nep-mkt New Economics Papers
on Marketing
Issue of 2010‒11‒13
eleven papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Targeted advertising in magazine markets By Chandra, Ambarish; Kaiser, Ulrich
  2. The Uneasy Case for Product Liability By Polinsky, A. Mitchell; Shavell, Steven M.
  3. Consumers and sellers heterogeneity, search costs and spatial price dispersion in retail food markets By Anania, Giovanni; Nistico, R
  4. Your call: eBay and demand for the iPhone 4 By Waterson, Michael; Doyle, Chris
  5. Valuing nested names in the Portuguese olive oil market: An exploratory study By Sottomayor, M.J.; Souza Monteiro, D. M.; Teixeira, M. S.
  6. Heritage and wine as tourist attractions in rural areas By Privitera, D.
  7. Glimmers and Signs of Innovative Health in the Commercial Internet By Greenstein, Shane
  8. Quality Differentiation as a Strategy for the Viability of Traditional Olive Farming in Trás-os-Montes Region By Baptista, Alberto; Biswas, Pradip
  9. Consumersâ attitude towards farmersâ markets in Tuscany By Rocchi, B.; Cavicchi, A.; Baldeschi, M.
  10. The Personal Travel Assistant (PTA): Measuring the dynamics of human travel behavior By Recker, W.; Marca, J.; Rindt, C.; Dechter, R.
  11. An analysis of Marketing Channels of Local Food in Scotland By Revoredo-Giha, C.; Watts, D.; Leat, P.

  1. By: Chandra, Ambarish; Kaiser, Ulrich
    Abstract: We examine the scope and value of targeted advertising in the magazine industry. We use data on reader characteristics at individual media, in contrast to previous work that has needed to infer this information from aggregate data. Our results show a strong relationship between subscriber characteristics and advertising prices. Advertisers clearly value more homogenous groups of readers, measured according to income, gender and age. Our results explain recent trends of declining advertising expenditures in print media, in favor of increasing online advertising. --
    Keywords: targeted advertising,reader homogeneity,quantile regression,magazines,advertising rates
    JEL: C21 C23 L11 M31
    Date: 2010
  2. By: Polinsky, A. Mitchell; Shavell, Steven M.
    Abstract: In this Article we compare the benefits of product liability to its costs and conclude that the case for product liability is weak for a wide range of products. One benefit of product liability is that it can induce firms to improve product safety. Even in the absence of product liability, however, firms would often be motivated by market forces to enhance product safety because their sales may fall if their products harm consumers. Moreover, products must frequently conform to safety regulations. Consequently, product liability might not exert a significant additional influence on product safety for many products — and empirical studies of several widely sold products lend support to this hypothesis. A second benefit of product liability is that it can improve consumer purchase decisions by causing product prices to increase to reflect product risks. But because of litigation costs and other factors, product liability may raise prices excessively and undesirably chill purchases. A third benefit of product liability is that it compensates victims of product-related accidents for their losses. Yet this benefit is only partial, for accident victims are frequently compensated by insurers for some or all of their losses. Furthermore, the award of damages for pain and suffering tends to reduce the welfare of individuals because it effectively forces them to purchase insurance for a type of loss for which they ordinarily do not wish to be covered. Opposing the benefits of product liability are its costs, which are great. Notably, the transfer of a dollar to a victim of a product accident through the liability system requires more than a dollar on average in legal expenses. Given the limited nature of the benefits and the high costs of product liability, we come to the judgment that its use is often unwarranted. This is especially likely for products for which market forces and regulation are relatively strong, which includes many widely sold products. Our generally skeptical assessment of product liability for such products is in tension with the broad social endorsement of this form of liability.
    Date: 2010–04
  3. By: Anania, Giovanni; Nistico, R
    Abstract: â Price dispersion, i.e. a homogeneous product sold at different prices by different sellers, is among the most replicated findings in empirical economics. The paper assesses the extent and determinants of spatial price dispersion for 14 perfectly homogeneous food products in more than 400 retailers in a market characterized by the persistence of a large number of relatively small traditional food stores, side by side with large supermarkets. The extent of observed price dispersion is quite high, suggesting that, despite their large number, monopolistic competition prevails among sellers as a result of the heterogeneity of services offered. When prices in an urban area (where the spatial concentration of sellers is much higher and consumer search costs significantly lower) have been compared with those in smaller towns and rural areas, differences in search costs and the potentially higher degree of competition did not yield lower prices; quite the contrary, they were, on average, higher for 11 of the 14 products considered. Supermarkets proved to be often, but not always, less expensive than traditional retailers, although average savings associated to food shopping at supermarkets were extremely low. Finally, the results of the study suggest that sellers behave differently in their pricing decision strategies; these differences emerge both at the firm level and, for supermarkets, within the same chain. The fact that products considered were homogeneous, purchases frequently repeated, the number of sellers large, and search costs relatively low, did not suffice to keep price dispersion low. Based on the results presented in the paper, it is clear that more important in explaining price dispersion is the contemporaneous heterogeneity of retailers (in terms of services rendered) and consumers (in terms of their propensity to search and shopping preferences), which makes it possible for a monopolistic competition structure of the market to emerge and for small traditional food retail stores to remain in business.
