nep-mkt New Economics Papers
on Marketing
Issue of 2009‒02‒07
nine papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Price Variability and the Marketing of Goat Classifications By Nelson, Mack C.; Lui, Xuanli; Styles, Erika
  2. An Empirical Analysis of Individual Level Casino Gambling Behavior By Narayanan, Sridhar; Manchanda, Puneet
  3. Consumer behaviour: evolution of preferences and the search for novelty By Garcia-Torres, Abraham
  4. Consumer Preferences in Purchasing Beef and the Values they Attribute to Branded Beef Products By Hanagriff, Roger; Rhoades, Ryan; Wilmeth, Doug
  5. Improved Baseline Sales By Kurt A. Jetta; Erick W. Rengifo
  6. How Much are Consumers Paying for Organic Baby Food? By Smith, Travis A.; Huang, Chung L.; Lin, Biing-Hwan
  7. Will Higher Shipping Costs Drive the U.S. to Source More Localized Produce? By Woods, Timothy; Saghaian, Sayed; Ona, Lucia
  8. (R)evolution of the E-grocery Industry: Strategic Implications By Mário Pedro Ferreira
  9. An Overview of Needs Theories behind Consumerism By Ward, David; Lasen, Marta

  1. By: Nelson, Mack C.; Lui, Xuanli; Styles, Erika
    Keywords: marketing, goats, Demand and Price Analysis, Marketing,
    Date: 2009–01
  2. By: Narayanan, Sridhar (Stanford U); Manchanda, Puneet (U of Michigan)
    Abstract: Gambling and gaming has evolved to becoming a very large and pervasive industry in the United States over the last three decades, with over $73 billion in revenues and 33% adult participation. The nature of this industry and its rapid growth has led to a lot of debate about its benefits and costs. In this paper, our access to a rich and new dataset on individual consumer behavior vis-a-vis casino visitation and activity allows us to take a data based approach to investigating some of the commonly raised criticisms of the casino gaming industry. We focus our attention on three of the commonly cited criticisms of the gambling industry-- it leads to addictive behavior (with potentially harmful individual and societal effects), it leverages "irrational" consumer beliefs and it uses marketing incentives to influence gamblers. We use the commonly accepted definition of addiction from the economics literature to test for its presence i.e., that current consumption is affected by past consumption. We fit a model of the play decision and bet amount (given play) to data from a consumer panel of casino visitors over a two year period. Our data are at a highly disaggregate level--we look at play decisions within a given trip for individual consumers. Our modeling approach allows us to exploit the rich variation in the data both across and within individuals. Our results show that, controlling for other reasons that could induce play, only about 8% of all consumers show evidence for addiction (as defined by us). While this proportion may look small (in absolute terms), it is consistent with research in other academic fields that has focused on casino gamblers. This result also suggests, that for a majority of casino gamblers, the failure to find patterns of addiction may be interpreted as support for the view that the role of casinos for these gamblers is to provide entertainment. In terms of irrational beliefs, our analysis allows us to test for behavior based on two such beliefs--the "hot hand myth" and the "gamblers fallacy." We find evidence for the gamblers fallacy in both directions--consumers who win (lose) a bet are less (more) likely, on average, to continue betting. We believe this is the first study to conduct such an analysis on individual-level behavioral data (as opposed to laboratory settings). We also find that marketing activity has a positive effect on the decision to play and the amount to bet. In terms of effect size, marketing (comps) seem to be more similar to advertising rather than price promotions. Finally, we find some evidence that marketing activity is more effective for consumers who exhibit more addictive behavior.
    Date: 2008–09
  3. By: Garcia-Torres, Abraham (UNU-MERIT, Maastricht University)
    Abstract: Evolution of consumers' preferences has been recognized by many scholars as being key to understanding technological change. However, mainstream economics cannot account for the seemingly irrational behavior of consumers based on changes in taste – consumer theory lacks exibility and accuracy to explain changes in consumer behavior. Adopting a behavioral psychology perspective, this paper argues that there is a rational pattern in the change of consumers' tastes. I argue that behavioral psychology offers us a unique perspective to solve some of the paradoxes of consumer behavior. This paper incorporates exibility into CES utility function to more adequately account for, and differentiate between, habit formation routines. A model is developed in which habit formation and consumption of new goods are interrelated.
    Keywords: Consumer behaviour, Consumer choice, Technological change, Innovations
    JEL: D11 D12 D91 O31
    Date: 2009
  4. By: Hanagriff, Roger; Rhoades, Ryan; Wilmeth, Doug
    Abstract: There have been significant changes in consumer demand at the retail counter, such as health, convenience, palatability preferences, and safety concerns. Branded programs offer a means for satisfying consumer demand for high quality and differentiated beef products. To help answer the question of who is purchasing branded beef market and why, an online survey was sent to interested beef consumers to determine their preferences of purchasing, as well as values they attribute to certain product characteristics. The total sample response from 13,000 contacted consumers was 502 responses, which according to Kreiche and Morgan, 1970 is a valid sample size. Decision variables ranked moderate and always important include guaranteed tender and satisfaction, low price, and low fat or lean. Differences in the strength of the decision values, such as always important, moderately important to seldom important were found with gender, purchasing frequency product differences. Results provide a better understanding of consumer decisions to buy branded beef and may assist producers with advertising decisions.
