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on Marketing |
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Issue of 2013‒01‒07
nine papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Chenhang Zeng (Research Center for Games and Economic Behavior, Shandong University) |
| Abstract: | This paper considers a two-period model with experienced consumers and inexperienced consumers. The retailer determines both advance selling price and regular selling price at the beginning of the first period. I show that advance selling weekly dominates no advance selling, and the optimal advance selling price may be at a discount, at a premium or at the regular selling price. To help the retailer choose the optimal pricing strategy, conditions for each possible advance selling strategy to outperform others are characterized. Furthermore, how the consumer composition affects the retailer¡¯s optimal pricing strategy and profit are examined. In the extension, a special case with no experienced consumers provides a new explanation of advance selling price premium. That is, without experienced consumers, there are no incentives for the retailer to implement advance selling at a premium price. Besides, another special case indicates that advance selling strictly dominates no advance selling when consumer valuation distribution is uncertain. With pre-order information obtained in the first period under advance selling, the retailer is able to know the consumer valuation distribution and thus better forecast the future demand. |
| Keywords: | advance selling, price commitment, endogenous price, demand uncertainty, experienced consumers. |
| JEL: | C72 D42 L12 M31 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:shn:wpaper:2012-03&r=mkt |
| 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 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 be at a discount or a premium relative to the regular selling price. |
| Keywords: | advance selling, the Newsvendor Problem, demand uncertainty, experienced consumers, inexperienced consumers |
| JEL: | C72 D42 L12 M31 |
| Date: | 2012–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1213&r=mkt |
| By: | Schmidt, Klaus M.; Spann, Martin; Zeithammer, Robert |
| Abstract: | Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. Furthermore, to see how competition affects the viability of PWYW, we implement markets in which a PWYW seller competes with a traditional seller. Finally, we endogenize the market structure and let sellers choose their pricing strategy. The experimental results show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers pay voluntarily to a PWYW seller. We find that PWYW can be viable in isolation, but it is less successful as a competitive strategy because it does not drive traditional posted-price sellers out of the market. Instead, the existence of a posted-price competitor reduces buyers’ payments and prevents the PWYW seller from fully penetrating the market. If given the choice, the majority of sellers opt for setting a posted price rather than a PWYW pricing. We discuss the implications of these results for the use of PWYW as a marketing strategy. |
| Keywords: | customer-driven pricing mechanisms; pay what you want; revenue management; price discrimination; social preferences |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:14308&r=mkt |
| By: | Rosa-Branca Esteves (Universidade do Minho - NIPE) |
| Abstract: | This paper investigates the competitive and welfare effects of information accuracy improvements in markets where firms can price discriminate after observing a private and noisy signal about a consumer’s brand preference. It shows that firms charge more to customers they believe have a brand preference for them, and that this price has an inverted-U shaped relationship with the signal’s accuracy. In contrast, the price charged after a disloyal signal has been observed falls as the signal’s accuracy rises. While industry profit and overall welfare fall monotonically as price discrimination is based on increasingly more accurate information, the reverse happens to consumer surplus. |
| Keywords: | Competitive Price Discrimination, Imperfect Customer Recognition, Imperfect Information |
| JEL: | D43 D80 L13 L40 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:12/2012&r=mkt |
| By: | Fioriti, Linda; Marchini, Andrea; Diotallevi, Francesco; Pampanini, Rossella |
| Abstract: | After a deep review of the main economic studies and applications about the emerging problem of obesity, this paper focuses on a particular aspect of the issue: the improvement of fruit and vegetable purchasing in retailing sector. First of all it has been analyzed the actual presence of strategies aimed at improving fruit and vegetable consumption in the main retailing companies operating in Italy. Then the study investigates the role of price in consumers’ purchasing choices. High price elasticity of F&V products could suggest the implementation of lower prices to consumers instead of implementing other policy interventions. The methodology is based on qualitative and quantitative research methods. In particular, in depth interviews to retailing sector experts have been run to gather useful insights about retailers’ management of F&V department. Then quantitative analysis on IRI data about F&V consumption in Italy has been conducted to evaluate the influence of price on consumers’ attitude towards F&V. The results obtained provide meaningful insights to formulate marketing strategies and policy interventions. |
