nep-mkt New Economics Papers
on Marketing
Issue of 2012‒06‒05
fourteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Discount Pricing By Mark Armstrong; Yongmin Chen
  2. Advertising Pricing Models in Media Markets: Lump-Sum versus Per-Consumer Charges By Helmut Dietl; Markus Lang; Panlang Lin
  3. What affects the most to the recall and recognition of brand symbols? By Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz; Osman, Ms. Amber
  4. Can local be the new organic? Food choice motives and willingness to pay By Roosen, Jutta; Kottl, Barbara; Hasselbach, Johanna
  5. Food Authenticity, Technology and Consumer Acceptance By Hobbs, Jill E.; McDonald, Jill; Zhang, Jing
  8. Platform Pricing at Sports Card Conventions By Marc Rysman; Ginger Zhe Jin
  9. Consumer Preferences for Refrigerators Manufactured by “Climate Leaders” By Li, Xiaogu; Clark, Christopher D.; Jensen, Kimberly L.; Yen, Steven T.
  10. Factors Affecting Producer Participation in State-Sponsored Marketing Programs By Fruit and Vegetable Growers in Tennessee By Davis, James A.; Velandia, Margarita; Clark, Christopher D.; Lambert, Dayton M.; Jensen, Kimberly; Wilcox, Michael D.; Wszelaki, Annette
  11. Consumer Risk Reduction Behavior of New Brand Purchase By Yonezawa, Koichi; Richards, Timothy J.
  12. Valuing Information on GM Foods in the Presence of Country-of-Origin Labels By Xie, Jing; Kim, Hyeyoung; House, Lisa
  13. The Identity Oriented Brand Leadership Concept in the Insurance Business: Results of an Exploratory Empirical Study By Regine Kalka; Katharina Juliana Schmidt
  14. Discrete Choice Modeling of Consumer Preferences for Sustainably Produced Steak and Apples By Sackett, Hillary M.; Shupp, Robert S.; Tonsor, Glynn T.

  1. By: Mark Armstrong; Yongmin Chen
    Abstract: This paper investigates discount pricing, the common marketing practice whereby a price is listed as a discount from an earlier, or regular, price. We discuss two reasons why a discounted price - as opposed to a mearly low price - can make a rational consumer more willing to purchase the item. First, the information that the product was initially sold at a high price can indicate the product is high quality. Second, a discounted price can signal that the product is an unusual bargain, and there is little point searching for lower prices. We also discuss a behavioral model in which consumers have an intrinsic preference for paying a below-average price. Here, a seller has an incentive to offer different prices to identical consumers, so that a proportion of its consumers enjoy a bargain. We discuss in each framework when a seller has an incentive to offer false discounts, in which the reference price is exaggerated.
    Keywords: Reference dependence, Price discounts, Sales tactics, False advertising
    JEL: D03 D18 D83 M3
    Date: 2012
  2. By: Helmut Dietl (Department of Business Administration, University of Zurich); Markus Lang (Department of Business Administration, University of Zurich); Panlang Lin (Department of Business Administration, University of Zurich)
    Abstract: This paper develops a model of asymmetric competition between a pay and a free media platform. The pay media platform generates revenues from media consumers through subscription fees, while the free media platform generates revenues from charging advertisers either on a lump-sum basis (regime A) or on a per-consumer basis (regime B). The paper shows that the advertising level on the free platform is higher and this platform attracts more consumers in regime A than B even though advertisers have to pay more for an ad and consumers dislike ads. Moreover,\ the pay media platform faces a higher subscription fee and a lower consumer demand in regime A than B. Compared to regime B, the profit of the free (pay) media platform is higher (lower) in regime A, while aggregate profits are only higher if the consumers' disutility from ads is sufficiently low. The advertisers are better off in regime A than B, while the opposite is true for the media consumers. Finally, in small media markets, social welfare is lower in regime A than B, while this is true in large media markets only if the media consumers' disutility from advertising is sufficiently high.
