market performance at the expense of others, and how they can lead consumers to take insufficient care in the market.
    Keywords: Competition policy; consumer protection; fraud; market transparency; add-on pricing
    JEL: D18 M30 L15
    Date: 2008–02

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