nep-mkt New Economics Papers
on Marketing
Issue of 2008‒07‒05
six papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Reference Dependence and Market Competition By Zhou, Jidong
  2. Open Versus Closed Platforms By Tåg, Joakim
  3. Perceived technology clusters and ownership of related technologies: the case of consumer electronics By Frank J. van Rijnsoever; Carolina Castaldi
  4. Path Dependencies and the Long-term Effects of Routinized Marketing Decisions By Farris, P.W.; Verbeke, W.J.M.I.; Dickson, P.M.; Nierop, E. van
  5. Restaurant Prices and the Minimum Wage By Fougère, Denis; Gautier, Erwan; Le Bihan, Hervé
  6. When Intelligence is (Dys)Functional for Achieving Sales Performance By Verbeke, W.J.M.I.; Belschak, F.D.; Bakker, A.B.; Dietz, B.

  1. By: Zhou, Jidong
    Abstract: This paper studies the implications of consumer reference dependence in market competition. If consumers take some product (e.g., the first product they have considered) as the reference point in evaluating others and exhibit loss aversion, then the more "prominent" firm whose product is taken as the reference point by more consumers will randomize its price over a high and a low one. All else equal, this firm will on average earn a larger market share and a higher profit than its rival. The welfare impact is that consumer reference dependence could harm firms and benefit consumers by intensifying price competition. Consumer reference dependence will also shape firms' advertising strategies and quality choices. If advertising increases product prominence, ex ante identical firms may differentiate their advertising intensities. If firms vary in their prominence, the less prominent firm might supply a lower-quality product even if improving quality is costless.
    JEL: D11 L13 M37 D43
    Date: 2008–05
  2. By: Tåg, Joakim (Research Institute of Industrial Economics (IFN))
    Abstract: This paper studies an industry in which firms can choose to provide open or closed platforms. Open platforms, as opposed to closed, are extendable so third-party producers can develop extensions for them. Building on a two-sided market model, I show that firms might prefer to commit to keeping their platforms closed despite the fact that opening the platform is costless and open platforms are more valuable to consumers. The reason is that opening the platform may lead to intensified competition for consumers.
    Keywords: Platforms; Software; Two-sided Markets
    JEL: D40 D42 D43 L10 L12 L13 L14
    Date: 2008–04–12
  3. By: Frank J. van Rijnsoever; Carolina Castaldi
    Abstract: We contribute to the understanding of how technologies may be perceived to be part of technology clusters. The value added of the paper is both at a theoretical and empirical level. We add to the theoretical understanding of technology clusters by distinguishing between clusters in perceptions and clusters in ownership and by proposing a mechanism to explain the existence of clusters. Our empirical analysis combines qualitative and quantitative methods to investigate clusters of consumer electronics for a sample of Dutch consumers. We find that perceived clusters in consumer electronics are mostly determined by functional linkages and that perceived technology clusters are good predictors of ownership clusters, but only for less widely diffused products.
    Keywords: Technology clusters, consumer electronics, innovation
    Date: 2008–06
  4. By: Farris, P.W.; Verbeke, W.J.M.I.; Dickson, P.M.; Nierop, E. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The purpose of this paper is to discuss a simulation of marketing budgeting rules that is based on a simplified version of the market share attraction model. The budgeting rules are roughly equivalent to those that may be used in practice. The simulation illustrates the concept of path dependence in dynamic marketing systems and shows how it might result from decision rules potentially applied by marketers and retailers. Path dependence results from positive feedback in dynamic systems that imparts momentum to market choices. Where the potential for path dependence exists, there are implications for defining and measuring long-term effects of marketing decisions in a way that is meaningful to managers and researchers. In the simulations presented we show that limited retails assortment may contribute to path dependence when firms use either percentage-of-revenue rules or "market learning" experiments to set budgets. While other budgeting procedures (e.g., matching competition) may stabilize market share, this stability in the share dimension comes at the cost of instability for budgets and profits.
    Keywords: path dependencies;marketing decisions
    Date: 2008–06–18
  5. By: Fougère, Denis; Gautier, Erwan; Le Bihan, Hervé
    Abstract: We examine the effect of the minimum wage on restaurant prices. For that purpose, we estimate a price rigidity model by exploiting a unique dataset of individual price quotes used to calculate the Consumer Price Index in France. We find a positive and significant impact of the minimum wage on prices. We obtain that the effect of the minimum wage on prices is very protracted. The aggregate impact estimated with our model takes more than a year to fully pass through to retail prices.
    Keywords: Inflation; Minimum wage; Price stickiness; Restaurant prices
    JEL: D43 E31 L11
    Date: 2008–06
  6. By: Verbeke, W.J.M.I.; Belschak, F.D.; Bakker, A.B.; Dietz, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Using two different samples of salespeople, the authors investigate how a combination of general mental ability (GMA) and specific skills and capabilities (social competence and thinking styles) allows salespeople to reach their sales goals. The study finds evidence for an interaction between GMA and social competence. If combined with high social competence, high GMA leads to highest sales performance; if combined with low social competence, high GMA leads to lowest sales performance. In addition, interaction effects between GMA and a judicial thinking style were found. Salespeople high on GMA have the most potential for attaining high levels of sales performance when combined with specific skills; when lacking these skills they may become the firm’s worst performers.
    Keywords: sales;knowledge based marketing;knowledge;general mental ability;thinking styles
    Date: 2008–06–18

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