    Keywords: Advertising, media platform, two-sided market, lump-sum charge, per-consumer charge, asymmetric competition
    JEL: D40 L10
    Date: 2012–05
  3. By: Hasan, Dr. Syed Akif; Subhani, Dr. Muhammad Imtiaz; Osman, Ms. Amber
    Abstract: Recall and Recognition, two important aspects when one talks about advertising and consumers awareness towards the brands. This study has mainly been focused on the brand symbols and its importance in the mind of the consumers. Does a brand symbol really play a role of differentiating a brand from another and how well it gets associated with the consumer? Questions like these are well-answered in this research. 250 respondents from the largest city of Pakistan i.e. Karachi were handed over a questionnaire on 18 brand symbols on an un-restricted non-probability sampling criteria. Education, age and gender are the focus of this study predicting the recall and recognition of the brand symbols. Consumer behavior entails variations towards selection of brand and the change in behavior is mostly due to brand recall and not recognition, which was found by testing the variables through multiple linear regressions (OLS-Model). It was of interest to find that except of gender, there is no association found between recognition of brand symbols and the said variables. Age has positive impact on recall of brand symbols and education has negative impact on recall of brand symbols. Furthermore, gender plays no role in predicting the recall and but somehow associated with recognition of brand symbols.
    Keywords: brand recall; brand recognition; brand symbols; age; gender; education; consumer behavior
    JEL: A1
    Date: 2012
  4. By: Roosen, Jutta; Kottl, Barbara; Hasselbach, Johanna
    Abstract: Due to growth and changing distribution channels for organic food in Germany, there is some concern that organic food will lose against local food in the competition for conscious consumers. In this paper we will present the results of a survey in Bavaria searching for consumer motives and label recognition. A choice experiment using different prices, brands and labels is conducted for bread, beer and milk. Results show the importance of local production to the surveyed consumers, similarly for conventional as for organic products.
    Keywords: Food Consumption/Nutrition/Food Safety,
    Date: 2012
  5. By: Hobbs, Jill E.; McDonald, Jill; Zhang, Jing
    Abstract: Traceability and authenticity issues have gained increasing prominence in food markets and create both opportunities and challenges for the food industry in providing credible information to consumers. Internal molecular tagging is an emerging technology with the potential to deliver traceability and authenticity assurances. A key question for the food industry in adopting new technologies is consumer acceptance. This paper explores consumer attitudes toward traceability and authenticity and the role of information in affecting consumer acceptance of new technologies, using molecular tagging as an example. Data were gathered from an online survey conducted in Canada in December 2010. To determine whether product-specific effects exist, two versions of the survey were used, focusing on salami and on apple juice. In a discrete choice experiment respondents were presented with choice sets describing an apple juice (salami) product containing different combinations of four attributes: traceability technology (molecular tag Vs RFID), price, brand, country of origin. Of particular interest was the effect of information on consumers’ choices. Therefore, respondents were randomly assigned to one of four information treatments: positive information on molecular tagging technology or further information on the issue of food authenticity and adulteration, or a combination of both. The control group was provided with neutral information on the technology and no additional information. Results from Conditional Logit and Random Parameter Logit models reveal that initial consumer acceptance of the technology is low, however, information matters. Highlighting the problems of adulteration reduces resistance more effectively than providing positive technology information, and the effects appear to be product specific across a juice product versus a processed meat product. Other proxy signals (country of origin, brand), resonate strongly with consumers and tended to have a larger impact on willingness-to-pay.
    Keywords: Traceability, authenticity, consumer acceptance, choice experiment, information treatment, Agribusiness, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Q13,
    Date: 2012
  6. By: Toro-Gonzalez, Daniel; Yan, Jia; Gallardo, Rosa Karina; McCluskey, Jill J.
    Abstract: This article estimates the demand for mint-flavored gum products using grocery store sales data and accounting for consumers’ valuation of quality. Unobserved product attributes, such as flavor quality, are important elements to consider when estimating the demand for gum. The estimation results suggest that gum is an inelastic product. A positive relationship between willingness to pay and unobserved quality was identified, implying that gum industry should be able to command a premium for higher quality mint flavored products.
