nep-mkt New Economics Papers
on Marketing
Issue of 2012‒06‒25
sixteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Television Advertising and Soda Demand By Lopez, Rigoberto A.; Liu, Yizao; Zhu, Chen
  3. Price Discrimination with Asymmetric Firms: The Case of the U.S. Carbonated Soft Drinks Market By Liu, Yizao; Shen, Shu
  4. Consumer Preference Variation between Domestic and Imported Food By Parcell, Joseph L.; Gedikoglu, Haluk
  5. Influence of convenience on healthy food choice: The case of seafood By Mueller Loose, Simone; Peschel, Anne; Grebitus, Carola
  6. Carbon Labeling for Consumer Food Goods By Shewmake, Sharon; Okrent, Abigail M.; Thabrew, Lanka; Vandenbergh, Michael
  7. Promotion Pass-Through and Consumer Search: An Empirical Analysis By Richards, Timothy J.; Gomez, Miguel I.; Lee, Jun
  8. Corporate Social Responsibility Initiatives and Consumer Preferences in the Dairy Industry By Deselnicu, Oana; Costanigro, Marco; Thilmany, Dawn D.
  9. Factors Affecting Feeder Cattle Prices in Internet Sales By Burdine, Kenneth H.; Maynard, Leigh J.; Halich, Greg
  10. Product Information and Willingness-to-Pay: A Case Study of Fair Trade Coffee on Chinese Market By Yang, Shang-Ho; Guan, Huanda; Hu, Wuyang; Liu, Yun
  11. Marketing in smes: the role of entrepreneurial sensemaking By Bettiol, M; Di Maria, E; Finotto, Vladi
  12. Marketing Contracts for Fresh Market Tomato Production: A Choice Based Experiment By Vassalos, Michael; Hu, Wuyang; Woods, Timothy; Schieffer, Jack; Dillon, Carl R.
  13. The Effect of Information on Consumer Preferences of Indoor Plants By Solano, Alexis; House, Lisa; Gao, Zhifeng
  14. Product differentiation and brand competition in the Italian breakfast cereal market: a distance metric approach By Sckokai, Paolo; Varacca, A.
  15. An Empirical Analysis of Socio-Demographic Stratification in Sweetened Carbonated Soft-Drink Purchasing By Rhodes, Charles
  16. Consumer Response to Controversial Food Technologies and Price: A Neuroeconomic Analysis By McFadden, Brandon R.; Lusk, Jayson L.; Crespi, John M.; Cherry, J. Bradley C.; Martin, Laura E.; Bruce, Amanda S.

  1. By: Lopez, Rigoberto A.; Liu, Yizao; Zhu, Chen
    Abstract: This study examines the effects of television advertising on consumer demand for carbonated soft drinks using a random coefficients logit model (BLP) with household and advertising data from seven U.S. cities over a three year period. We find that advertising decreases the price elasticity of demand, indicating that advertising plays predominantly a persuasive, therefore anti-competitive role in this market. Further results show that brand spillover effects are significant and that measuring advertising with gross rating points (GRPs) outperforms measuring it with expenditures, as is conventionally done. Finally, simulation results indicate that eliminating all television advertising would lower market shares of sodas as consumers migrate to other beverages such as juices, water and milk
    Keywords: advertising, demand, competition, consumer behavior, sodas, carbonated soft drinks, Demand and Price Analysis, Industrial Organization, Marketing, D12, L66, Q18, I18,
    Date: 2012–06–01
  2. By: Watson, Jonathan Adam; Wysocki, Allen F.; Gunderson, Michael A.; Brecht, Jeffrey K.; Sims, Charles
    Keywords: Consumer/Household Economics, Demand and Price Analysis, Marketing,
    Date: 2012
  3. By: Liu, Yizao; Shen, Shu
    Abstract: This paper investigates the relationship between price discrimination and vertical product differentiation, using National Brands and Private Labels in the Carbonated Soft Drink market as a case study. We decompose prices difference into quantity dis- count and cost difference across packagings and recover marginal cost by a structural demand model of consumer preference and firm behavior. Our results suggest that in the carbonated soft drinks market, both national brands and private labels offers quantity discount to consumers: consumers pay lower unit prices when buying larger packed soft drinks. In addition, the price curvature parameter is lower for private la- bels, implying that the price schedule is more curved for private label soft drinks than national brands. This means in the CSD market, private labels have more ability to perform price discrimination, segment consumers, and generate high revenues, com- paring to national brands. This result, to some extent, explains the growing market shares of private label soft drinks and the significant percentage of total sales from private labels goods for retailers, such as Wal-Mart and Target.
