nep-mkt New Economics Papers
on Marketing
Issue of 2009‒07‒28
six papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Transaction data: Commercial transaction surveys and test market data By Bernhard Engel
  2. Product Recalls, Imperfect Information, and Spillover Effects: Lessons from the Consumer Response to the 2007 Toy Recalls By Seth M. Freedman; Melissa Schettini Kearney; Mara Lederman
  3. Data Augmentation by Predicting Spending Pleasure Using Commercially Available External Data By P. BAECKE; D. VAN DEN POEL
  4. Pay What You Like By Fernandez, Jose; Nahata, Babu
  5. Assessing the additional impact of Process Recovery Communications on Customer Outcomes: A Comprehensive Service Recovery Approach By Y. VAN VAERENBERGH; B. LARIVIÈRE; I. VERMEIR
  6. Search in the ProductMarket and the Real Business Cycle By Thomas, Y. MATH€; Olivier, PIERRARD

  1. By: Bernhard Engel
    Abstract: Commercial transaction surveys and test market data are important sources for the analysis of consumer behaviour in various markets. The advantage of these surveys is that they do not only rely on “weak” data of consumers but also on “measured” data (eg. sales information, marketing information etc.) The key questions for the analysis of commercial transaction surveys and test market data are the prospective evaluation of market success for launched or relaunched products and services, the influence of marketing and media on product purchases under “real market conditions” and comparison between the test market and the total market. These data are not yet used by the scientific community. There are three major challenges to get access to the data. The owners of the data (market research institutes/”clients”) have to allow data access. The data must be anonymized in various ways (individuals/households, brands/products) without losing relevant information. Furthermore it is necessary to develop quality guidelines for commercial transaction surveys and test market data. In order to setup the process the RATSWD should initiate a project of official statistics, scientific community and commercial market research.
    Keywords: Consumer behaviour, test market
    Date: 2009
  2. By: Seth M. Freedman; Melissa Schettini Kearney; Mara Lederman
    Abstract: In 2007, the Consumer Product Safety Commission (CPSC) issued 276 recalls of toys and other children's products, a sizeable increase from previous years. The overwhelming majority of the 2007 toy recalls were due to high levels of lead content and almost all of these toys were manufactured in China. This period of recalls was characterized by substantial media attention to the issue of consumer product safety and eventually led to the passage of the Consumer Product Safety Improvement Act of 2008. This paper examines consumer demand for toys following this wave of dangerous toy recalls. The data reveal four key findings. First, the types of toys that were involved in recalls in 2007 experienced above average losses in Christmas season sales. Second, Christmas sales of infant/preschool toys produced by manufacturers who did not experience any recalls were about 25 percent lower in 2007 as compared to earlier years, suggesting industry-wide spillovers. Third, a manufacturer’s recall of one type of toy did not lead to a disproportionate loss in sales of their other types of toys. And, finally, recalls of toys that are part of a brand had either positive or negative effects on the demand for other toys in the property, depending on the nature of the toys involved. Our examination of the stock market performance of toy firms over this period also reveals industry wide spillovers. The finding of sizable spillover effects of product recalls to non-recalled products and non-recalled manufacturers has important implications for regulation policy.
    JEL: D12 D18 D8 H1 K0 L15 L2 L81
    Date: 2009–07
    Abstract: Since customer relationship management (CRM) plays an increasingly important role in a company’s marketing strategy, the database of the company can be considered as a valuable asset to compete with others. Consequently, companies constantly try to augment their database through data collection themselves, as well as through the acquisition of commercially available external data. Until now, little research has been done on the usefulness of these commercially available external databases for CRM. This study will present a methodology for such external data vendors based on random forests predictive modeling techniques to create commercial variables that solve the shortcomings of a classic transactional database. Eventually, we predicted spending pleasure variables, a composite measure of purchase behavior and attitude, in 26 product categories for more than 3 million respondents. Enhancing a company’s transactional database with these variables can significantly improve the predictive performance of existing CRM models. This has been demonstrated in a case study with a magazine publisher for which prospects needed to be identified for new customer acquisition.
    Keywords: customer relationship management (CRM), data augmentation, commercially available external data, new customer acquisition, random forests, purchase behavior, attitude, spending pleasure
    Date: 2009–06
  4. By: Fernandez, Jose; Nahata, Babu
    Abstract: We show that when a seller of a di¤erentiated good o¤ers the product allowing consumers an option to pay what they like, then all consumers will never free ride in equilibrium when their valuations of the good are positive, and, under certain conditions, all will consumers would pay. Further, for the seller this pricing could be more pro…table than uniform pricing. If consumers consider the social cost of free riding, or not paying a "fair" price, then our results show that consumers, rather than free riding, may not opt for this option. Instead, they prefer to purchase the good at the market price from a price-setting firm.
    Keywords: pay-what-you-like pricing; self-selection; multidimensional screening; buffet pricing.
    JEL: D21 D11 D4 C72
    Date: 2009–04
    Abstract: Purpose – Services recoveries following service failures not only imply customer recovery opportunities in which customer-company relationships can be restored, they can also result in process improvements (i.e. process recoveries in literature). This paper seeks to identify the additional impact of process recoveries on four customer outcome variables (satisfaction with service recovery, overall satisfaction, repurchase intent and word-of-mouth) by communicating these improvements back to the complaining customers. In addition, we test for outcome differences depending on the level of customer recovery a complaining customer received (no, unsatisfactory or satisfactory), and question whether the use of one-to-one versus one-to-many communication yields different effects.<vr>Design/methodology/approach – A 3 (no, unsatisfactory, and satisfactory customer recovery) x3 (no, one-to-one, and one-to-many process recovery communication) scenario-based experiment was set up to investigate our research goals.<br>Findings - Our results indicate that communicating process recoveries to a complaining customer significantly increases satisfaction with service recovery, overall satisfaction, repurchase intent and positive word-of-mouth. We also find evidence for different effects depending on the level of customer recovery in combination with the type of communication being used.<br>Originality/value – This is the first study to test the effectiveness of communicating process recoveries to complaining customers as part of a more comprehensive service recovery approach. Our findings clearly demonstrate the importance of communicating process recoveries back to customers; especially in situations where customer recovery was absent or perceived as unsatisfactory.
    Keywords: Service failure, service recovery, customer recovery, process recovery, communication
    Date: 2009–04
  6. By: Thomas, Y. MATH€ (CENTRAL BANK OF LUXEMBOURG, Economics and Research Department); Olivier, PIERRARD (CENTRAL BANK OF LUXEMBOURG, Economics and Research Department and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Empirical evidence suggests thatmost firms operate in imperfectly competitivemarkets. We develop a search-matching model between wholesalers and retailers. Firms face search costs and formlong-termrelationships. Price bargain results in both wholesaler and retailer markups, depending on firmsÕ relative bargaining power. We simulate themodel to explore the role of product market search frictions in business cycles. We show that the way search costs are modelled is crucial to provide a realistic picture of firmsÕ business environment and improve the cyclical properties of an otherwise standard real business cycle model.
    Keywords: Business cycle, Frictions, Product market, Price bargain
    JEL: E10 E31 E32
    Date: 2009–07

This nep-mkt issue is ©2009 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.