nep-mkt New Economics Papers
on Marketing
Issue of 2010‒08‒28
ten papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Targeting in Advertising Markets: Implications for Offline vs. Online Media By Dirk Bergemann; Alessandro Bonatti
  2. Marketing éducatif (éthique et socialement responsable) ? By Yvon Pesqueux
  4. Estimation of Search Frictions in the British Electricity Market By Giulietti, Monica; Waterson, Michael; Wildenbeest, Matthijs R.
  5. Consumer Loss Aversion and the Intensity of Competition By Heiko Karle; Martin Peitz
  6. Estimating households' willingness to pay By Rachel Griffith; Lars Nesheim
  7. Uncertain Demand, Consumer Loss Aversion, and Flat-Rate Tariffs By Fabian Herweg
  8. Word of Mouth Advertising, Credibility and Learning in Networks By Chatterjee, Kalyan; Dutta, Bhaskar
  9. Cross-border Merger, Vertical Structure, and Spatial Competition By Beladi, Hamid; Chakrabarti, Avik; Marjit, Sugata
  10. Drivers of Sales Performance: A Contemporary Meta-Analysis By Verbeke, W.J.M.I.; Dietz, H.M.S.; Verwaal, E.

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT Sloan School of Management)
    Abstract: We develop a model with many advertisers (products) and many advertising markets (media). Each advertiser sells to a different segment of consumers, and each medium has a different ability to target advertising messages. We characterize the competitive equilibrium in the media markets and evaluate the implications of targeting in advertising markets. An increase in the targeting ability leads to an increase in the total number of purchases (matches), and hence in the social value of advertising. Yet, an improved targeting ability also increases the concentration of firms advertising in each market. Surprisingly, we then find that the equilibrium price of advertisements is first increasing, then decreasing in the targeting ability. We trace out the implications of targeting for competing media. We distinguish offline and online media by their targeting ability: low versus high. As consumers, relative exposure to online media increases, the revenues of offline media decrease, even though the price of advertising might increase.
    Keywords: Targeting, Advertising, Online advertising, Sponsored search, Media markets
    JEL: D44 D82 D83
    Date: 2010–03
  2. By: Yvon Pesqueux (LIPSOR - Laboratoire d'Innovation, Prospective stratégique et Organisation - Conservatoire National des Arts et Métiers)
    Abstract: Premiers éléments de l'argumentation : l'environnement institutionnel de ce marketing éducatif (éthique et socialement responsable Conclusion : des éléments d'un marketing éducatif
    Keywords: marketing éthique, business and society
    Date: 2010
  3. By: Tanel Mehine
    Abstract: The purpose of this article is to find out the relationship between yellow price tags and consumer reference prices. A laboratory study was conducted among 150 respondents, who were put in an experimental purchase situation and their initial internal reference prices were compared affected reference prices. The results revealed that consumers perceive yellow price tags as presenters of discounts. A comparison of the mean values showed that yellow price tags influence the reference price and, moreover, a yellow price tag increased the reference price. As a practical outcome, the results of the study indicated that companies have the opportunity to increase the consumer’s reference price and thereby to raise revenues by changing the colour of the price tag without offering an actual discount.
    Keywords: yellow price tags, consumer behaviour, reference price
    JEL: M30 M31 M39
    Date: 2010
  4. By: Giulietti, Monica (Nottingham University Business School); Waterson, Michael (Department of Economics, University of Warwick); Wildenbeest, Matthijs R. (Kelley School of Business, Indiana University)
    Abstract: This paper studies consumer search and pricing behaviour in the British domestic electricity market following its opening to competition in 1999. We develop a sequential search model in which an incumbent and an entrant group compete for consumers who nd it costly to obtain information on prices other than from their current supplier. We use a large data set on prices and input costs to structurally estimate the model. Our estimates indicate that consumer search costs must be relatively high in order to rationalize observed pricing patterns. We confront our stimates with observed switching behaviour and nd they match well. Keywords:
    Keywords: electricity ; consumer search ; price competition JEL Classification: C14 ; D83 ; L13
    Date: 2010
  5. By: Heiko Karle (Université Libre de Bruxelles); Martin Peitz (University of Mannheim)
    Abstract: Consider a differentiated product market in which all consumers are fully informed about match value and price at the time they make their purchasing decision. Initially, consumers become informed about the prices of all products in the market but do not know the match values. Some consumers have reference-dependent utilities—i.e., they form a reference-point distribution with respect to match value and price that will make them realize gains or losses if their eventually chosen product performs better or, respectively, worse than their reference point in both dimensions. Loss aversion in the match-value dimension leads to a less competitive outcome, while loss aversion in the price dimension leads to a more competitive equilibrium than a market in which consumers are not subject to reference dependence. Depending on the weights consumers attach to the price and the match-value dimension, a market with loss-averse consumers may be more or less competitive than a market with consumers that do not have reference-dependent utilities. We also show that consumer loss aversion tends to lead to higher prices if the market accommodates a larger number of firms.
