nep-mkt New Economics Papers
on Marketing
Issue of 2009‒09‒11
six papers chosen by
Joao Carlos Correia Leitao
Polytechnic Institute of Portalegre and Technical University of Lisbon

  1. The Premium for Organic Wines: Estimating a Hedonic Price Equation from the Producer Side By Alessandro, Corsi; Strøm, Steinar
  2. The Launch of Innovative Product-Related Services: Lessons from automotive telematics By Sylvain Lenfle; Christophe Midler
  3. First-price auctions with resale: the case of many bidders By Virag, Gabor
  4. Celebrities and Shoes on the Female Brain: The Neural Correlates of Product Evaluation in the Context of Fame By Stallen, M.; Smidts, A.; Rijpkema, M.; Smit, G.; Klucharev, V.; Fernandez, G.
  5. Does Anyone Read the Fine Print? Testing a Law and Economics Approach to Standard Form Contracts By Yannis Bakos; Florencia Marotta-Wurgler; David R. Trossen
  6. Crossing innovation and product projects management: comparative analysis in the automotive industry. By Romain Beaume; Rémi Maniak; Christophe Midler

  1. By: Alessandro, Corsi (Department of Economics, University of Turin, Italy); Strøm, Steinar (Dept. of Economics, University of Oslo)
    Abstract: Organic production techniques are an increasing, though minor so far, part of agriculture, and organic wines are increasingly produced and appreciated. Nevertheless, since the organic technique is more costly, a crucial question is whether organic wines benefit from a price premium. In this paper a hedonic price function has been estimated for Piedmont organic and conventional wines. Unlike the current literature on the determinants of wine prices, we used data on the production side in addition to variables of interest for consumers. One question was whether farm and operator’s characteristics of no interest for consumers affect wine prices. The second question was whether organic wine obtains a price premium relative to conventional wine. Our results show that, along with characteristics that are of interest to consumers, like the appellation and the variety, some farm and producer characteristics that are not directly relevant for consumers do significantly affect wine prices. We also find that, though there is not a premium in the sense of an addition to other price components, given farmers’ and wines’ characteristics, organic wines do command higher prices.
    Keywords: Organic wine; hedonic price; price premium; Piedmont
    JEL: C21 L11 Q12
    Date: 2009–02–20
  2. By: Sylvain Lenfle (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X); Christophe Midler (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X)
    Abstract: In the literature on new product development, most existing studies on the end of the design process concentrate on managing ramp-up in the field of manufactured products. This situation poses a problem at a time when our economies increasingly depend upon services and products are more and more related with sophisticated services that provides value for customers and producers. This article examines the management of the final phases of the design process of an innovative product-related service. Our research thus makes three contributions: 1) An analysis of the implementation process shows that the simultaneity of the production and consumption of a service means that three types of learning – technical, sales and uses – take place at the same time. Launch management strategies have thus to be adapted. 2) An analysis of the data collected confirms this difference by bringing to light great contrasts in these different aspects of learning. 3) This led us to identify a field that needs exploration by researchers in product and services innovation: the design of the sales process. Furthermore we underline two scenarios to manage the launch of innovative product-related services.
    Keywords: project management, Services, Automotive telematics, Product Launch, Ramp up, Innovation Management
    Date: 2009
  3. By: Virag, Gabor
    Abstract: If agents engage in resale, it changes bidding in the initial auction. Resale offers extra incentives for bidders with lower valuations to win the auction. However, if resale markets are not frictionless, then use values affect bidding incentives, and stronger bidders still win the initial auction more often than weaker ones. I consider a first price auction followed by a resale market with frictions, and con…rm the above statements. While intuitive, our results differ from the two bidder case of Hafalir and Krishna (2008): the two bidders win with equal probabilities regardless of their use values. The reason is that they face a common (resale) price at the relevant margin, a property that fails with more than two bidders. Numerical simulations show that asymmetry in winning probabilities increases in the number of bidders, and in large markets resale loses its e¤ect on allocations.
    Keywords: auction; resale
    JEL: D44
    Date: 2009
  4. By: Stallen, M.; Smidts, A.; Rijpkema, M.; Smit, G.; Klucharev, V.; Fernandez, G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Celebrity endorsement is omnipresent. However, despite its prevalence, it is unclear why celebrities are more persuasive than (equally attractive) non-famous endorsers. The present study investigates which processes underlie the effect of fame on product memory and purchase intention by the use of functional magnetic resonance imaging methods. We find an increase in activity in the medial orbitofrontal cortex (mOFC) underlying the processing of celebrity-product pairings. This finding suggests that the effectiveness of celebrities stems from a transfer of positive affect from celebrity to product. Additional neuroimaging results indicate that this positive affect is elicited by the spontaneous retrieval of explicit memories associated with the celebrity endorser. Also, we demonstrate that neither the activation of implicit memories of earlier exposures nor an increase in attentional processing is essential for a celebrity advertisement to be effective. By explaining the neural mechanism of fame, our results illustrate how neuroscience may contribute to a better understanding of consumer behavior.
    Keywords: celebrity endorsement;persuasion;medial orbital frontal cortex;affect transfer;neuromarketing;neuroeconomics
    Date: 2009–08–26
  5. By: Yannis Bakos (Stern School of Business, New York University); Florencia Marotta-Wurgler (School of Law, New York University); David R. Trossen (Boalt School of Law, University of California at Berkeley)
    Abstract: A cornerstone of the law and economics approach to standard form contracts is the Òinformed minorityÓ hypothesis: in competitive markets, a minority of term-conscious buyers is enough to discipline sellers from offering unfavorable boilerplate terms. The informed minority argument is widely invoked to limit intervention in consumer transactions, but there has been little empirical investigation of its validity. We track the Internet browsing behavior of 45,091 households with respect to 66 online software companies to study the extent to which potential buyers access the standard form contract associated with software purchases, the end user license agreement. We find that only one or two out of every thousand retail software shoppers chooses to access the license agreement, and those that do spend too little time, on average, to have read more than a small portion of the license text. The results cast doubt on the relevance of the informed minority mechanism in a specific market where it has been invoked by both theorists and courts and, to the extent that comparison shopping online is relatively cheap and easy, suggest limits to the mechanism more generally.
    Keywords: online contracts, clickwrap, informed minority, ecommerce law, contracts law, standard form contracts
    JEL: D83 K12 L14
    Date: 2009–08
  6. By: Romain Beaume (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X); Rémi Maniak (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X); Christophe Midler (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X)
    Abstract: Projectification and platform approaches have been two main transformation trends implemented by industrial firms during the1990s. For those firms, innovation management no longer deals with introducing radically and totally new products, but rather withapplying innovative features within a regular stream of products and platforms. This paper proposes an analytical framework thatcan address the resulting interplay between innovative features and new products. This framework relies on the concept of innovationlife-cycle management (ILCM). The paper presents the early results from the comparison of five case studies from three OEMs.
    Keywords: Organizational learning; New product projects portfolio; Innovation management; Automotive industry; Comparative analysis.
    Date: 2009–02

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