nep-mkt New Economics Papers
on Marketing
Issue of 2011‒01‒03
thirteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. To Groupon or Not to Groupon: The Profitability of Deep Discounts By Benjamin Edelman; Sonia Jaffe; Scott Duke Kominers
  2. Advertising and R&D: Theory and evidence from France By Philippe Askenazy; Thomas Breda; Delphine Irac
  3. Consumer testing informs policy: overdraft regulation as a case study By Philip Keitel
  4. Concentration and self-censorship in commercial media By Fabrizio Germano; Martin Meier
  5. Trends and preferences in consumer payments By Susan Herbst-Murphy
  6. Does the EU Sugar Policy Reform Increase Added Sugar Consumption? An Empirical Evidence on the Soft Drink Market By Bonnet, Céline; Réquillart, Vincent
  7. Grain Pricing and Transportation: Dynamics and Changes in Markets By Wilson, William W.; Dahl, Bruce
  8. Visitors’ experience in a modern art museum: a structural equation model By JG. Brida; Manuela Pulina; E. Riaño
  9. Should SA Tour, A Singapore Travel company, Use External financing to Expand the MICE business in the China and Singapore markets? By Chang, Chia-Yu; Dinh, Tran Ngoc Huy; Benjamin, Pekaric
  10. Multi-product firms at home and away: Cost- versus quality-based competence By carsten Eckel; Leonardo Iacovone; Beata Javorcik; J. Peter Neary
  11. Tying, Bundling, and Loyalty/Requirement Rebates By Nicholas Economides
  12. See you on Facebook: the effect of social networking on human interaction By Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro
  13. Digitization of Retail Payment By Wilko Bolt; Sujit Chakravorti

  1. By: Benjamin Edelman (Harvard Business School, Negotiation, Organizations & Markets Unit); Sonia Jaffe (Department of Economics, Harvard University); Scott Duke Kominers (Harvard Business School)
    Abstract: We examine the profitability and implications of online discount vouchers, a new marketing tool that offers consumers large discounts when they prepay for participating merchants' goods and services. Within a model of repeat experience good purchase, we examine two mechanisms by which a discount voucher service can benefit affiliated merchants: price discrimination and advertising. For vouchers to provide successful price discrimination, the valuations of consumers who have access to vouchers must systematically differ from - and be lower than - those of consumers who do not have access to vouchers. Offering vouchers is more profitable for merchants which are patient or relatively unknown, and for merchants with low marginal costs. Extensions to our model accommodate the possibilities of multiple voucher purchases and merchant price re-optimization.
    Keywords: voucher discounts, Groupon, experience goods, repeat purchase.
    Date: 2010–12
  2. By: Philippe Askenazy; Thomas Breda; Delphine Irac
    Abstract: This paper exploits a unique panel of 59,000 French firms over 1990-2004 to investigate the interactions between R&D, advertising and the competitive environment. The empirical findings confirm the predictions of a dynamic model that complements results known in static frameworks. First, more competition pushes Neck and Neck firms to advertise more to attract a larger share of consumers on their products or services. Second, for a given competitive environment, quality leaders spend more in advertising in order to extract maximal rents; thus, lower costs of ads may favor R&D.
    Date: 2010
  3. By: Philip Keitel
    Abstract: In November 2009, the Board of Governors of the Federal Reserve System issued regulations that protect consumers from being charged certain fees when, under a discretionary overdraft service, financial institutions pay transactions from a deposit account that contains insufficient funds. Under the regulations, consumers must receive notices that explain any discretionary overdraft services offered to them by their bank. In addition, consumers may not be charged overdraft fees for ATM or one-time debit transactions unless they have opted in to this service. During the rulemaking process, the Board extensively interviewed consumers and tested model notices to understand how consumers think about and use overdraft services. This paper describes banks’ overdraft programs, examines lessons learned from consumer testing, and explains how information obtained during consumer testing influenced the rulemaking. In addition, this paper presents some insights about more effective ways of conveying key information about overdraft services to consumers.
