nep-mkt New Economics Papers
on Marketing
Issue of 2012‒01‒18
nine papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Deriving consensus rankings via multicriteria decision making methodology By Amy Poh Ai Ling; Mohamad Nasir Saludin; Masao Mukaidono
  2. Understanding the Incentives of Commissions Motivated Agents: Theory and Evidence from the Indian Life Insurance Market By Santosh Anagol; Shawn Cole; Shayak Sarkar
  3. Applications Want to be Free: Privacy Against Information By Michael R. Hammock; Paul Rubin
  4. Buy-it-now or Take-a-chance: A New Pricing Mechanism for Online Advertising By L. Elisa Celis; Gregory Lewis; Markus Mobius; Hamid Nazerzadeh
  5. An Assessment of the Perceived Learning by Millennials during One-Day One-Topic Marketing Simulations By Timothy E. Burson; Bradley W. Brooks; Steven Cox
  6. Analyzing existing customers’ websites to improve the customer acquisition process as well as the profitability prediction in B-to-B marketing By D. THORLEUCHTER; D. VAN DEN POEL; A. PRINZIE
  7. A model of descending auction with hidden starting price and endogenous price decrease By Di Gaetano, Luigi
  8. Who Is Hurt by E-commerce? Crowding out and Business Stealing in Online Grocery By Andrea Pozzi
  9. Synergies between Digital Social Networks (DSN) and e-commerce: an application of the Delphi method By Sebastien Nouet; Jean Eric Pelet; Ballantyne David

  1. By: Amy Poh Ai Ling; Mohamad Nasir Saludin; Masao Mukaidono
    Abstract: Purpose - This paper seeks to take a cautionary stance to the impact of the marketing mix on customer satisfaction, via a case study deriving consensus rankings for benchmarking on selected retail stores in Malaysia. Design/methodology/approach - The ELECTRE I model is used in deriving consensus rankings via multicriteria decision making method for benchmarking base on the marketing mix model 4P's. Descriptive analysis is used to analyze best practice among the four marketing tactics. Findings - Outranking methods in consequence constitute a strong base on which to found the entire structure of the behavioral theory of benchmarking applied to development of marketing strategy. Research limitations/implications - This study looks only at a limited part of the puzzle of how consumer satisfaction translates into behavioral outcomes. Practical implications - The study provides managers with guidance on how to generate a rough outline of potential marketing activities that can be used to take advantage of capabilities and convert weaknesses and threats. Originality/value - The paper interestingly portrays the effective usage of multicriteria decision-making and ranking method to help marketing managers predict their marketing trends.
    Date: 2012–01
  2. By: Santosh Anagol (Wharton School of Business, University of Pennsylvania); Shawn Cole (Harvard Business School, Finance Unit); Shayak Sarkar (Harvard University)
    Abstract: We conduct a series of field experiments to evaluate two competing views of the role of financial service intermediaries in providing product recommendations to potentially uninformed consumers. One view argues intermediaries provide valuable product education, and guide consumers towards suitable products. Consumers understand how commissions affect agents' incentives, and make optimal product choices. The second view argues that intermediaries recommend and sell products that maximize the agents' well-being, with little or no regard for the customer. Audit studies in the Indian life insurance market find evidence supporting the second view: in 60-80% of visits, agents recommend unsuitable (strictly dominated) products that provide high commissions to the agents. Customers who specifically express interest in a suitable product are more likely to receive an appropriate recommendation, though most still receive bad advice. Agents cater to the beliefs of uninformed consumers, even when those beliefs are wrong. We then test how regulation and market structure affect advice. A natural experiment that required agents to describe commissions for a specific product caused agents to shift recommendations to an alternative product, which had even higher commissions but no disclosure requirement. We do find some scope for market discipline to generate debiasing: when auditors express inconsistent beliefs about the product suitable from them, and mention they have received advice from another seller of insurance, they are more likely to receive suitable advice. Agents provide better advice to more sophisticated consumers. Finally, we describe a model in which dominated products survive in equilibrium, even with competition.
    Date: 2012–01
  3. By: Michael R. Hammock; Paul Rubin
    Abstract: The debate over online privacy pays too little attention to the costs and benefits of the current systems of privacy protection and advertising-supported online applications. The costs of online privacy-related harm (such as identity theft) and of protective activities are small relative to the benefits from applications that are supported by online advertising, which depends on the collection of personal information. Advocates of increased privacy focus too much on increased privacy as a solution, and not enough on alternative forms of information security. Surveys show that consumers do not like targeted advertising, or the information collection that allows it, but this may be a form of rational irrationality. That is, it may not pay for consumers to understand the costs and benefits of reduced information use.
    Date: 2011–03
  4. By: L. Elisa Celis (Department of Computer Science, University of Washington); Gregory Lewis (Department of Economics, Harvard University); Markus Mobius (Microsoft Research New England); Hamid Nazerzadeh (Marshall School of Business, University of Southern California)
    Abstract: Increasingly sophisticated tracking technology offers publishers the ability to offer targeted advertisements to advertisers. Such targeting enhances advertising efficiency by improving the match quality between advertisers and users, but also thins the market of interested advertisers. Using bidding data from Microsoft's Ad Exchange (AdECN) platform, we show that there is often a substantial gap between the highest and second highest willingness to pay. This motivates our new BIN-TAC mechanism, which is effective in extracting revenue when such a gap exists. Bidders can ``buy-it-now'', or alternatively ``take-a-chance'' in an auction, where the top d > 1 bidders are equally likely to win. The randomized take-a-chance allocation incentivizes high valuation bidders to buy-it-now. We show that for a large class of distributions, this mechanism achieves similar allocations and revenues as Myerson's optimal mechanism, and outperforms the second-price auction with reserve. For the AdECN data, we use structural methods to estimate counterfactual revenues, and find that our BIN-TAC mechanism improves revenue by 11% relative to an optimal second-price auction.