    Keywords: Consumer/Household Economics, Industrial Organization, Marketing,
    Date: 2012
  4. By: Parcell, Joseph L.; Gedikoglu, Haluk
    Abstract: Increasing concerns about a healthy diet, food safety and support for the local economy provide new opportunities for farmers to increase their farm income by locally selling their farm products. The major challenge for farmers making local sales is to predict consumer preferences correctly and provide goods to the market accordingly. By analyzing results from a consumer survey conducted in the Midwest, the current study determines the consumer preferences for domestic artisan cheese compared with processed cheese and imported French cheese compared with U.S. artisan cheese. The results of the econometric analysis show that consumer preferences vary between domestic and imported cheese. The results also show that experience attributes are more influential than search and credence attributes on consumers’ willingness to pay a price premium for a food item.
    Keywords: Willingness to Pay, Consumer Preferences, Ordered Probit, Factor Analysis, Agribusiness, Marketing,
    Date: 2012–05–31
  5. By: Mueller Loose, Simone; Peschel, Anne; Grebitus, Carola
    Abstract: Although seafood is considered to be a healthy food choice, the recommended consumption level of two servings per week is still not reached in most countries. Previous research has identified potential barriers of seafood consumption, including purchase and consumption convenience, but it is still unclear to what degree consumer choice is affected by convenience relative to known choice drivers such as price, species and region of origin. This study contributes to filling this research gap by analyzing how consumers’ in-store choice of readypackaged aquaculture oysters is driven by convenience factors (opened versus unopened presentation format, packaging format and accompaniments with or without visual serving suggestions) relative to traditionally examined demand factors of price, origin, species, health, environmental and quality claims. A total of 1,718 Australian oyster consumers participated in an online choice experiment with visual product stimuli to simulate their choice of oysters in a retail store. Considering preference heterogeneity respondents’ choices were analyzed with a scale adjusted latent class model and six different consumer segments differing in their preferences were identified. Over all respondents price, presentation format and species were the most important choice drivers, while packaging format and claims only had a minor impact on consumer choice. Origin and accompaniments were found to be important for some consumer segments. These results provide recommendations for policy makers as well as seafood marketers and are in line with the presented literature in that convenience seems to be an important driver which can be manipulated in order to increase seafood consumption. Consumers strongly prefer the ‘ready to eat’ half shell open oysters over closed oysters, although those are saver and keep fresh longer. Visual serving suggestions and accompaniments in form of easy to prepare flavor sachets were found to positively increase choice likelihood.
    Keywords: oysters, discrete choice experiment, retail packaging, convenience, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
    Date: 2012
  6. By: Shewmake, Sharon; Okrent, Abigail M.; Thabrew, Lanka; Vandenbergh, Michael
    Abstract: We construct a model to predict how consumers will respond to better information about the carbon content of 42 foods and a nonfood composite as well as product categories through a label, and provide guidance as to what kinds of goods would provide the highest CO¬2eq emission reductions through a labeling scheme. Our model assumes that consumers value their individual carbon footprint, allowing us to utilize estimates of own- and cross-price elasticities of demand from the literature on demand analysis. We make three different assumptions about how consumers currently value their carbon footprint and find that when a label informs consumers, their baseline perception matters. We also find that carbon labels on alcohol and meat would achieve the largest decreases in carbon emissions.
