nep-mkt New Economics Papers
on Marketing
Issue of 2008‒03‒08
nine papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. The Role of National Culture in Advertising’s Sensitivity to Business Cycles: An Investigation Across All Continents By Deleersnyder, B.; Dekimpe, M.G.; Steenkamp, J.B.E.M.; Leeflang, P.S.H.
  2. Place Marketing, Governance and Tourism Development. Or How to Design the Perfect Regional Tourist Board? By Jan van der Borg
  3. The Value of Analogical Reasoning for the Design of Creative Sales Promotion Campaigns: A Case-Based Reasoning Approach By Althuizen, N.A.P.; Wierenga, B.
  4. Quality Perceptions of Private Label Brands: Conceptual Framework and Agenda for Research By ; Koshy Abraham
  5. On Measuring the Complexity of Urban Living By Hasan, Lubna
  6. Pricing the Option to Surrender in Incomplete Markets By Consiglio, Andrea; De Giovanni, Domenico
  7. Hybrid Consumption Paths in the Attribute Space: A Model and Application with Scanner Data By Sergi Jiménez-Martín; Antonio Ladron-de-Guevara Martinez
  8. Choosing between Auctions and Negotiations in Online B2B Markets for IT Services: The Effect of Prior Relationships and Performance By Radkevitch, U.L.; Heck, H.W.G.M van; Koppius, O.R.
  9. Auctions in which Losers Set the Price By Mezzetti, Claudio; Tsetlin, Ilia

  1. By: Deleersnyder, B.; Dekimpe, M.G.; Steenkamp, J.B.E.M.; Leeflang, P.S.H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Cutting advertising budgets has traditionally been a popular reaction by companies around the globe when faced with a slacking economy. Still, anecdotal evidence suggests the presence of considerable cross-country variability in the cyclical sensitivity of advertising expenditures. We conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries across all continents, covering up to 25 years and four key media: magazines, newspapers, radio and television. While our findings confirm that advertising moves in the same direction as the general economic activity, we also show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole, with an average co-movement elasticity of 1.4. Interestingly, advertising’s cyclical dependence is systematically related to the cultural context in which companies operate. Advertising behaves less cyclically in countries high on long-term orientation and power distance, while advertising is more cyclical in countries high on uncertainty avoidance. Further, advertising is more sensitive to the business cycle in countries characterized by significant stock-market pressure and few foreign-owned multinationals. These results have important strategic implications for both global advertisers and their ad agencies.
    Keywords: advertising;business cycle;time-series econometrics;cross-country comparison;national culture
    Date: 2007–12–19
  2. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The principal scope of this paper is to reconstruct the chain-of-command that regards the implementation of a regional tourism development strategy, in particular the tourism marketing policy. Starting point of the analysis was the assumption that the quality of the governance of these organisations is one of the factors that may explain the success of a tourist destination. Thereto, an international comparative study into the role of the organizational structure, of organizing capacity and of governance on the effectiveness of tourism promotion and territorial marketing was organised. By comparing four different case studies, Catalunya (E), Rhone-Alpes (F), Scotland (UK) and Trentino (I), worst and best practices have been identified, and an answer to the question whether there exists such a thing as an ideally structured organisation that deals with territorial and tourism marketing at the regional level has been sought.
    Keywords: Tourism Marketing, Governance, Regional Tourist Organisations, Tourism Policy
    JEL: L83 L88 M31 R11 R58
    Date: 2008
  3. By: Althuizen, N.A.P.; Wierenga, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Many marketing problems, such as the design of marketing communication campaigns and the development of new products, require creative solutions. Such problems are typically weakly-structured and underspecified (open-ended). The authors investigate the potential of analogical reasoning as a decision support principle for this type of problems. They carry out experiments in a case-based reasoning (CBR) environment. The application domain is the design of sales promotion campaigns. The authors demonstrate that providing decision makers with analogies leads to more creative campaigns. Providing analogies is most effective for decision makers with a low creative ability. Furthermore, solutions become better when decision makers have a larger set of analogies to choose from. Far analogies have the potential of generating more novel solutions than near analogies, but there is a higher threshold for using them. Interestingly, decision makers do not recognize the contribution of the analogies to the quality of their solution. On the practical side, the authors provide an effective tool for supporting decision making in weakly-structured marketing problem areas.
