nep-mkt New Economics Papers
on Marketing
Issue of 2009‒01‒24
four papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. A Brand Specific Investigation of International Cost Shock Threats on Price and Margin with a Manufacturer-Wholesaler-Retailer Model By Till Dannewald; Lutz Hildebrandt
  2. Competencies Driving Innovative Performance of Slovenian and Croatian Manufacturing Firms By Janez Prašnikar; Tanja Rajkoviè; Maja Vehovec
  3. Genetic substitution micro evidence from register data in Norway By Dalen Dag Morten; Furu Kari; Locatelli Marilena; Strom Steinar
  4. Urban fashion policies: lessons from the Barcelona catwalks By Chilese Erica; Russo Antonio Paolo

  1. By: Till Dannewald; Lutz Hildebrandt
    Abstract: In times of increasing oil prices and a weak dollar, European companies that focus their business on the US market may find themselves in a weak position. While many businesses can hedge this kind of risk by relocating production to the US, or employing financial remedies, these strategies may not work throughout the consumer goods industry. Especially for brands whose consumption is strongly impacted by country of origin (e.g. French whine, Swiss chocolate, German beer, etc.), there are only limited possibilities to bypass these challenges. To react efficiently to these threats, managers need a precise picture of complete market mechanisms before they can set up an appropriate marketing strategy to react. We aim to enhance the understanding of market mechanisms that are caused by exogenous cost shocks for typical consumer goods. The contribution of our work is twofold: To investigate the underlying process and to derive concrete managerial suggestions. We hereby propose a combination of two different empirical frameworks to measure the effects of exchange rate variations in fast moving consumer markets. Furthermore we extend existing work in being the first to model vertical interactions with a Manufacturer-Wholesaler-Retailer Model. Within this framework we investigate how changes in local currency affect the strategic management variables of price, margin and profit in a typical consumer goods market. While it is widely known that exchange rate changes cause variations in export/import prices and numerous studies show that the effect of currency fluctuations decreases within the distribution process, recent marketing research in this area has not explicitly accounted for the mechanisms that occur within the distribution channel. Many empirical studies implicate that exogenous cost shocks, which are caused by exchange rate changes, are passed through imperfectly to final consumer prices. We therefore show that the margins of the players involved in the distribution process will be affected differently by exchange rate variation dependent on the competitive situation. Although our empirical study focuses on the effect of exchange rate variations on strategic marketing variables of a selected fast moving consumer good, our framework can be easily adapted to any other market and other sources that cause a change in production cost.
    Keywords: Exchange Rate Pass-Through, Structural Choice Modelling, Endogeneity, International Marketing, Pricing, Channel Management
    JEL: M31 F12 L66 F14 L13
    Date: 2008–12
  2. By: Janez Prašnikar (Faculty of Economics, University of Ljubljana); Tanja Rajkoviè (Faculty of Economics, University of Ljubljana); Maja Vehovec (The Institute of Economics, Zagreb)
    Abstract: The paper discusses the innovative performance of firms and underlying competencies, namely technological, marketing and complementary. Competencies as a broader concept are regarded as networks of capabilities and other firm assets, and can be used for cross-industry comparisons. The study is based on a survey carried out among 86 established Slovenian and Croatian manufacturing companies addressing competencies which they employ in their 105 distinct product lines. Three distinct segments of firms are established based on innovative performance indicators. We used the techniques of multivariate statistics, including cluster analysis and the analysis of variance. The results imply that the most innovative firms simultaneously develop technological, marketing and complementary competencies. They operate in industries in which new technologies offer considerable new opportunities. Weaker technological competencies can be to some extent compensated by strong marketing and complementary competencies. The findings also support the notion of Slovenia and Croatia being technology follower economies, primarily relying on imitation as a source of innovation.
    Keywords: competencies, innovative performance, technology followers, technology leaders
    Date: 2008–12
  3. By: Dalen Dag Morten; Furu Kari; Locatelli Marilena (University of Turin); Strom Steinar
    Abstract: The importance of prices, doctor and patient characteristics, and market institutions for the likelihood of choosing generic drugs instead of the more expensive original brand-name version were examined. Using an extensive dataset extracted from The Norwegian Prescription Database (NorPD) containing all prescriptions dispensed to individuals in February 2004 and 2006 on 23 different drugs (chemical substances) in Norway, we find strong evidence for the importance of both doctor and patient characteristics for the choice robabilities. The price difference between brand and generic versions and insurance coverage both affect generic substitution. Moreover, controlling for the retail chain affiliation of the dispensing pharmacy, we find that pharmacies play an important role in promoting generic substitution. In markets with more recent entry of generic drugs, the brand-name loyalty proves to be much stronger, giving less explanatory power to our demand model.
    Date: 2009–01
  4. By: Chilese Erica; Russo Antonio Paolo
    Abstract: Since at least a decade, Barcelona is on the world map of fashion: Antonio Mirò, Mango, Desigual, Agatha Ruiz de la Prada are famous Barcelona-based stylists teaming up with other large Spanish fashion firms, like Zara, and commercial outlets, like El Corte Ingles, to attract a large interest on local fashion and fashion-based events. Thus, Barcelona has become a straightforward “shopping destination” for millions of international visitors, developing a shopping-related image, various specialised “fashion clusters” for different market targets, and a number of fashion-related events attracting both professionals and a dedicated general audience, like the 080 Barcelona and Bread & Butter. Barcelona’s liberal and leisure-related image can be easily associated with fashion, so if the national capital Madrid retains its role of business capital of the country even in relation to fashion, Barcelona could be considered the emergent “catwalk” of the Mediterranean, challenging other fashion capitals of Europe like Milan and Paris. The article analyses the urban strategy to foster the fashion industry in Barcelona through a redefinition of the “soft” factors establishing the substance of a fashion capital: image, place qualities, events, connectedness and social embeddedness. Tourism, unsurprisingly, is an important component of such strategy. The growth of Barcelona to the stardom of international leisure and cultural tourism is mostly about the “liminal” nature and the symbolically-charged activities of visitors that can be easily extended to fashion and fashion buying behaviour. Through a number of interviews and the analysis of strategy documents and reports, the authors unravel this relationship and assess the effectiveness of this strategy face to other factors playing against a more enduring rooting of fashion industries in the city, like the volatility of the sector, the insufficient international connectedness of the city and its business orientation, and the reorientation of the tourist supply towards low-cost visitors segments.
    Date: 2009–01

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