nep-mkt New Economics Papers
on Marketing
Issue of 2010‒11‒06
nine papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Marketing via Friends: Strategic Diffusion of Information in Social Networks with Homophily By Roman Chuhay
  2. From Business model to Business model portfolio in the european biopharmaceutical industry By Valérie Sabatier; Vincent Mangematin; Tristan Rouselle
  3. Toward the general theory of marketing: The state of the art and one more approach By Cherenkov, Vitally I.
  4. Promoting Fruit and Vegetable Consumption: Are Coupons More Effective Than Pure Price Discounts? By Dong, Diansheng; Ephraim, Leibtag
  5. Are there gambling effects in incentive-compatible elicitations of reservation prices? An empirical analysis of the BDM-mechanism By Holger Müller; Steffen Voigt
  6. ABC Analysis in an Internet Shop: A New Set of Criteria By Chodak, Grzegorz
  7. "Discrete/Continuous Choice Model of the Residential Gas Demand on the Nonconvex Budget Set" By Koji Miyawaki; Yasuhiro Omori; Akira Hibiki
  8. Virgin Finance: Sir Richard Brandson’s pursuit of a significant presence in retail financial services By Batiz-Lazo, Bernardo; Kase, Kimio
  9. Wine export demand shocks and wine tax reform in Australia: Regional consequences using an economy-wide approach By Kym Anderson; Ernesto Valenzuela; Glyn Wittwer

  1. By: Roman Chuhay (University of Alicante)
    Abstract: The paper studies the impact of homophily on the optimal strategies of a monopolist, whose marketing campaign of new product relies on a word of mouth communication. Homophily is a tendency of people to interact more with those who are similar to them. In the model there are two types of consumers embedded into a social network, which differ in friendship preferences and desirable design of product. Consumers can learn about the product directly from an advertisement or from their neighbors. The monopolist chooses the product design and price to influence a pattern of communication among consumers. We find a number of results: (i) for low levels of homophily the product attractive to both types of consumers is preferred to specialized products; (ii) the price elasticity is increasing in homophily; (iii) an increase in the homophily benefits both the monopolist and consumers; and (iv) the product attractive to both types may be optimal even if the monopolist obtains profits only from sales to one type of consumers.
    Keywords: Networks, Word of Mouth, Viral Marketing, Homophily, Diffusion, Social Networks, Random Graphs, Monopoly, Pricing Strategy, Product Design, Marketing, Advertisement
    JEL: D21 D42 D60 D83 L11 L12
    Date: 2010–09
  2. By: Valérie Sabatier (GAEL - Economie Appliquée de Grenoble - INRA : UR1215 - Université Pierre Mendès-France - Grenoble II, 3PX Therapeutics - 3PX Therapeutics, MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Tristan Rouselle (3PX Therapeutics - 3PX Therapeutics)
    Abstract: At the crossroad of firm's core competencies and of the anticipations of consumers' needs, the business model approach complements corporate and business strategy approaches. Firms combine several business models simultaneously to deliver value to different markets, building a portfolio of business model. For managers, business model and business model portfolio are particularly useful to address customer's needs and organisational capabilities of the firm. They also emphasise how the initial core competency of the firm can be extended or redeployed to increase the rent. Business model portfolio describes the firm's strategy to balance time-to-market, revenue stream, risk and interdependencies. It conceptualises firm diversification within the same industry to generate and capture rents. They finally describe two generic dimensions: core competence extension to enlarge the market and to address additional customers and core competence redeployment to serve similar market with the same core competence.
    Keywords: Biopharmaceutical; portfolio; corporate strategy; business strategy; core competence; coherence; value chain
    Date: 2010
  3. By: Cherenkov, Vitally I.
    Abstract: In this paper the author has reviewed in brief advances and obstacles met on the way of the marketing thought to construct the general theory of marketing. The attention, in considerable part, is focused on understanding general theory of marketing in Russia. Based on analysis of the most important works, made by Western scholars in the field of marketing, the conclusions highlighting a huge work as well as its incompleteness is made. The original classification schemes designed by well-known Western marketing scholars are estimated as the approaches to the general theory of marketing only. The hypotheses concerning a need to use a deductive approach supported by positive instruments of Marxist political economy was formulated. The author has made the conclusion the kit of tools for designing the general theory of marketing is to be added by an analytical knowledge extracted from exact sciences. Finally, a holistic model of emphatically-communicative approach to building general theory of marketing, applicable, to the author’s opinion, to putting in order partial marketing theories (sub-theories) and arranging well-focused theoretical studies in this field of marketing science.
    Keywords: general theory of marketing, main category, cost-value approach, market theory evolution, matched marketing filtration, marketing empathy and ecology,
    Date: 2010
  4. By: Dong, Diansheng; Ephraim, Leibtag
    Abstract: The U.S. Department of Agriculture administers food and nutrition assistance programs that promote fruit and vegetable consumption. But consumption remains relatively low among program recipients as well as among the general U.S. population. The perceived high cost of produce is often cited as a deterrent to more consumption. This study looks at coupons and price discounts, two methods of lowering the cost of fruits and vegetables, and uses household purchase data and a consumer demand model to examine each method. Coupons infl uence consumer behavior through a price-discount effect and an informational/advertising effect. Because of this dual effect, the use of a coupon to increase fruit and vegetable purchases may be more effective than a pure price-discount policy or other noncoupon promotion. Assuming a coupon usage rate of 10 to 50 percent, lowering prices through a â10 percent offâ coupon would increase average weekly fruit and vegetable quantities purchased by 2 to 11 percent, as compared with a 5- to 6-percent effect for a pure price discount.