    Keywords: Advertising, Auctions, Mechanism Design
    JEL: D44 L86
    Date: 2011–09
  5. By: Timothy E. Burson (McColl School of Business, Queens University of Charlotte); Bradley W. Brooks (McColl School of Business, Queens University of Charlotte); Steven Cox (McColl School of Business, Queens University of Charlotte)
    Abstract: Millennials have been characterized as active learners who seek engaging, customized, and relevant educational experiences. Born in the digital era they expect rapid feedback and an environment where they can quickly test different strategies. Simulations would seem to mesh well with Millennial learning styles. However, professors have often criticized simulations as too complex, too time consuming, and unfocused. Recently, a new group of simulations have been developed which focus on a single issue, are simple to learn, and can be completed within a single class period. This research explores how Millennials will find these simplified products in terms of the learning experience and subject matter mastery.
    Date: 2012
    Abstract: We investigate the issue of predicting new customers as profitable based on information about existing customers in a business-to-business environment. In particular, we show how latent semantic concepts from textual information of existing customers’ websites can be used to uncover characteristics of websites of companies that will turn into profitable customers. Hence, the use of predictive analytics will help to identify new potential acquisition targets. Additionally, we show that a regression model based on these concepts is successful in the profitability prediction of new customers. In a case study, the acquisition process of a mail-order company is supported by creating a prioritized list of new customers generated by this approach. It is shown that the density of profitable customers in this list outperforms the density of profitable customers in traditional generated address lists (e. g. from list brokers).<br><br> From a managerial point of view, this approach supports the identification of new business customers and helps to estimate the future profitability of these customers in a company. Consequently, the customer acquisition process can be targeted more effectively and efficiently. This leads to a competitive advantage for B2B companies and improves the acquisition process that is time- and cost-consuming with traditionally low conversion rates.
    Keywords: B-to-B marketing, Text Mining, Web Mining, Acquisition, SVD
    Date: 2011–08
  7. By: Di Gaetano, Luigi
    Abstract: Several new auction formats are spreading over the Internet. They have usually the aim of raising revenues by increasing the number of participant, who will pay a participation fee, rather than selling the object at the highest possible price. The aim of this paper is to study a format of descending price auction with hidden starting price and endogenous price decrease. In this format, usually known as price reveal auction, the price is hidden and players have to pay a fee to observe it. The price decreases only if a bidder observes it and not because of the time, like in the usual Dutch format. In the following pages, we will analyse the effect of the concealment of the price in a standard Dutch auction. We will, then, define a model for price reveal auction, and analyse its most important aspects. We will, finally, derive players' best strategy and the Nash equilibrium of the game. Our result is that players use a threshold strategy to decide whether or not participate the auction (observe the price and pay the fixed fee). However, in our model there is not a separating equilibrium. Moreover, we will find that there is a process of beliefs updating, which takes account of the time as a signal of the price. Therefore, if the game continues, players infer that the price is too high and update their beliefs accordingly. We will finally compare our theoretical results with empirical data about 135 price reveal auctions held between December 2009 and April 2011 on the website
    Keywords: Price reveal auction; Endogenous price; Descending auction
    JEL: D44 D82 C72
    Date: 2011–10–01
  8. By: Andrea Pozzi (EIEF)
    Abstract: I study the impact of e-commerce on competition in retail markets. Using scanner data from a large chain that markets grocery online and through traditional stores, I illustrate that selling online reduces the barrier of geographic differentiation and allows stealing business from competitors. Between 60% and 70% of the sales made online by the chain are stolen from other grocers, the rest coming from self cannibalization. I show that small stores are suffering the largest losses from this reallocation of market shares, as they were more heavily relying on geographic differentiation to survive the competitive pressure of big-box stores.
    JEL: D22 L21 L81
    Date: 2011
  9. By: Sebastien Nouet (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine); Jean Eric Pelet (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Ballantyne David (Centre for Relationship Marketing and Service Management - université d'Otago)
    Abstract: The purpose of this paper is to offer customer relationship insights in what is a fast developing new e-commerce development strategy. We examine the potential synergies between digital social networks (DSN) and e-commerce websites, thus bringing e-commerce and DSN websites into the same relational network orbit. A Delphi dialogical survey among ten DSN experts was arranged (five academics plus five web designers) to draw out from experts the degree of consensus currently existing between them on the strategies, competencies and resources needed for achieving effective DSN-website links. Our literature review allowed us to develop seven key themes, which were presented to our 10 DSN experts. Their evaluations were then obtained on a series of propositions within each of those themes, using a Delphi iterative review process. Convergence of expert opinion (and hence consensus) on each of these propositions emerged across four themes out of the seven presented. Results reveal the importance of firms obtaining good DSN technical expertise. Competencies of an ideal technical expert are defined but opinion diverged on how to find such skilled people in the short term. Thus a necessary but interim step in many firms may be the creation of dual roles for technical expertise and a network community (service) management. We conclude that our findings raise further questions for discussion; nonetheless it is clear that SME organizations can just as easily as large corporate enterprises outsource the development of the technical expertise necessary for the creation of effective DSN-ecommerce relationship links.
    Keywords: social networks, e-commerce, Facebook, Delphi method
    Date: 2011–12–25

This nep-mkt issue is ©2012 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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