    Keywords: Price dispersion, retail pricing, food markets., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  4. By: Waterson, Michael (Department of Economics, University of Warwick); Doyle, Chris (Department of Economics, University of Warwick)
    Abstract: The iPhone 4 was introduced into the UK market on 24th June 2010 to significant consumer interest. This clearly exceeded supply through conventional channels, since there was very extensive activity in terms of bidding on eBay auctions for the product. We monitored all eBay transactions on the iPhone 4 for six weeks from introduction, with total transactions amounting to around £1.5m. We analyse determinants of the winning bid in terms of characteristics of the phone, the seller and the buyer. Our most notable and novel finding relative to previous studies is a very significant premium over list price being paid in almost all cases, with positive uplift factors including whether the phone was unlocked and whether it could be sold overseas. Demand fell over time, as evidenced by lower achieved prices, but the fall in price was relatively modest. A significant premium of 32GB over 16GB versions is revealed.
    Keywords: eBay auctions ; demand revelation ; auctions ; bidding ; short supply ; versioning JEL Classification: D44 ; L81 ; D12 ; L63
    Date: 2010
  5. By: Sottomayor, M.J.; Souza Monteiro, D. M.; Teixeira, M. S.
    Abstract: The Portuguese olive oil market had a remarkable development in recent years. Production is rising steadily is response to a EU program supporting a renewal of olive groves. Moreover there is a proliferation of national brands and private labels. These are often associated to regional collective labels or to organic production. The aim of our research is to determine how consumers value these nested names or co-brands. We conducted a pilot survey on a convenience sample of 103 consumers in the Oporto and Lisbon metropolitan areas as well in a rural area. Our results reveal some contradictions, for instance while origin is an important purchasing criteria, few PDO olive oils are recognized. Moreover, only 25% of respondents identify organic olive oils sold in the market and this attribute is one of the last purchasing criteria, but organic olive oils have the highest willingness to pay. Finally we find that associating a PDO to private labels increases willingness to pay by 33.3%, but doesnât affect valuation of national brands. While we canât take definite conclusions our findings give us interesting cues for future research. Therefore we aim to investigate whether regional identity, alternative usage and health or environmental conscience determine of affect valuation and choices of different olive oils brands and labels.
    Keywords: olive oil, nested names, valuation., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  6. By: Privitera, D.
    Abstract: In recent times, the search for a new relationship with nature, of quality and safety of foodstuffs and in particular the need for âidentityâ, of characterizing places as bearers of values and traditions have led an increasing number of people to see rural areas as places of values, resources, culture and products to discover and enjoy. Agriculture has taken on a multifunctional role and link with tourism is required to protect and exploit its âhistoricalâ resources (heritage) as a tool of interconnection between local products, countryside, traditions, cultural values but also to place emphasis of the territory and communicate it. The aim of paper is the role assumed today by firms regarding both the primary activity and other services, in particular those that express and support rural tourism. The objective is to assess the relationship between the company image, the entrepreneurial behavior built according to values, âtypicalâ signs, historical resources of the rural world and the spin-offs on the territory. The research will be carried out by making specific reference to Calabria, a representative region of the Mediterranean area. Here, case-studies will be considered in sample areas where tourism and agriculture are integrated, with specific reference to vineyards and wine-making firms, is part of specific rural development strategies and initiatives. Therefore, we intend to highlight the important role of heritage and heritage marketing in order to privilege the competitive advantage that it can have for the company. The finding suggest the utility for rural tourism development: the heritage, which is often well preserved in rural areas is a valuable resource to integrate with management providing useful help as a vehicle for economic benefits also for a territory.
    Keywords: heritage marketing, wine tourism, case study, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  7. By: Greenstein, Shane
    Abstract: What are the signs of healthy behavior in an innovative industry? This seemingly simple question isn’t so simple to answer in a quickly evolving industry such as the Internet. Commercial behavior resides inside a complex value chain, which is a set of interrelated activities that produces a final product for end users. No single firm controls the value chain, and the quality, price, and user experience arise from the complex interactions between those participants. Moreover, over time many parts of this value chain have undergone innovative improvements, and no reasonable observer expects those improvements to cease tomorrow. There is no agreement about which criteria observers and policy makers should use to assess the performance of the commercial Internet. Ever since the commercial Internet first emerged, there have been arguments about how to best organize its value chain to achieve maximum value for the most users. Disagreements have not diminished with time. If anything, this debate has grown shrill as the number of commercial interests and business commentators have grown. This essay makes a novel contribution to this topic. It identifies patterns of healthy commercial behavior indicative of an innovative industry, and illustrates how to observe signs of such behavior in information technology markets, such as the Internet. Stated broadly, the essay identifies healthy behavior that correlates with desirable marketwide outcomes, such as improvement in products, lower prices, new capabilities, or other innovations that lead to productivity improvements among business users.
