nep-mkt New Economics Papers
on Marketing
Issue of 2008‒07‒14
twelve papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Firms’ Ethics, Consumer Boycotts, and Signalling By Glazer, Amihai; Kanniainen, Vesa; Poutvaara, Panu
  2. E-commerce and the Market Structure of Retail Industries By Maris Goldmanis; Ali Hortacsu; Chad Syverson; Onsel Emre
  3. The supermarket revolution in developing countries: Policies for "competitiveness with inclusiveness" By Reardon, Thomas; Gulati, Ashok
  4. Static efficiency in Dutch supermarket chain By Harold Creusen; Arno Meijer; Gijsbert Zwart; Henry van der Wiel
  5. International Strategic Alliances for Local Market Entry: Direct Launches versus Marketing Alliances in Pharmaceuticals By TAKECHI Kazutaka
  6. Customer Needing - Conceptualising Industrial Service from a Customer Perspective By Strandvik, Tore; Holmlund, Maria; Edvardsson, Bo
  7. Price Discrimination Bans on Dominant Firms By Degryse, H.A.
  8. Leading in Service Innovation: Three perspectives on service value delivery in a European context By Mathe, Hervé
  9. Investigating the impact of C2C electronic marketplace quality on trust By Verhagen, T.
  10. Preference Heterogeneity and Habit Persistence: the Case of Breakfast Cereal Consumption By Thunström, Linda
  11. Market Entry and Competitive Strategies in the German B2B Parcel Market By Helmut Dietl; Markus Lang; Martin Lutzenberger; Stephan Wagner
  12. Between Agora and Shopping Mall By Falkinger, Josef

  1. By: Glazer, Amihai (University of California, Irvine); Kanniainen, Vesa (University of Helsinki); Poutvaara, Panu (University of Helsinki)
    Abstract: This paper develops a theory of consumer boycotts. Some consumers care not only about the products they buy but also about whether the firm behaves ethically. Other consumers do not care about the behavior of the firm but yet may like to give the impression of being ethical consumers. Consequently, to affect a firm’s ethical behavior, moral consumers refuse to buy from an unethical firm. Consumers who do not care about ethical behavior may join the boycott to (falsely) signal that they do care. In the firm’s choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of behaving ethically. In particular, when the cost is (relatively) low, ethical behavior arises from a prisoners’ dilemma as the firm’s optimal strategy.
    Keywords: firm’s ethical code, consumer morality, boycotts
    JEL: M14 D43
    Date: 2008–05
  2. By: Maris Goldmanis; Ali Hortacsu; Chad Syverson; Onsel Emre
    Abstract: While a fast-growing body of research has looked at how the advent and diffusion of e-commerce has affected prices, much less work has investigated e-commerce's impact on the number and type of producers operating in an industry. This paper theoretically and empirically takes up the question of which businesses most benefit and most suffer as consumers switch to purchasing products online. We specify a general industry model involving consumers with differing search costs buying products from heterogeneous-type producers. We interpret e-commerce as having reduced consumers' search costs. We show how such reductions reallocate market shares from an industry's low-type producers to its high-type businesses. We test the model using U.S. data for three industries in which e-commerce has arguably decreased consumers' search costs considerably: travel agencies, bookstores, and new auto dealers. Each industry exhibits the market share shifts predicted by the model. Interestingly, while the industries experienced similar changes, the specific mechanisms through which e-commerce induced them differed. For bookstores and auto dealers, industry-wide declines in small outlets reflected market-specific impacts, evidenced by the fact that more small-store exit occurred in local markets where consumers' use of e-commerce channels grew fastest. For travel agencies, on the other hand, the shifts reflected aggregate changes driven by airlines cutting agent commissions as consumers started buying tickets online.
    JEL: D4 L1 L8
    Date: 2008–07
  3. By: Reardon, Thomas; Gulati, Ashok
    Abstract: "A “supermarket revolution” has been underway in developing countries since the early 1990s. Supermarkets (here referring to all modern retail, which includes chain stores of various formats such as supermarkets, hypermarkets, and convenience and neighborhood stores) have now gone well beyond the initial upper- and middle-class clientele in many countries to reach the mass market. Within the food system, the effects of this trend touch not only traditional retailers, but also the wholesale, processing, and farm sectors. The supermarket revolution is a “two-edged sword.” On the one hand, it can lower food prices for consumers and create opportunities for farmers and processors to gain access to quality-differentiated food markets and raise incomes. On the other hand, it can create challenges for small retailers, farmers, and processors who are not equipped to meet the new competition and requirements from supermarkets. Developing-country governments can put in place a number of policies to help both traditional retailers and small farmers pursue “competitiveness with inclusiveness” in the era of the supermarket revolution. Some countries are already taking such steps, and their experiences offer lessons for others." from Author's text
    Keywords: Supermarkets, Wholesalers, Modern retail, Small farmers, Traditional retail, Supply chains, Competitiveness, Inclusiveness,
    Date: 2008
  4. By: Harold Creusen; Arno Meijer; Gijsbert Zwart; Henry van der Wiel
    Abstract: In this study, we analyse changes in market power in the Dutch supermarket chain and discuss the effects on welfare. The supermarket chain includes consumers, supermarkets, buyer groups and food manufactures. We look at the theoretical background of market power. Special attention has been paid to recent theories of buyer power of retailers in the vertical chain. Theory suggests that supermarkets can enhance their buyer power by, for instance, using own private brands as an outside option in bargaining with manufacturers. Using firm-level data, indicators reveal that profit margins of both supermarkets and of manufacturers have declined between 1993 and 2005. Hence, competition on these markets seems to have become tougher and mark-ups lower over time. Furthermore, we find no significant empirical indications that supermarkets were able to use their buyer power to shift profits from manufacturers to supermarkets after 1993. Finally, all else equal, in terms of welfare consumers have benefited from fiercer competition in terms of lower prices.