    Keywords: Quality Differentiation, Unobserved Product Attributes, Demand Estimation, Gum, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Industrial Organization,
    Date: 2012
  7. By: Bakhtavoryan, Rafael; Capps, Oral, Jr.; Salin, Victoria
    Abstract: A 2007 foodborne illness incident involving peanut butter is linked with structural change in consumer demand. Compensated and uncompensated own- and cross-price elasticities and expenditure elasticities were calculated for leading brands before and after the product recall using the Barten synthetic model and weekly time-series data from 2006 through 2008. Statistically significant differences in price elasticities for the affected brand, Peter Pan, were absent. After a period of 27 weeks, this brand essentially recovered from the food safety crisis. Significant differences in price elasticities were evident among non-affected brands. Hence, spillover effects and heightened competition are associated with the recall.
    Keywords: Food safety, 2007 Peter Pan recall, demand system models, scanner data., Agribusiness, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D12,
    Date: 2012
  8. By: Marc Rysman (Department of Economics, Boston University); Ginger Zhe Jin (University of Maryland and NBER)
    Abstract: We study a new data set of US sports card conventions in order to evaluate the pricing theory of two-sided markets. Conventions are two-sided because organizers must set fees to attract both consumers and dealers. We have detailed information on consumer price, dealer price and, since most conventions are local, the market structure for conventions. We present several ndings: rst, consumer pricing decreases with competition at any reasonable distance, but pricing to dealers is insensitive to competition and in longer distances even increases with competition. Second, when consumer price is zero (and thus constrained), dealer price decreases more strongly with competition. These results are compatible with existing models of two-sided markets, but are dicult to explain without such models.
    Date: 2012–01
  9. By: Li, Xiaogu; Clark, Christopher D.; Jensen, Kimberly L.; Yen, Steven T.
    Abstract: In 2002, EPA established a voluntary program called the Climate Leaders Program (CL Program) designed for organizations to complete a corporate greenhouse gas (GHG) inventory, set a goal for reducing GHG emissions, and achieve that goal. The program was never implemented as a product labeling program. In 2010, EPA announced the program’s phase out. This study examines whether the CL Program could have been effectively used as a consumer product labeling program to assist consumers in choosing products manufactured by firms that have voluntarily set and achieved targeted GHG emission reductions.
    Keywords: Consumer Preferences, Climate Leaders, Willingness-to-Pay, Environmental Economics and Policy, Q50, Q58,
    Date: 2012–05–22
  10. By: Davis, James A.; Velandia, Margarita; Clark, Christopher D.; Lambert, Dayton M.; Jensen, Kimberly; Wilcox, Michael D.; Wszelaki, Annette
    Abstract: State programs promoting agricultural products have proliferated in response to increased consumer interest in locally grown foods. Tennessee, for example, currently has two state-sponsored programs promoting Tennessee agricultural products. This study examines the factors associated with fruit and vegetable farmer participation in these programs using mean comparisons and bivariate probit regression. Results suggest that farmer participation in these programs was associated with operation size, percentage of income from farming, percentage of annual sales from fresh produce, and attendance to University Extension educational events. These results should interest individuals attempting to increase producer participation in these types of programs.
    Keywords: State-sponsored marketing program, fruit and vegetable marketing, Tennessee producer participation, bivariate probit regression.JEL: Q13, Q18., Agribusiness, Agricultural and Food Policy, Marketing, Q13, Q18.,
    Date: 2012
  11. By: Yonezawa, Koichi; Richards, Timothy J.
    Keywords: Agribusiness, Demand and Price Analysis,
    Date: 2012–05–21
  12. By: Xie, Jing; Kim, Hyeyoung; House, Lisa
    Keywords: Agribusiness, Consumer/Household Economics, Marketing,
    Date: 2012
  13. By: Regine Kalka (Department of Economics of the Duesseldorf University of Applied Sciences); Katharina Juliana Schmidt (Department of Economics of the Duesseldorf University of Applied Sciences)
    Abstract: Focus of this article will be the question to which extent the concept of the identity oriented brand leadership is established in the insurance business and how it should be implemented in ideal case. First of all, it is the objective is develop a theoretical benchmark for the identity oriented brand leadership for services and insurances in particular, secondly compare it with practice in insurance companies. First there will be a short theoretical representation of the insurance market and the concept of the identity oriented brand leadership. In this regard especially the effects are obvious, the constitutive distinctive marks of services have on brand leadership. Due to the characteristics of services, the internal identity oriented brand leadership plays a major role in this article. According to that concept the employees’ brand knowledge and brand commitment result in brand citizenship behavior. In turn there are other variables that have an effect on these determinants like: consistence and continuity, positive differentiation and operationalization of the brand as well as brand-corresponding human ressource acitivies, internal brand communication and brand-corresponding leadership. By expert interviews the status quo of the identity oriented brand leadership in practice becomes apparent and is compared with theory. It is obvious, that the identity oriented brand leadership basically exists in the insurance business but is not entirely comparable to theory. These gaps between practice and theory as well as some conspicuous characteristics of insurances lead to the given recommendations: Definition of a strong, individual brand identity, an integral management of the identity oriented brand leadership in insurance companies and a stronger integration of the employees and especially of the sales department. According to that, insurance companies shall develop a special concept for their exclusive agents.