| Keywords: | Obesity; fruit and vegetables; consumer behaviour; food promotion |
| JEL: | Q13 Q18 |
| Date: | 2012–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43279&r=mkt |
| By: | Tamás Briglevics; Oz Shy |
| Abstract: | Recent legislation and court settlements in the United States allow merchants to use price discounts to steer customers to pay with means of payment that are less costly to merchants. This paper suggests one method of calculating merchants’ change in profit associated with giving price discounts to buyers who pay with debit cards and cash. We use data from the pilot of the Boston Fed’s Diary of Consumer Payment Choice to compute rough estimates of the expected net cost reduction by merchant type that may result from debit card and cash price discounts. We find that steering consumers to debit and cash via price discounts reduces some merchants’ card costs. However, this cost reduction may be insufficient to offset the cost increase of administering price menus that vary by payment instrument. In addition, rewards buyers receive on credit card transactions may exceed the price discounts that merchants can provide. These factors may explain why steering via price discounts is not widely observed. |
| Keywords: | Payment systems ; Credit cards ; Debit cards ; Cash transactions |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:12-9&r=mkt |
| By: | Michael R. Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Babur De los Santos (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Matthijs R. Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: | Organic product search results on Google and Bing do not systematically include information about seller characteristics (e.g., feedback ratings and prices). Consequently, it is often assumed that a retailer’s organic traffic is driven by the prominence of its position in the list of search results. We propose a novel measure of the prominence of a retailer’s name, and show that it is also an important predictor of the organic traffic retailers enjoy from product searches through Google and Bing. We also show that failure to account for the prominence of retailers’ names–as well as the endogeneity of retailers’ positions in the list of search results–significantly inflates the estimated impact of screen position on organic clicks. |
| Keywords: | product search, position, internet, search engines, prominence |
| JEL: | D43 D83 L13 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2012-09&r=mkt |
| By: | Dornbusch, Friedrich; Kroll, Henning; Schricke, Esther |
| Abstract: | The present paper aims to draw a comprehensive picture of the ways how university scientists in Germany interact with their regional environment. Previous research documented varieties of localised interactions, however, there have hardly been any broad and systematic approaches explaining the different patterns of regionally-oriented university involvement. This study develops a new typology of researchers' regionally-oriented activities and uses a recent nation-wide survey among German professors to test for main influences on those activities. The results highlight the decisive interplay between an individual academic's motivation as well as different opportunities provided by the regional environment. -- |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisifr:r62012&r=mkt |
| By: | Michael Grossman; Erdal Tekin; Roy Wada |
| Abstract: | We examine the effects of fast-food restaurant advertising on television on the body composition of adolescents as measured by percentage body fat (PBF) and to assess the sensitivity of these effects to using conventional measures of youth obesity based on body-mass index (BMI). We merge measures of body composition from bioelectrical-impedance analysis (BIA) and dual-energy x-ray absorptiometry (DXA) from the National Health and Nutrition Examination Survey with individual level data from the National Longitudinal Survey of Youth 1997 and data on local fast-food restaurant advertising on television from Competitive Media Reporting. Exposure to fast-food restaurant advertising on television causes statistically significant increases in PBF in adolescents. These results are consistent with those obtained by using BMI-based measures of obesity. The responsiveness to fast-food advertising is greater for PBF than for BMI. Males are more responsive to advertising than females regardless of the measure. A complete advertising ban on fast-food restaurants on television would reduce BMI by 2 percent and PBF by 3 percent. The elimination of the tax deductibility of food advertising costs would still leave a considerable number of youth exposed to fast-food advertising on television but would still result in non-trivial reductions in obesity. |
| JEL: | I10 I18 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18640&r=mkt |