    Keywords: Supermarket; price cost margins; buyer power; seller power; welfare
    JEL: D40 D61 L11
    Date: 2008–04
  5. By: TAKECHI Kazutaka
    Abstract: This paper investigates the determinants of international strategic alliances by pharmaceutical firms. When launching drugs onto the market, there are two choices: launching the drugs directly or forming marketing alliances including licensing agreements. Because these choices affect firm revenue structure and the international supply pattern of pharmaceuticals, the impact on world welfare is significant. We examine the determinants of supply mode choice (direct launch versus alliance) by Japanese pharmaceutical companies. Our estimation results reveal that in addition to firm heterogeneity, product - and market - specific determinants of strategic alliances are important: firms with smaller scope economies prefer alliances for drugs with less market potential when intellectual property rights protection (IPP) is strong.
    Date: 2008–07
  6. By: Strandvik, Tore (Swedish School of Economics and Business Administration); Holmlund, Maria (Swedish School of Economics and Business Administration); Edvardsson, Bo (Karlstad University)
    Abstract: Views on industrial service have conceptually progressed from the output of the provider’s production process to the result of an interaction process in which the customer also is involved. Although there are attempts to be customer-oriented, especially when the focus is on solutions, an industrial company’s offering combining goods and services is inherently seller-oriented. There is, however, a need to go beyond the current literature and company practices. We propose that what is needed is a genuinely customer-based parallel concept to offering that takes the customer’s view and put forward a new concept labelled customer needing. A needing is based on the customer’s mental model of their business and strategies which will affect priorities, decisions, and actions. A needing can be modelled as a configuration of three dimensions containing six functions that create realised value for the customer. These dimensions and functions can be used to describe needings which represent starting points for sellers’ creation of successful offerings. When offerings match needings over time the seller should have the potential to form and sustain successful buyer relationships.
    Keywords: industrial service; customer needing; realised value; customer understanding
    Date: 2008–07–04
  7. By: Degryse, H.A. (Tilburg University, Tilburg Law and Economics Center)
    Date: 2008
  8. By: Mathe, Hervé (Institute for Service Innovation and Strategy, ESSEC Paris-Singapore)
    Abstract: This paper explores the relationships between the shaping of “service value propositions” according to three dimensions: “intangible mix”, “physical support”, and “time”, and the strengthening of Innovative Capability in service organizations. After the first introductory section, we describe a series of related innovative moves experienced in the European context by leading companies. We analyze how JCDecaux addresses service recipients simultaneously as citizens and consumers, focusing especially on the Cyclocity project. With CS2 Lawyers in the UK, we envision how automation and technology adoption in professional services may lead to significant productivity improvement for the good of society. Finally, we study how SNCF in France has succeeded in implementing a permanently strengthening value proposition in public service through the recent launching of the IDTGV initiative. In these situations, the service companies have clearly addressed their market considering three different forms of interrelated, yet distinct, targets: “ultimate beneficiaries”, “paying bodies”, and entities or individuals who somehow “prescribe” the consumption of services. In these three situations, we investigate the robustness of the “value propositions” thus implemented, and analyze the particular role played by technology in the success of the new ventures.
    Keywords: Service and innovation; value proposition; technology implementation
    JEL: M13
    Date: 2008–02
  9. By: Verhagen, T. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)
    Date: 2008
  10. By: Thunström, Linda (Department of Economics)
    Abstract: This paper estimates the strength and heterogeneity across households in state dependence associated with breakfast cereal consumption, where positive state dependence implies habit persistence and negative state dependence implies variety-seeking in consumption. The analysis relies on a discrete choice model and finds that breakfast cereal consumption is generally highly habitual, but the degree of habit persistence exhibits heterogeneity across households. In addition, some households can be characterized as variety-seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared to one-adult-households.
    Keywords: consumer choice; habit persistence; food consumption; preference heterogeneity
    JEL: C35 D12
    Date: 2008–07–07
  11. By: Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Martin Lutzenberger (Institute for Strategy and Business Economics, University of Zurich); Stephan Wagner (Chair of Logistics Management, Swiss Federal Institute of Technology Zurich)
    Abstract: This paper analyzes competitive strategies and the impending market entry of a new player in the German Business-to-Business (B2B) parcel market. Currently there a four large service providers in the German B2B parcel market. Each of these incumbent providers operates - albeit with varying degrees of automation - with a classical multi-hub-and-spoke network. The entrant plans to enter the B2B parcel market with a completely new parcel delivery system and network. Such operations shall enable the incumbent to offer new services to potential customers and realize lower costs and prices than the established .rms. We describe the market and contrast the incumbents’ and the entrant’s strategy and operations. We develop a game-theoretic Cournot model with economies of scale and different cost functions to analyze the effect of the entrant’s market entry on competition, market shares, prices, costs and profits. We present calibrated results illustrating the impact of market entry in various scenarios.
    Date: 2008
  12. By: Falkinger, Josef (University of Zurich)
    Abstract: Advertisements provide consumers with knowledge about private products, whereas political information is required to provide voters with knowledge of public issues. Modern information technologies and globalization are increasing the exposure of individuals to information. Goods advertising is competing with political information for people's attention. This paper presents a politico-economic equilibrium model in which the tension between private and public agendas can be analysed. It is shown that in an information-rich society, international goods market integration tends to reduce the quality of public policy. Complementing economic integration with political integration can increase the gains from globalisation, though not in all cases.
    Keywords: globalisation, agenda-setting, information-rich societies, scarcity of attention, advertising
    JEL: D83 L86 H11
    Date: 2008–05

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