    Keywords: Consumers' preferences ; Overdrafts ; Regulation
    Date: 2010
  4. By: Fabrizio Germano; Martin Meier
    Abstract: Within a simple model of non-localized, Hotelling-type competition among arbitrary numbers of media outlets we characterize quality and content of media under different ownership structures. Assuming advertising-sponsored, profit-maximizing outlets, we show that (i) topics sensitive to advertisers can be underreported (self-censored) by all outlets in the market, (ii) self-censorship increases with the concentration of ownership, (iii) adding outlets, while keeping the number of owners fixed, may even increase self-censorship; the latter result relies on consumers' most preferred outlets being potentially owned by the same media companies. We argue that externalities resulting from self-censorship could be empirically large.
    Keywords: Media economics; media consolidation; media markets; advertising and commercial media bias.
    JEL: L13 L82
    Date: 2010–12
  5. By: Susan Herbst-Murphy
    Abstract: For two decades, Visa Inc. has contracted with a market research firm to gather detailed information from U.S. consumers about the forms of payment they use when carrying out transactions at many types of merchants. This omnibus project, the Visa Payment Panel Study, has recorded the migration away from paper forms of payment to electronic and plastic payment methods, identified variation in preferred payment methods based on consumer demographics, and calculated a share of use for each payment type at the merchant category level. The Payment Cards Center invited Michael Marx, senior business leader, Visa Inc. Research Services, to conduct a workshop on findings from the Visa Payment Panel Study. This paper summarizes the information presented at that workshop, including indications from panel data about changes in payment behavior during the recent recession.
    Keywords: Credit cards ; Debit cards ; Consumers' preferences
    Date: 2010
  6. By: Bonnet, Céline; Réquillart, Vincent
    Abstract: National Health authorities recommend a decrease in the consumption of addedsugar. At the same moment, a reform of the Common Organisation of the Sugar Market will lead to a decrease by more than 30% of the sugar price in the EU. Using French data on the soft drinks purchases, this paper investigates the impact of this reform on the consumption of sugar sweetened beverages and on added sugar consumption. The soft drink market is composed of highly differentiated products with different sugar content. Hence the reform of the EU sugar policy leads to a decrease in regular soft drink prices by more than 3% in average and varies from 1.7% to 6.5% according to the brand. To assess substitution within the food category of sugar sweetened beverages, we use a structural econometric model, the random-coefficients logit model. Our model also takes into account observed and unobserved heterogeneity in the consumersbehavior and then allows to estimate the impact of the sugar price decrease on the soft drink consumption according to the type of consumers. Results suggest that price changes would lead to an increase in market shares of regular products by 7.5% and a decrease in market share of diet products by 3.5%. On the whole, it would rise the consumption of regular soft drinks by more that 1 liter per year and per person and the consumption of added sugar by 124 grams per year and per person. Moreover, the reform leads to substitution between brands at the bene…t of products with the highest sugar content. The increase in per person consumption is larger in households composed of overweight and obese individuals.
    JEL: D12 I18 Q18
    Date: 2010–10
  7. By: Wilson, William W.; Dahl, Bruce
    Keywords: Agricultural Finance, Crop Production/Industries, Marketing,
    Date: 2010–12
  8. By: JG. Brida; Manuela Pulina; E. Riaño
    Abstract: This study aims to provide a better understanding on the museum experience by studying visitors’ motivation, satisfaction and likelihood to return to the Museum for Modern and Contemporary Art (MART) of Rovereto (Italy). The empirical data were obtained from a survey undertaken from September to November 2009. A theoretical model to analyze the attractiveness factors of the museum based on two exogenous variables (push and pull motivation) and two endogenous variables (satisfaction and loyalty) is used and a structural equation model is estimated as a confirmatory tool of the hypothetical model. The findings reveal that tourists visiting the MART are mainly motivated by push factors, as relaxation, looking for a new experience and learn new things. Loyalty also positively influences the probability to return to the MART and recommend to friends and family. However, visit the city or the region of Trentino has no impact on satisfaction and loyalty to the MART. Besides, loyalty to MART does not imply the probability to recommend a visit to Rovereto.