    Keywords: fruit and vegetable consumption, coupons, price discounts, consumer demand, dual effect of coupons, informational advertising effects, Food Consumption/Nutrition/Food Safety,
    Date: 2010–06
  5. By: Holger Müller (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Steffen Voigt (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Pricing research suggests incentive compatible evaluations of separate products in so-called monadic designs when consumers' situation-specific WTP is to be elicited in a monopolistic purchase setting. In our study, the lottery-based BDM-mechanism is applied for measuring subjects' WTP for a fast moving consumer good in binding one-on-one interviews at the point of purchase. In previous studies, the validity of elicited WTP measures is commonly checked within subjects with respect to indicators of face and criterion validity (such as interest in buying, preference ratings, compliance rates). In addition, we observed real purchases of a separate validation sample at the point of purchase, thus checking external validity between subjects. As a result, the BDM-based WTPs reveal a sufficient degree of internal face validity. However, the external validity in terms of a goodness of fit between WTP-based predictions and purchases of the validation sample is significantly reduced. Specifically, we observed a substantial underestimation of shares of non-buyers. Hence, a potential bias is indicated, leading to an overrating of consumers' true WTP in the lottery-based BDM-mechanism in the setting of our survey.
    Keywords: Pricing, Willingness to Pay (WTP), BDM-mechanism, Validation
    Date: 2010–10
  6. By: Chodak, Grzegorz
    Abstract: This article presents a model of ABC analysis tailored for internet shops. The standard set of criteria is expanded to cover e-commerce specific characteristics, such as the number of product views, search engine rankings and product links via a recommendation system..The proposed new methodology is applied to real data from an internet bookstore in Poland. A comparison with the results of a standard, not internet-oriented ABC analysis shows the advantage of using the new set of criteria.
    Keywords: ABC analysis; internet shop; inventory control
    JEL: C88 C67
    Date: 2010–10–28
  7. By: Koji Miyawaki (National Institute for Environmental Studies); Yasuhiro Omori (Faculty of Economics, University of Tokyo); Akira Hibiki (National Institute for Environmental Studies)
    Abstract: The discrete/continuous choice approach is often used to analyze the demand for public utility services under block rate pricing, which is a nonlinear price system. Although a consumer's budget set is convex under increasing block rate pricing, a consumer's budget set is nonconvex under decreasing block rate pricing as is the case with the gas supply in Japan and the United Kingdom. The nonlinearity problem, which has not been examined in previous studies, arises under nonconvex budget sets in which the indirect utility function corresponding to the demand function becomes highly nonlinear. To address this problem, this article proposes a feasible, efficient method of demand on the nonconvex budget set and implements a case study using household-level data on Japanese residential gas consumption. The advantages of our method are as follows: (i) the construction of an efficient Markov chain Monte Carlo algorithm with an efficient blanket based on the Hermite-Hadamard integral inequality and the power-mean inequality, (ii) the explicit consideration of the (highly nonlinear) separability condition, which often makes numerical likelihood maximization difficult, and (iii) the introduction of normal disturbance into the discrete/continuous choice model.
    Date: 2010–10
  8. By: Batiz-Lazo, Bernardo; Kase, Kimio
    Abstract: This teaching case study tells of the foundation and growth of the Virgin Group over the forty years to 2010. The creation of over 300 business interests in parts as far afield as the UK, South Africa, Australia and the USA resulted from a unique management style. Branson and the Virgin brand often associate with music (such as records and music stores) and travel (airlines, trains and booked holidays) but between August 2007 and February 2008 they were involved in a failed takeover of Northern Rock, a collapsed British bank. However, as this case study details, the Northern Rock affair was one of a long series of steps dating to the 1980s through which Branson and Virgin have been developing capabilities to enter the British retail banking sector.
    Keywords: Branson; Virgin; retail financial services; leadership style; corporate strategy; diversification
    JEL: N24 A20 N84 M13
    Date: 2010–05
  9. By: Kym Anderson (School of Economics, University of Adelaide); Ernesto Valenzuela (School of Economics, University of Adelaide); Glyn Wittwer (Centre of Policy Studies, Monash University, Clayton)
    Abstract: We provide economy-wide modeling results of the national and regional implications of two current challenges facing the Australian wine industry: a decline in export demand for premium wines, and a possible change in the tax on domestic wine sales following the Henry Review of Taxation. The demand shock causes regional GDP to fall in the cool and warm wine regions but not in the hot wine regions unless the shock is large. A change from the current ad valorem tax to a similarly low volumetric tax on domestic wine sales causes regional GDP to rise in the cool and warm wine regions, partly offsetting its fall due to the export demand shock; but GDP in the hot wine regions would fall substantially. The switch to a volumetric tax as high as the standard beer rate would raise tax revenue and lower domestic wine consumption by more than one-third, but would induce a one-third decrease in production of non-premium wine as its consumer price would rise by at least three-quarters (while the average price of super premium wines would change very little), hence exacerbating the difference in effects of a tax reform on hot versus warm and cool wine regionsÂ’ GDP.
    Keywords: Wine export demand, wine consumer taxation, regional economy-wide modeling
    JEL: D58 F18 H22 Q18 R13
    Date: 2009–12

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