nep-mkt New Economics Papers
on Marketing
Issue of 2009‒01‒17
seven papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Branding, Marketing and Product Innovation: The attempts of British Banks to Reach Consumers in the Interwar Period By Lucy Newton
  2. Advertising, promotion, and the competitive advantage of interwar UK department stores By Peter Scott; James Walker
  3. The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation By Guy David; Sara Markowitz; Seth Richards
  4. Prices and Market Structure: An Empirical Analysis of the Supermarket Industry in Chile By Loreto Lira; Magdalena Ugarte; Rodrigo Vergara.
  5. The model of the linear city under a triangular distribution of consumers: an empirical analysis on price and location of beverage kiosks in Catania By Torrisi, Gianpiero
  6. Recommender Systems and their Effects on Consumers: The Fragmentation Debate By Daniel Fleder; Kartik Hosanagar
  7. Measuring Consumer Preferences and Estimating Demand Systems. By William Barnett; Apostolos Serletis

  1. By: Lucy Newton (Department of Management, University of Reading)
    Abstract: This paper considers the relationships of the ‘Big Five’ British clearing banks with their personal customers in the interwar period. British banks formed a cartel and dominated the market for domestic financial services from the early twentieth century onwards. This cartel, combined with government imposed restrictions upon lending, meant that banks were severely restrained in their ability to offer new products and consequently to distinguish themselves from their competitors. It also meant that consumers had limited choices in terms of financial service providers. In this environment, bank managements had to rely heavily upon building brand image and utilising marketing techniques in order to differentiate themselves and to attract customers. For many bankers such techniques were new and unpopular – they were not used to communicating with their customers. From the perspective of the consumer, the paper aims to examine if the adoption of such marketing, brand building and public relations efforts were successful or not. It draws upon sources from bank archives but also from newspapers and public inquiries in an attempt to gather both the perceptive of banks and of their customers. The paper presents an analysis of personal customers and their relationships with, and views of, British banks in order to build upon the growing literature concerned with corporations and their consumers.
    Date: 2008
  2. By: Peter Scott (Department of Management, University of Reading); James Walker (Department of Management, University of Reading)
    Abstract: Promotional activity proved key to the success of department stores in fending off competition from the expanding chain stores by drawing in customers to their large, central, premises. This paper uses a combination of quantitative and qualitative archival data to examine the promotional methods of interwar British department stores, variations in the promotional mix between types of store, and returns to promotional activities. A number of distinct regional promotional strategies are identified, shaped by variations in the types of consumer markets served. Meanwhile there was considerable policy convergence among stores towards using promotional activity primarily as a means of imprinting a strong institutionalrand image in the minds of the consuming public.
    Keywords: advertising, promotion, mail order, retailing, department stores
    Date: 2008
  3. By: Guy David; Sara Markowitz; Seth Richards
    Abstract: This paper analyzes the relationship between postmarketing promotional activity and reporting of adverse drug events by modeling the interaction between a welfare maximizing regulator (the FDA) and a profit maximizing firm. In our analysis demand is sensitive to both promotion and regulatory interventions. Promotion-driven market expansions enhance profitability yet may involve the risk that the drug would be prescribed inappropriately, leading to adverse regulatory actions against the firm. The model exposes the effects of the current regulatory system on consumer and producer welfare. Particularly, the emphasis on safety over benefits distorts the market allocation of drugs away from some of the most appropriate users. We then empirically test the relationship between drug promotion and reporting of adverse reactions using an innovative combination of commercial data on pharmaceutical promotion and FDA data on regulatory interventions and adverse drug reactions. We provide some evidence that increased levels of promotion and advertising lead to increased reporting of adverse medical events for certain conditions.
    JEL: I1 K0 K2
    Date: 2009–01
  4. By: Loreto Lira; Magdalena Ugarte; Rodrigo Vergara. (Instituto de Economía. Pontificia Universidad Católica de Chile.)
    Abstract: This paper investigates empirically the relationship between market structure and consumer prices in the supermarket industry in Chile. A panel of monthly data from 16 cities in the period January 1998–September 2006 was used. It was found that the more concentrated the industry is in a city, the higher the prices, while the participation of major national chains in cities tends to lower prices. Moreover, the dominant local chain was found to behave differently depending on whether or not one of the national chains was present in the city. <br><br>Finally, we find that prices rise when a national chain acquires another chain and both were previously in a city (inmerge) while if only one of the two was present (outmerge), prices fall.
    Keywords: Prices, retail, market structure.
    JEL: L11 L81
    Date: 2008
  5. By: Torrisi, Gianpiero
    Abstract: This paper presents a model of oligopolistic competition under horizontal differentiation of products and a triangular distribution of consumers. The triangular distribution aims to represent a case of concentration of consumers around the central location. The main result is that a good deal of differentiation among products is achieved also under such assumption concerning the consumers’ distribution. This means that the incentive to differentiate – to some extent - prevails on the incentive to the central location, although consumers are concentrated in the central location. The analysis on an original empirical case-study is presented, concerning the choice of beverage retails in a town. The empirical evidence is consistent with the theoretical model.
    Keywords: product differentiation; Hotelling; consumers distribution; empirical analysis.
    JEL: L13 D43 C72
    Date: 2008–01
  6. By: Daniel Fleder (Department of Operations and Information Management, The Wharton School); Kartik Hosanagar (Department of Operations and Information Management, The Wharton School)
    Abstract: Recommender systems survey many products to help consumers find which books, music, movies, and news stories best match their interests. This ability to focus more powerfully on one's interests has spawned criticism that recommenders will fragment consumers. Critics say recommenders cause consumers to have less in common and that the media should do more to increase exposure to a variety of content. Others, however, contend that recommenders do the opposite: they may homogenize users because they push users toward the same items and share information among those who would otherwise not communicate. These are opposing views, discussed in the literature for over ten years, for which there is not yet empirical evidence. We present an empirical study of recommender systems in the music industry. In contrast to concerns that users are becoming more fragmented, we find that users become more similar to one another in their purchases. This increase in similarity occurs for two reasons, which we term a taste and volume effect. The taste effect is that consumers buy a more similar assortment of products after recommendations. The volume effect is that consumers have more in common because they simply purchase more after recommendations, increasing the chance of having common purchases with others. When we view consumers as a similarity network before versus after recommendations, we find that the network becomes smaller and denser. These findings suggest that, for this setting, critiques of fragmentation may be misplaced.
    Keywords: recommender systems, collaborative filtering, fragmentation, personalization, long tail
    JEL: O3
    Date: 2008–12
  7. By: William Barnett (Department of Economics, The University of Kansas); Apostolos Serletis (Department of Economics, University of Calgary)
    Abstract: This chapter is an up-to-date survey of the state-of-the art in consumer demand analysis. We review (and evaluate) advances in a number of related areas, in the spirit of the recent survey paper by Barnett and Serletis (2008). In doing so, we only deal with consumer choice in a static framework, ignoring a number of important issues, such as, for example, the effects of demographic or other variables that affect demand, welfare comparisons across households (equivalence scales), and the many issues concerning aggregation across consumers.
    Keywords: Demand systems, Consumer preferences, Theoretical regularity.
    JEL: D12 E21
    Date: 2009–01

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