    Keywords: Carbon emissions, food labeling, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q53, D83, Q18,
    Date: 2012
  7. By: Richards, Timothy J.; Gomez, Miguel I.; Lee, Jun
    Keywords: Cereal, Panel Data, Retail-Price Pass-Through, Threshold Error Correction Model, Price Transmission Asymmetry, Industrial Organization, Marketing, C32, Q17,
    Date: 2012
  8. By: Deselnicu, Oana; Costanigro, Marco; Thilmany, Dawn D.
    Abstract: We conduct a best worst-ranking exercise to investigate consumers’ perception of the importance of twelve possible actions for a dairy farm engaging in Corporate Social Responsibility. Animal welfare is clearly identified as the most preferred activity and a top priority for most consumers. Sustainable agricultural practices, energy consumption, and waste management are ranked as second, third, and fourth respectively. Company involvement in the community has the lowest priority amongst the surveyed consumers. The perceptual profile of four fluid milk labels (Organic, Colorado Proud, Validus and Rbst free) is also investigated, showing that common milk labels do convey some information related to CSR activities. Most prominently, the Validus certification is immediately connected to improved animal welfare. Similarly, Colorado Proud sends a strong message related to locality and community involvement. USDA Organic and RBST-free convey a more complex message, where information cues include better nutrition, taste, and sustainable agriculture. Willingness to pay for the differentiating labels was estimated (stated preferences) to be $0.55/gallon for Colorado proud, $0.64/gallon for USDA organic, $0.49/gallon for RBST-free and $0.46/gallon for Validus. However, a very small share of these price premia could directly be attributed to consumers’ perceptions of implemented CSR activities. The Validus label is a clear exception: as currently framed, it elicits a strong perception of improved animal welfare, which in turn directly affects valuation of fluid milk.
    Keywords: corporate social responsibility, Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2012
  9. By: Burdine, Kenneth H.; Maynard, Leigh J.; Halich, Greg
    Keywords: Demand and Price Analysis, Marketing, Teaching/Communication/Extension/Profession,
    Date: 2012
  10. By: Yang, Shang-Ho; Guan, Huanda; Hu, Wuyang; Liu, Yun
    Keywords: product information, willingness-to-pay, fair trade coffee, Chinese market, Agribusiness, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, Research Methods/ Statistical Methods, D12, Q13,
    Date: 2012–06
  11. By: Bettiol, M; Di Maria, E; Finotto, Vladi
    Abstract: Marketing literature has emphasized the factors hampering marketing planning and strategizing in small firms, in particular resource scarcity, lack of specialized structures and competences. Recent streams of literature in entrepreneurial marketing have nonetheless shown that small firms do engage in peculiar marketing strategies and activities that do not necessarily reflect codified processes observed in large organizations. Within this line of research, the article aims at contributing to extant theory in entrepreneurial marketing placing under scrutiny the generative moments of marketing strategies in small firms. Through the integration of literature in entrepreneurial marketing and in entrepreneurship and through the analysis of four case studies, the article proposes a conceptual framework that emphasizes the centrality of entrepreneurial sensemaking in small and medium-sized enterprises’ marketing strategies. We posit that entrepreneurs are engaged in the construction of interpretive frameworks that, when explicated and made accessible to consumers and stakeholders, legitimate novel business ideas and logics. These interpretive frameworks structure the content and processes of marketing activities. Theoretically, the article aims at contributing to the debate on marketing in small businesses shedding light on the processes underlying the formation of marketing strategies. Propositions are offered to guide future empirical research based on the proposed conceptual framework.
