nep-mkt New Economics Papers
on Marketing
Issue of 2011‒10‒01
seven papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Temptation, horizontal differentiation and monopoly pricing By Joaquín Gómez Miñambres
  2. Simulating tourists’ behaviour using multi-agent modelling By Corniglion, Sébastien; Tournois, Nadine
  3. Reviews, Reputation, and Revenue: The Case of By Michael Luca
  4. Advance Selling in the Presence of Experienced Consumers By Oksana Loginova; X. Hnery Wang; Chenhang Zeng
  5. Online Service Quality and Customer Satisfaction: A case study of Bank Islam Malaysia Berhad By Ahmed, Khalil
  6. Exploring consumer’s insights in a unique Thai language course characteristics: the application of conjoint analysis technique By Putthiwanit, Chutinon; Vogler, Denis Marcel; Zhu, Jingling; Kincart, Andrew
  7. The Price Effects of Cash Versus In-Kind Transfers By Jesse M. Cunha; Giacomo De Giorgi; Seema Jayachandran

  1. By: Joaquín Gómez Miñambres
    Abstract: We study the implications for pricing strategies and product offerings of consumers’ temptation when the differentiation of the product is horizontal. With horizontal differentiation, the temptation state is represented by a change in the consumers’ ideal product on the Hotelling line, so that consumers have two (possibly distinct) ideal products: one when committed and another when tempted. The firm faces the following trade-off: for the consumer who diverge the most between the ideal product with temptation and commitment, if the firm positions a product close to the consumer’s temptation ideal product, it increases the consumer’s surplus when tempted but decreases surplus with commitment, which lowers the consumer’s incentive to participate. This paper shows that, because of this trade-off, the firm may exclude products that are too close to the temptation preferences in the optimal menu. Moreover, it is shown that product diversity and firm’s profits decrease with the probability of temptation and with the consumers’ awareness of their dynamic inconsistency
    Keywords: Temptation; Commitment; Price discrimination
    JEL: D11 D42 D82 L11 L12 L15
    Date: 2011–07
  2. By: Corniglion, Sébastien; Tournois, Nadine
    Abstract: We discuss who should be in charge of providing data relevant to marketing segmentation for the tourism industry. We describe the difficulties of using the most commonly found consumer behavioural models within an information system, and oppose them to a novel approach in marketing segmentation, based on outgoings analysis. We use agent-modelling techniques, based on cellular automaton rules and stochastic processes to implement our model and generate sales data. We then present our algorithm to identify similarly behaved tourists, showing that the commonly used “nationality” variable for segments discrimination is not efficient. We conclude with some test runs results discussion and possible further research tracks.
    Keywords: Simulation; Stochastic processes; Cellular automata; Tourism; Business; Public Policy Issues; Management techniques; Marketing; Market segmentation; Customer behaviour model
    JEL: M31 C63 L83
    Date: 2011–05–19
  3. By: Michael Luca (Harvard Business School, Negotiation, Organizations & Markets Unit)
    Abstract: Do online consumer reviews affect restaurant demand? I investigate this question using a novel dataset combining reviews from the website and restaurant data from the Washington State Department of Revenue. Because Yelp prominently displays a restaurant's rounded average rating, I can identify the causal impact of Yelp ratings on demand with a regression discontinuity framework that exploits Yelp's rounding thresholds. I present three findings about the impact of consumer reviews on the restaurant industry: (1) a one-star increase in Yelp rating leads to a 5% to 9% increase in revenue, (2) this effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation, and (3) chain restaurants have declined in market share as Yelp penetration has increased. This suggests that online consumer reviews substitute for more traditional forms of reputation. I then test whether consumers use these reviews in a way that is consistent with standard learning models. I present two additional findings: (4) consumers do not use all available information and are more responsive to quality changes that are more visible and (5) consumers respond more strongly when a rating contains more information. Consumer response to a restaurant's average rating is affected by the number of reviews and whether the reviewers are certified as "elite" by Yelp, but is unaffected by the size of the reviewers' Yelp friends network.
    Date: 2011–09
  4. By: Oksana Loginova (Department of Economics, University of Missouri-Columbia); X. Hnery Wang (Department of Economics, University of Missouri-Columbia); Chenhang Zeng
    Abstract: The advance selling strategy is implemented when a firm offers consumers the opportunity to order its product in advance of the regular selling season. Advance selling reduces uncertainty for both the firm and the buyer and enables the firm to update its forecast of future demand. The distinctive feature of the present theoretical study of advance selling is that we divide consumers into two groups, experienced and inexperienced. Experienced consumers know their valuations of the product in advance. The presence of experienced consumers yields new insights. Specifically, pre-orders from experienced consumers lead to a more precise forecast of future demand by the firm. We show that the firm will always adopt advance selling and that the optimal pre-order price may or may not be at a discount to the regular selling price.
    Keywords: advance selling, the Newsvendor Problem, demand uncertainty, experienced consumers, inexperienced consumers.
    JEL: C72 D42 L12 M31
    Date: 2011–06–30
  5. By: Ahmed, Khalil
    Abstract: Online banking can provide a reliable service to the customers for which make them happy. Online banking service is a comparative advantage and can improve relationship with customers. The purpose of this study is to understand the impact of E-SERVQUAL model on customer satisfaction in Bank Islam Malaysia Brhd (BIMB). Four service quality dimensions namely tangibles, reliability, responsiveness, assurance, and empathy have been established based on the SERVQUAL model modified by Han and Beak (2004). These variables have been tested to explore the relationship between online service quality and the customer satisfaction. The data were gathered through a questionnaire with 21 customers. The study shows that these dimensions are good to measure the relationship between online service and customer satisfaction. The study also explores that empathy, reliability, and responsiveness have more contribution to satisfy the customers of Bank Islam online banking service.
    Keywords: Service quality dimensions; E-SERVQUAL model; and customer satisfaction
    JEL: G21
    Date: 2011–04–07
  6. By: Putthiwanit, Chutinon; Vogler, Denis Marcel; Zhu, Jingling; Kincart, Andrew
    Abstract: Our research aims to explore a unique package of a Thai language course in foreigners’ perceptions by using Conjoint Analysis technique. This study is a descriptive research in which Conjoint Analysis technique is applied to give a greater understanding of the more desired course for foreigners. The research instrument used in the research is self-administered questionnaires. Prior to the survey, a focus group was conducted to obtain a comprehensive representation of factors to be included. Our findings show that consumers perceive price, number of teaching hours, and the class size of a Thai language course as the most important factors in choosing a course. In conclusion, the ideal Thai language course package should be comprised of 40 hours of private classes at a downtown location, and with a price of 4,000 baht.
    Keywords: Thai Language, Conjoint Analysis, Focus Group, Statistical Technique
    JEL: M31
    Date: 2011–07–31
  7. By: Jesse M. Cunha; Giacomo De Giorgi; Seema Jayachandran
    Abstract: This paper compares how cash and in-kind transfers affect local prices. Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.
    JEL: H4 O12
    Date: 2011–09

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