    Keywords: museum; customer’s motivation; satisfaction; loyalty; probability to return and recommend; SEM
    JEL: C19 D12 L83
    Date: 2010
  9. By: Chang, Chia-Yu; Dinh, Tran Ngoc Huy; Benjamin, Pekaric
    Abstract: Based on our empirical analysis on China potential MICE (Meeting-Incentive-Conference-Exhibition) market, we have come to these results: Firstly, China is an emerging market with the total population is reaching to a one-fifth ratio among total world’s population. Secondly, the Chinese cultural community feature is highly valued. And last but not least, the number of Chinese business travel overseas is continuous increasing, as our customer analysis pointed out, these are certainly good signals for a potential MICE business opportunity. Besides the market analysis, this paper aims to analyze the strength and weakness of a typical traveling company such as SA Tour, a real Singapore traveling company, we found out that SA’s strength is brand awareness and package tours. This will contribute to the development of its business services and products which we also discuss in the marketing strategy in detail in later session. Next, A real case analysis can not be done without considering the context or environment analysis. So, our methodology is performing a total company analysis combined with a focusing market analysis in China, then, we also used a hypothetical financial model with assumed variables from commercial banks to estimate this project results. In conclusion, the positive Net Present Value (NPV) from the project and good performance of SA Tour in current business, plus the good signals from an increasing and emerging China market in Asia are sound evidence for us to suggest that The Board of Management of The Company should consider a next implementation plan to make this project become feasible. Finally, we also include in this paper performing a total marketing strategy to support for SA Tour to consider before it goes into the action. It is also considered as an analysis of a market expansion strategy for SA Tour before entering the new potential market, The People’s Republic of China.
    Keywords: Strategic management; marketing strategy; project finance; market expansion theory; business strategy
    JEL: F20 L20 L10 M10
    Date: 2010–12–12
  10. By: carsten Eckel; Leonardo Iacovone; Beata Javorcik; J. Peter Neary
    Abstract: We develop a new model of multi-product firms which invest to improve both the quality of their individual products and of their brand. Because of flexible manufacturing, products closer to firms’ core competence have lower costs, so they produce more of them, and also have higher incentives to invest in their quality. These two effects have opposite implications for the profile of prices. Mexican data provide robust confirmation of the model’s key prediction: firms in differentiated-good sectors exhibit quality-based competence (prices fall with distance from core competence), but export sales of firms in non-differentiated-good sectors exhibit the opposite.
    Keywords: Flexible manufacturing, multi-product firms, quality competition
    JEL: F12
    Date: 2010
  11. By: Nicholas Economides (Stern School of Business, NYU)
    Abstract: I discuss the impact of tying, bundling, and loyalty/requirement rebates on consumer surplus in the affected markets. I show that the Chicago School Theory of a single monopoly surplus that justifies tying, bundling, and loyalty/requirement rebates on the basis of efficiency typically fails. Thus, tying, bundling, and loyalty/requirement rebates can be used to extract consumer surplus and enhance profit of firms with market power. I discuss the various setups when this occurs.
    Keywords: tying, ties, bundling, bundled rebates, loyalty discounts, loyalty requirement rebates, single monopoly surplus, monopolization, market power, foreclosure, antitrust
    JEL: C72 D42 D43 K21 L12 L40 L41 L42
    Date: 2010–12
  12. By: Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro
    Abstract: This paper proposes an evolutionary framework to explore the dynamics of social interaction in an environment characterized by online networking and increasing pressure on time. The model shows how time pressure encourages the choice to develop social interactions also through online networking instead of relying exclusively on face to face encounters. Our findings suggest that the joint influence exerted by the reduction in leisure time and the new opportunities of participation offered by web-mediated communication may progressively lead a growing share of the population to adopt networking sites as an indispensable environment for the development of interpersonal relationships.
    Keywords: internet; computer-mediated communication; social networking; online networks; Facebook; human interaction; social capital
    JEL: O33 Z13 D85 C73
    Date: 2010–12–23
  13. By: Wilko Bolt; Sujit Chakravorti
    Abstract: The rapid proliferation of electronic payment media continues to change the way consumers shop and merchants sell goods and services. Many policymakers and economists agree that the digitization of payments is socially beneficial. However, there is considerable debate regarding the optimal pricing of these payment services. Payment markets are complex with many participants engaging in a series of interrelated bilateral relations and transactions. In this article, we survey the recent payment literature, identify the main economic bottlenecks, and study their implications for public policy.
    Keywords: retail financial services; electronic payments; pricing, public policy
    JEL: L11 G21 D53
    Date: 2010–12

This nep-mkt issue is ©2011 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.
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