    Keywords: Beef demand, consumer beef demand, demand preferences for beef, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics,
    Date: 2008–01–16
  5. By: Kurt A. Jetta (TABS Group); Erick W. Rengifo (Fordham University, Department of Economics)
    Abstract: This paper develops a more accurate and robust baseline sales (sales in the absence of price promotion) using Dynamic Linear Models and a Multiple Structural Change Model (DLM/MSCM). We first discuss the value of utilizing aggregated (chain-level) vs. disaggregated (store-level) point-of-sale (POS) data to estimate baseline sales and measure promotional effectiveness. We then discuss the practical advantage of the DLM/MSCM modeling approach using aggregated data, and we propose two tests to determine the superiority of a particular baseline estimate: the minimization of weekly sales volatility and the existence of no correlation with promotional activities in these estimates. Finally, we test this baseline against the industry standard ones on the two measures of performance. Our tests find the DLM/MSCM baseline sales to be superior to the existing log-linear models by reducing the weekly baseline sales volatility by over 80% and by being uncorrelated to promotional activities.
    Keywords: Dynamic linear Models, Multiple Structural Change Model, Consumer Packaged Goods, Marketing, Sales, Promotions. Baseline Sales.
    Date: 2009
  6. By: Smith, Travis A.; Huang, Chung L.; Lin, Biing-Hwan
    Abstract: Using retail purchase data, price premiums and discounts associated with household demographics, market factors, and product attributes (focusing on the organic attribute for strained baby food) are estimated using a hedonic pricing model. Results suggest that the organic premium ranges from about 12 to 49 percent in 2004 and from 30 to 52 percent in 2006. Tests for significant changes relative to product attributes show that while the price of conventional baby food has stayed relatively the same, the premium for organic baby food has increased.
    Keywords: organic baby food, hedonic price, market factors, product attributes, Nielsen Homescan, organic premium, Consumer/Household Economics, Demand and Price Analysis,
    Date: 2009
  7. By: Woods, Timothy; Saghaian, Sayed; Ona, Lucia
    Abstract: The recent wide fluctuations in diesel fuel costs and subsequent trucking costs has raised speculation within the produce industry of potential structural shifts in the location of production. Recent increases in demand for local produce seem to further support speculation toward this end. A component pricing model is used to actually examine the impact of fuel prices on farm gate and retail produce prices for strawberries, lettuce, and potatoes. The study finds that distribution costs, while significantly increasing in absolute value, have surprisingly little contribution to changes in retail prices even in markets distant to the primary production regions. These results suggest that factors other than lower distribution costs for local produce will ultimately need to drive the supply for these products.
    Keywords: produce, local, marketing margin, fuel cost, Agribusiness, Crop Production/Industries, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, Q11, Q12, Q13, Q18,
    Date: 2009
  8. By: Mário Pedro Ferreira (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto))
    Abstract: The use of the Internet in grocery retailing created the need for new business models, but it did not bring radical changes to consumer behaviour. Despite adopting revolutionary business models in their early days, online grocery firms did not manage to survive or reach profitability without using existing supermarket infrastructure and knowledge. Today, with most online grocers supplying small market niches, it is important to understand the reasons that made online grocers adopt a hybrid click and mortar strategy. Historical evidence from online grocery in the UK and the US suggests that firms had to adopt contingent strategies to face the difficulty of attracting consumers, sectorial entry barriers and financial targets.
    Keywords: e-grocery, contingency, mismatch, revolution and evolution
    Date: 2009–01
  9. By: Ward, David; Lasen, Marta
    Abstract: Wynn and Coolidge [2004] have hypothesized that one of the key reasons why the Homo Sapiens progressed to being modern man while the Neanderthal man didn’t, is that the former developed through innovation (from artefacts to advanced hunting methods) while the latter has left no trace of such evolution. Almost as if the Neanderthal man did not see the need to progress and accepted circumstances as fact. If this is true then the Homo Sapiens have not only developed psychological and objective needs but have progressively updated them as well. Maslow put it beautifully by saying “You will either step forward into growth, or you will step backward into safety”. This paper is the first part of a two part series. Here we provide an overview of needs theories and discuss them in the context of consumerism, consumption and opportunities for enterprises. In part two, needs and opportunities are linked to markets, benefits and strategies through a specific 3D model based on Maslow’s pyramid. To pave the way for this approach we also promote a model (PIE-Persons, Institutions and Enterprises) with the intent to help enterprises view consumers, institutions and their organisation as one interweaved entity. Needs theories are known to be crucial behind much of the understanding of human behaviour and in particular in the workplace and by the consumer. This paper examines the development of hierarchical needs theory from Maslow to Gough with the intent to better identify consumer needs, provide examples of current and past business opportunities and macroscopically show the progression from red to blue ocean strategies . The authors provide an overview of needs theories seeded through motivational theory also with the aim to uncover the differences in having (sometimes known as deficit needs) and being needs (sometimes known as growth needs) and then subsequently link them to enterprise strategies, improved consumer understanding and better market exploitation.
    Keywords: Maslow; Herzberg; Needs; Motivation; Having; Being; Uniformity. Diversity; Part A
    JEL: M30 M20 A10
    Date: 2009–01–31

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