    Date: 2010–01
  8. By: Baptista, Alberto; Biswas, Pradip
    Abstract: Despite special quality of the olive oil of Trás-os-Montes (TM), producers fail to create niche market and raise price commensurate with the high cost. Some local manufacturers made some attempts to establish special brands for their oil and the association of the local producers (AOTAD) made the required efforts to bring the product of the region under PDO, designated as Azeite de Trás-os-Montes DOP. Only a small part of the marketed product is sold under PDO (4%) and a fraction of which is sold under some brand till date. The cost structure of olive oil depends on multiple factors - the type of production system (traditional or intensive), plant variety, inclination of plots and productivity, among others. The harvesting cost in general represents more than 50 percent of the total costs. The massive increase of production with the use of intensive farming at lower unit cost in other regions has pulled down the overall market price making traditional farms unviable. For the modern super intensive farm unit cost is only one fourth of that of traditional farm. The issue is not of protecting an unviable traditional system from the competition of an intensive system, but of the realisation of the true value of a product that the market mechanism fails to accomplish. This kind of problem of adverse selection due incomplete/ asymmetric information in the market is often interpreted in terms of the âlemon effectâ or âGreshamâs Lawâ. It states that in the case of buyer failing to discriminate between the products of different qualities at the time of purchase, the producers of higher quality products cannot charge a premium price. Under these circumstances, if the cost of high quality product exceeds that of low quality product, the producers of the former cannot sustain in the market. This is precisely what happens with the good quality high cost olive oil of TM against the competition of the low quality low cost olive oil of some other places. As an exotic high quality product its characteristics must be described in most visible and attractive forms and search its niche market globally.
    Keywords: Olive Oil in Trás-os-Montes, Quality Differentiation, Viability, Traditional Farming, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  9. By: Rocchi, B.; Cavicchi, A.; Baldeschi, M.
    Abstract: Farmers Markets (FMs) around the world are often considered as one key response to the less sustainable conventional food production systems. Despite the economic crisis, international studies show that the most important factor leading people to buy fresh products in these points of sale is the quality. In fact, consumers usually cite âbetter food qualityâ, âlocally produced foodsâ, âhigher social interactionâ and âlearning directly about the vendors and their food production practicesâ, as the principal motivations in buying in FM environment. In this paper the results of a survey carried out in several FMs and shops in Tuscany are presented. A sample of consumers were interviewed on-site using a structured questionnaire. The attitude of respondent towards FM was assessed using a test scale composed of 16 items referring to five different features of this form of distribution, supposed to be relevant in the consumer choice: quality of products, direct contact with farmers, convenience, environmental sustainability, and support for rural development processes. The high level of reliability of the attitude scale allowed its use in performing a cluster analysis of observed units. The cluster analysis allowed to identify two groups of consumers with different characteristics both in term of socio-economic descriptive variables and in term of attitudes and motivations towards FMs.
    Keywords: Food miles, Sustainability, Short Food Supply Chain. 800822056, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  10. By: Recker, W.; Marca, J.; Rindt, C.; Dechter, R.
    Abstract: The fundamental research question that was addressed with the project is whether a simple, continuously collected GPS sequence can be used to accurately measure human behavior. We applied Hybrid Dynamic Mixed Network (HDMN) modeling techniques to learn behaviors given an extended GPS data stream. This research project was designed to be an important component of a much larger effort. Unfortunately, the promised funding from a commercial sponsor for the larger project did not materialize, and so we did not have the resources to deploy a prototype personal travel assistant system. Work focused on developing the HDMN model. The learning and inference steps using the HDMN model were much slower than would be acceptable in an operational Personal Travel Assistant (PTA) system. We conducted research into alternate formulations that would improve convergence, handle noisy data more robustly and reduce the need for human intervention. This report describes how this project’s results fit into the larger research context, details the work done for this UCTC grant, and outlines future directions of research based on the findings of this project.
    Date: 2010–08–01
  11. By: Revoredo-Giha, C.; Watts, D.; Leat, P.
    Abstract: Local food and its possibilities for addressing sustainable regional growth, food availability, accessibility and affordability has received considerable attention in the discussion on and development of the National Food Policy in Scotland. In terms of methodology, the paper continues the analysis of the local food database for Scotland constructed in Watts et al (2010) by exploring the marketing outlets used by the local food enterprises. This subject is important because it may provide information about the degree of entrepreneurship of the involved firms.
    Keywords: Local food, Scotland, marketing outlets., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27

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