    Abstract: Im Mittelpunkt des Beitrages steht die Frage, inwieweit die identitätsorientierte Markenführung in der Versicherungsbranche Einzug erhalten hat und wie sie umgesetzt werden sollte. Nach kurzer theoretischer Darstellung des Versicherungsmarktes, der identitätsorientierten Markenführung und der Auswirkungen der konstitutiven Merkmale von Dienstleistungen auf die Markenführung wird ein theoretischer Maßstab der identitätsorientierten Markenführung für Dienstleistungen bzw. Versicherungen im Besonderen aufgestellt. Eine große Rolle spielt auf Grund der Charakteristika von Dienstleistungen die innengerichtete, identitätsorientierte Markenführung sowie die damit einhergehende Annahme, dass Markenwissen und Brand Commitment der Mitarbeiter zu markenkonformem Verhalten, dem Brand Citizenship Behavior, führen kann. Auf die beiden Wirkungsgrößen können wiederum bestimmte Determinanten einwirken: Konsistenz und Kontinuität, positive Differenzierung und Operationalisierung der Marke sowie markenkonforme HR-Aktivitäten, interne Markenkommunikation und markenkonforme Führung. Mit Hilfe von Experteninterviews ist der Stand der identitätsorientierten Markenführung dann in der Praxis beleuchtet und mit der Theorie abgeglichen worden. Dabei ist offensichtlich, dass die identitätsorientierte Markenführung zwar schon ansatzweise in der Versicherungsbranche angelangt, mit der aufgestellten Theorie jedoch nicht vergleichbar ist. Diese Defizite zwischen Theorie und Praxis sowie einige auffallenden Besonderheiten bei Versicherungen führen zu den gegebenen Handlungsempfehlungen: Definition einer klaren, individuellen Markenidentität, ganzheitliche Steuerung der identitätsorientierten Markenführung, stärkere Einbeziehung der Mitarbeiter und der unterschiedlichen Vertriebsorgane im Speziellen. Dabei sollten Versicherungen gerade für Ausschließlichkeitsvertreter ein spezielles Konzept entwickeln.
    Keywords: Identity oriented brand leadership, Insurance Industry, Brand Knowledge, Brand Commitment, Brand Citizenship Behavior
    JEL: M3 G22
    Date: 2012–05
  14. By: Sackett, Hillary M.; Shupp, Robert S.; Tonsor, Glynn T.
    Abstract: "Sustainably produced" food labels have rapidly grown in popularity over the past decade (Batte 2011). Moreover, because there is no government agency overseeing certication of these production methods, consumers are generally confused about the production attributes that may or may not be present in a sustainable food system. This paper analyzes data from a hypothetical choice experiment to better understand consumer purchasing behavior when faced with competing food production attributes such as "organic" and "local". We seek to estimate preferences for "sustainably produced" food products and determine how they may be aected by varying degrees of information about sustainable agricultural systems. Additionally, the willingness to pay measurements estimated in this paper provide insight into the trade-os perceived between current eco-labeling schemes, and the potential for differentiating "sustainably produced" products from their "organic" and "local" counterparts.
    Keywords: Sustainably Produced Food, Choice Experiment, Consumer Preferences, Food Consumption/Nutrition/Food Safety, Q01, Q13, Q11,
    Date: 2012

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