    Keywords: creative design;analogical reasoning;decision support systems;sales promotion campaigns
    Date: 2008–02–12
  4. By: ; Koshy Abraham
    Abstract: Private Label brands had seen an impressive growth in past few decades. Though, initially private label brands had a low-priced strategy, retailers made efforts for serious quality improvements in recent years. However, they have continued to suffer from poor quality perceptions. Previous research dealing with quality perceptions of store brands did not adequately examine the ways to improve the quality perceptions of private label brands. The paper examines how retailers can influence the quality perceptions for private label brands by providing additional information cues to the customers. The nature of additional information cues may have differential impact on quality perceptions of private label brands vis-à-vis national brands. The paper proposes extrinsic high scope cues – in form of manufacturer’s name and public quality label – to improve the quality perceptions of private label brands. Furthermore, the familiarity of the product may influence the quality perceptions, consequently influencing the purchase decision. The paper also proposes differential impact of information cues across different product categories on quality perceptions of private label brands.
    Date: 2008–02–25
  5. By: Hasan, Lubna
    Abstract: This paper explores the concept of city ranking as a way to measure dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done, and their nature has changed considerably overtime. These rankings are also afflicted with many methodological and measurement problems. A review of major city rankings and related literature is carried out to suggest a framework for measuring Pakistani cities.
    Keywords: Quality of Life; Cities; Urbanization
    JEL: R10
    Date: 2007
  6. By: Consiglio, Andrea (Department of Statistics and Mathematics “Silvio Vianelli”, University of Palermo,); De Giovanni, Domenico (Department of Business Studies, Aarhus School of Business)
    Abstract: New international accounting standards require insurers to reflect the value of embedded options and guarantees in their products. Pric- ing techniques based on the Black & Scholes paradigm are often used, however, the hypotheses underneath this model are rarely met. We propose a framework that encompasses the most known sources of incompleteness. We show that the surrender option, joined with a wide range of claims embedded in insurance contracts, can be priced through our tool, and deliver hedging portfolios to mitigate the risk arising from their positions. We provide extensive empirical analysis to highlight the effect of incompleteness on the fair value of the option
    Keywords: Life insurance; Policies with minimum guarantee; Option pricing; Incomplete markets; Surrender options
    Date: 2007–10–31
  7. By: Sergi Jiménez-Martín; Antonio Ladron-de-Guevara Martinez
    Abstract: This paper presents a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products. We run some simulations to analyze the consumption paths out of the steady state. Under the hybrid utility assumption, the consumer behaves inertially among the unfamiliar brands for several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical illustration is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.
    Date: 2008–02
  8. By: Radkevitch, U.L.; Heck, H.W.G.M van; Koppius, O.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The choice of contract allocation mechanism in procurement affects such aspects of transactions as information exchange between buyer and supplier, supplier competition, pricing and, eventually, performance. In this study we investigate the buyer’s choice between reverse auctions and bilateral negotiations as an allocation mechanism for IT services contracts. Prior studies into allocation mechanism choice focused on factors pertaining to discrete exchange situation, such as con-tract complexity or availability of suppliers. We broaden the research by focusing on buyers’ past exchange relationships with vendors. Based on the literature on the economics of contracting and agency theory, we hypothesize that prior re-peat interaction with vendors favors the use of negotiations over auctions in the next transaction, while the need to explore the marketplace due to buyer’s inexperience or dissatisfaction with vendor’s performance in the most recent project leads to the use of auctions instead of negotiations. We find support for these hypotheses in a longitudinal dataset of 2,081 IT projects realized by 91 repeat buyers at a leading online services marketplace over a period of eight years. Taken together, the results show that analyzing B2B auctions and negotiations should move beyond analyzing discrete instances and instead analyze them in the context of the individual firm’s history and supplier strategy.
    Keywords: reverse auctions;online marketplace;IT services;outsourcing
    Date: 2008–02–04
  9. By: Mezzetti, Claudio (Department of Economics, University of Warwick); Tsetlin, Ilia (INSEAD, Singaport)
    Abstract: We study auctions of a single asset among symmetric bidders with affiliated values. We show that the second-price auction minimizes revenue among all efficient auction mechanisms in which only the winner pays, and the price only depends on the losers' bids. In particular, we show that the k-th price auction generates higher revenue than the second-price auction, for all k > 2. If rationing is allowed, with shares of the asset rationed among the t highest bidders, then the (t + 1)-st price auction yields the lowest revenue among all auctions with rationing in which only the winners pay and the unit price only depends on the losers' bids. Finally, we compute bidding functions and revenue of the k-th price auction, with and without rationing, for an illustrative example much used in the experimental literature to study first-price, second-price and English auctions.
    Keywords: Auctions ; Second-Price Auction ; English Auction ; k-th Price Auction ; Affiliated Values ; Rationing ; Robust Mechanism Design
    JEL: D44 D82
    Date: 2008

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