    Keywords: Entrepreneurship; Marketing; Sensemaking
    JEL: M31 M13
    Date: 2012–06–01
  12. By: Vassalos, Michael; Hu, Wuyang; Woods, Timothy; Schieffer, Jack; Dillon, Carl R.
    Keywords: Crop Production/Industries, Demand and Price Analysis, Marketing,
    Date: 2012
  13. By: Solano, Alexis; House, Lisa; Gao, Zhifeng
    Abstract: This study primarily focuses on the effect of information on consumers’ purchasing behavior. If consumers are provided with information about a specific product they may change their beliefs about that product. This distribution of information may lead the consumer to make the decision either to purchase or not purchase, or the consumer may increase or decrease the amount he or she is willing to pay. Here, the impact of information about indoor plants’ ability to reduce indoor air pollution on participants is analyzed. This research will add to the literature on consumer behavior and will also benefit the floriculture industry within the state of Florida. Florida’s floriculture sales have fluctuated during the last ten years. From 2000 to 2003 the industry experienced an increase in sales; however, the hurricanes of 2004 and 2006 had a negative impact of these sales. In early 2007 the industry began to recovery. By late 2007, though, the recession had begun and floriculture sales declined. This decrease continued through 2008. In 2009 and 2010 there was some recovery but sales were not up to their pre-recession level. To improve these sales the industry has been searching for a new way to market indoor plants. One possible avenue is to market indoor plants as “green” or natural indoor air cleaners. According to the Environmental Protection Agency (EPA) buildings, including homes, often contain pollutants such as dust, dander, smoke particles, and Volatile Organic Compounds/Chemicals (VOCs). VOCs include the chemicals benzene, formaldehyde, and trichloroethylene, all of which can cause health problems including sick building syndrome (SBS) and some cancers. Scientific research has shown that specific indoor plants can remove indoor air pollution. NASA scientists investigated specific indoor plants’ ability to remove indoor air pollution. The researchers found that many plants that are common household plants, such as English Ivy, have the ability to remove VOCs from indoor air. Much research has been devoted to examining the link between indoor plants and the reduction of indoor air pollution. Several indoor plants have been identified as having the ability to remove indoor air pollution but despite the amount of research consumers may not be aware of the benefits. To help determine if information about VOCs and the ability of specific indoor plants to reduce them had an impact on consumers’ opinions and which additional attributes were important to consumers focus groups were conducted with both Florida residents and University of Florida graduate students. Participants were provided with information about VOCs and nearly all of them said they preferred an indoor plant that could remove VOCs. Also, many participants stated they preferred an indoor plant that “did something.” In this study the plants performed a specific function, reducing indoor air pollution. If indoor plants are able to perform a function that is beneficial to human health then consumers may feel these plants are useful instead of being used for decoration alone. Participants were then asked which attributes of indoor plants they believed to most important. These attributes included the level of care needed (or hardiness), the height of the plant at maturity, the amount of sunlight needed, toxicity of the plant, the plant’s ability to flower, and tags that clearly identified the plant. Of these six attributes hardiness, the amount of sunlight needed, and the ability of the plant to flower were chosen as the most important attributes. Several participants stated that they would like an indoor plant that required little care as it would take less effort to keep the plant alive. Some participants lived in homes that did not allow for much sunlight to enter and preferred a plant that survive on little or indirect sunlight. Flowering was chosen as several participants preferred plants that could be used as decoration and that performed a function. These attributes were then used in surveys which included 2,280 respondents. In order to determine if the information about VOCs had an effect on consumers decisions to buy indoor plants a choice-based conjoint (CBC) analysis was used in the form of an online survey. CBC analysis is a commonly used marketing tool and is most often in a survey form. This method allows participants to choose one hypothetical product among other hypothetical products, simulating a marketplace environment. A “none” option is also included in CBC. One of the surveys constructed for this study departed slightly from the standard CBC. Usually the attributes are chosen by the researcher and/or a marketing manager and the hypothetical products are constructed from the attributes and their levels. One survey constructed did contain attributes chosen by the authors. For this survey the attributes included those which were considered as most important to the focus groups: the level of care needed (Hardiness), the amount of sunlight needed (Sunlight Needed), and the ability of the indoor plant to flower (Flowering). The ability of the plant to remove indoor air pollution (VOC Removal) and the price of the plant (Price) were also included. However, the majority of participants were allowed to select the attributes they preferred. In this second survey participants were allowed to choose three attributes from a set of six. This set of six attributes included Hardiness, Sunlight, Flowering, the toxicity of the plant (Toxicity), tags clearly identifying the plant (Tags), and the height of the plant at maturity (Height). If a participant received a survey allowing attribute selection he or she was able to choose the three he or she preferred most. For example, a participant could have selected Flowering, Height, and Sunlight Needed as the attributes that he or she most preferred. Again, Price and VOC Removal were included. Participants who received either of the two surveys were then presented with twelve choice sets, each containing five choices, or hypothetical products composed of the attributes and their levels, and a “none” option. In addition, to determine if information has an effect on consumer behavior, information about VOCs and the ability of specific indoor plants to remove them was randomly provided to participants. To determine if this information had an effect conditional logits were used to analyze the data from both surveys and the results were compared. This logit analyzes the probability of the participants’ choices based on the characteristics (attributes and their levels) of the choices. The logit parameters were then used to calculate the willingness-to-pay (WTP) for each attribute. The WTP estimates of the attributes from the surveys where the information was not provided were compared with the WTP estimates when information was provided. The results demonstrate that VOC information did make a difference in participants’ choices. Participants who were given this information were willing to pay more for an indoor plant if it had the ability to reduce indoor air pollution. WTP for the other attributes changed as well if participants were given this information. Height, Sunlight Needed, and Hardiness generally experienced increases in their WTP estimates though these estimates were negative. WTP was positive for Flowering and Tags but generally decreased. Toxicity had negative WTP estimates and experienced both increases and decreases. Providing information to consumers may have an effect on purchasing behavior. In this study participants who were given information were willing to pay more for indoor plants that remove VOCs. This information also had an effect on how much they were willing to pay for other attributes. When consumers gain this knowledge they can make better and more informed choices.