    Keywords: Loss Aversion, Reference-Dependent Utility, Behavioral Industrial Organization, Imperfect Competition, Product Differentiation
    JEL: D83 L13 L41 M37
    Date: 2010–05
  6. By: Rachel Griffith (Institute for Fiscal Studies and University College London); Lars Nesheim (Institute for Fiscal Studies)
    Abstract: <p><p>The recent literature has brought together the characteristics model of utility and classic revealed preference arguments to learn about consumers' willingness to pay. We incorporate market pricing equilibrium conditions into this setting. This allows us to use observed purchase prices and quantities on a large basket of products to learn about individual household's willingness to pay for characteristics, while maintaining a high degree of flexibility and also avoiding the biases that arise from inappropriate aggregation.</p> </p><p><p>We illustrate the approach using scanner data on food purchases to estimate bounds on willingness to pay for the organic characteristic. We combine these estimates with information on households' stated preferences and beliefs to show that on average quality is the most important factor affecting bounds on household willingness to pay for organic, with health concerns coming second, and environmental concerns lagging far behind. </p></p>
    Date: 2010–08
  7. By: Fabian Herweg (University of Bonn)
    Abstract: The so called flat-rate bias is a well documented phenomenon caused by consumers' desire to be insured against fluctuations in their billing amounts. This paper shows that expectation-based loss aversion provides a formal explanation for this bias. We solve for the optimal two-part tariff when contracting with loss-averse consumers who are uncertain about their demand. The optimal tariff is a flat rate if marginal cost of production is low compared to a consumer's degree of loss aversion and if there is enough variation in the consumer's demand. Moreover, if consumers differ with respect to the degree of loss aversion, firms' optimal menu of tariffs typically comprises a flat-rate contract.
    Keywords: Consumer Loss Aversion; Flat-Rate Tariffs; Nonlinear Pricing; Uncertain Demand
    JEL: D11 D43 L11
    Date: 2010–07
  8. By: Chatterjee, Kalyan (Department of Economics, The Pennsylvania State University); Dutta, Bhaskar (Department of Economics, University of Warwick)
    Abstract: Social networks representing the pattern of social interactions - who talks to or who observes whom- play a crucial role as a medium for the spread of information, ideas, diseases, products. Someone in the population may struck with an infection or may adopt a new technology, and it can then either die out quickly or spread throughout the population, depending possibly on the location of the initial appearance, the structure of the network - for instance, how dense it is. The dynamics of adoption -the extent to which individuals are in uenced by their neighbours, the impact of "word of-mouth" communication- also plays a role in determining the speed of diffusion. Given the large range of contexts in which social learning is important, it is not surprising that researchers from various disciplines have studied processes of diffusion from a variety of perspectives.
    Date: 2010
  9. By: Beladi, Hamid; Chakrabarti, Avik; Marjit, Sugata
    Abstract: This analysis is a natural follow up of continued efforts to assess the consequences of cross-border mergers in industries with a vertical structure. Absent free trade, in a vertically related industry, the downstream firms will not choose the social optimum under spatial price discrimination when none of the downstream firms produce all the varieties that consumers demand. We show that free trade will induce the downstream firms to gravitate toward the social optimum but an upstream merger across borders, under free trade, will pull the downstream firms away from the social optimum back to their autarkic positions.
    Keywords: Product-differentiation; Price-discrimination; Spatialcompetition; Firm-location; Cross-border Merger
    JEL: L13 F12 D43
    Date: 2010
  10. By: Verbeke, W.J.M.I.; Dietz, H.M.S.; Verwaal, E.
    Abstract: It has been twenty-five years since the publication of a comprehensive review of the full spectrum of sales-performance drivers. This study takes stock of the contemporary field and synthesizes empirical evidence from the period 1982–2008. The authors revise the classification scheme for sales performance determinants devised by Walker, Churchill, and Ford (1977) and estimate both the predictive validity of its sub-categories and the impact of a range of moderators on determinant-sales performance relationships. Based on multivariate causal model analysis, the results make two major observations: (1) Five sub-categories demonstrate significant relationships with sales performance: selling-related knowledge (β=.28), degree of adaptiveness (β=.27), role ambiguity (β=-.25), cognitive aptitude (β=.23) and work engagement (β=.23). (2) These sub-categories are moderated by measurement method, research context, and sales-type variables. The authors identify managerial implications of the results and offer suggestions for further research, including the conjecture that as the world is moving toward a knowledge-intensive economy, salespeople could be functioning as knowledge-brokers. The results seem to back this supposition and indicate how it might inspire future research in the field of personal selling.
    Keywords: sales;sales-performance;sales drivers
    Date: 2010–07–20

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