    Keywords: effect of information, willingness to pay, conditional logits, volatile organic compounds, indoor plants, floriculture, Agribusiness, Marketing, Research Methods/ Statistical Methods,
    Date: 2012
  14. By: Sckokai, Paolo; Varacca, A.
    Abstract: This article employs a nation-wide sample of supermarket scanner data to study product and brand competition in the Italian breakfast cereal market. An Almost Ideal Demand System (AIDS) modelled to include Distance Metrics (DMs) and consistent with the methodology proposed by Pinske, Slade and Brett (2002), is estimated to study demand responses, substitution patterns, own-price and cross-price elasticities. Estimation results indicate a certain level of brand loyalty and opposite attitudes towards product type. Elasticities point out the presence of patterns of substitution within products sharing the same brand and similar nutritional characteristics.
    Keywords: Industrial Organization,
    Date: 2012
  15. By: Rhodes, Charles
    Abstract: Caloric soft drinks are the number one source of added sugars in U.S. diets, and are associated with many health problems. Three recent years of household purchase, household demographic, and industry advertising data allow Heckit estimation to identify how specific demographic groups vary in their purchase response to marketing of sweetened carbonated soft drinks (sCSDs) at the product category level. Empirical results reveal unique non-linear patterns of household purchase response to sCSD-industry price, sale, and advertising signals that vary significantly by specific demographic characteristics. Isolating the effects of either price, sale, or advertising on household purchase, highest education level of high school or less for the household head tends to be the most robust predictor of higher sCSD purchase, followed by household income at or below the poverty level for a family of four. The novel approach and results here contribute to the literature by estimating how rising education level for a fixed level of household income will variously affect sCSD purchase quantity depending on the ethnicity of the household, and does the same fixing education level across rising income level. Econometric controls are used to avoid estimation and inference errors the literature warns commonly accompany the Heckman specification.
    Keywords: sugar-sweetened beverages, Heckit, scanner data, demographic sub-groups, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, D12, C33, C34, Z18,
    Date: 2012
  16. By: McFadden, Brandon R.; Lusk, Jayson L.; Crespi, John M.; Cherry, J. Bradley C.; Martin, Laura E.; Bruce, Amanda S.
    Abstract: With new food technologies such as cloning or added artificial growth hormones, consumers face complex and conflicting information related to the quality, safety, nutrition, and ethical outcomes associated with food choices. Economics has partially addressed the challenge of predicting people’s choices and willingness-to-pay for new food technologies by using experimental methods, but thus far has offered little to explain why choices are made. The emerging field of neuroeconomics, which integrates the findings of economics, psychology, and neuroscience, can provide unique insights into consumer preferences. The purpose of this research is to enhance understanding of consumers’ preferences for new food technologies by capitalizing on recent developments in economics and neuroscience. Specifically, this research seeks to determine how the human brain responds to the controversial newer food technologies as compared to standard, “rational” food attributes such as product price.
    Keywords: Controversial Food Technology, Animal Cloning, Artificial Growth Hormones, Neuroeconomics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies,
    Date: 2012–05–29

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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