nep-mkt New Economics Papers
on Marketing
Issue of 2013‒03‒16
eight papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Paradoxical Relationship between the Amount of Negative eWOM Messages and Positive Consumer Attitude By Mai Kikumori; Akinori Ono
  2. From Amazon to Apple: Modeling Online Retail Sales, Purchase Incidence and Visit Behavior By Anastasios Panagiotelis; Michael S. Smith; Peter J Danaher
  3. Effects of Pharmaceutical Promotion: A Review and Assessment By Dhaval M. Dave
  4. The Effect of Deceptive Advertising on Consumption of the Advertised Good and its Substitutes: The Case of Over-the-Counter Weight Loss Products By John Cawley; Rosemary Avery; Matthew Eisenberg
  5. Advertising and Competition in Privatized Social Security: The Case of Mexico By Justine S. Hastings; Ali Hortaçsu; Chad Syverson
  6. An Empirical Analysis of New Product by Using Models of Market Research (2013) By Alvi, Mohsin; Siddiqui, Bilal
  7. The Social Media Revolution. Strategies and Attitudes towards the Rise of an Enabling Technology By Elena Casprini; Alberto Di Minin
  8. Diffusion of innovation within an agent-based model: Spinsons, independence and advertising By Piotr Przybyla; Katarzyna Sznajd-Weron; Rafal Weron

  1. By: Mai Kikumori (Graduate School of Business and Commerce, Keio University); Akinori Ono (Graduate School of Business and Commerce, Keio University)
    Abstract: Most research has shown that positive electric word-of-mouth (e-WOM) has positive effects, while negative e-WOM has negative effects on consumer attitude towards a product. However, negative e-WOM may have positive impacts rather than negative impacts. Using ANOVA in three experiments, this study found that negative e-WOM can have a positive impact on consumer attitude under some conditions, including when the e-WOM is in regard to hedonic products, when expert consumers read attribute-centric reviews, and/or when there is negative e-WOM at the top of the website than at the bottom.
    Date: 2013–02
  2. By: Anastasios Panagiotelis; Michael S. Smith; Peter J Danaher
    Abstract: In this study we construct a multivariate stochastic model for website visit duration, page views, purchase incidence and the sale amount for online retailers. The model is constructed by composition from parametric distributions that account for consumer heterogeneity, and involves copula components. Our model is readily estimated using full maximum likelihood, allows for the strong nonlinear relationships between the sales and visit variables to be explored in detail, and can be used to construct sales predictions. We examine a number of top-ranked U.S. online retailers, and find that the visit duration and the number of pages viewed are both related to sales, but in very different ways for different products. Using Bayesian methodology we show how the model can be extended to account for latent household segments, further accounting for consumer heterogeneity. The model can also be adjusted to accommodate a more accurate analysis of online retailers like that sell products at a very limited number of price points. In a validation study across a range of different websites, we find that the purchase incidence and sales amount are both forecast more accurately using our stochastic model, when compared to regression, probit regression and a popular data-mining method.
    Keywords: Online purchasing, panel data, copulas, marketing models
    Date: 2013
  3. By: Dhaval M. Dave
    Abstract: This review discusses the role of consumer-directed and physician-directed promotion in the pharmaceutical market, based on the classic conceptual framework of whether such promotion is “persuasive” and/or “informative”. Implications for public health and welfare partly depend on whether, and to what extent, advertising: 1) raises “selective” or brand-specific demand versus “primary” or industry-wide demand; 2) impacts drug costs; and 3) impacts competition. Empirical evidence from the literature bearing on these effects is surveyed. These studies show that pharmaceutical promotion has both informative and persuasive elements. Consumer advertising is more effective at enlarging the market, educating consumers, inducing physician contact, expanding drug treatment, and promoting adherence among existing users. Physician advertising is primarily persuasive in nature, effectively increasing selective brand demand. Evidence bearing on the effects of promotion on competition and prices is more limited. However, there is no strong evidence that drug promotion deters entry, and there is some suggestive evidence that it may even be mildly pro-competitive. With respect to costs, some studies suggests that consumer advertising may weakly raise the average wholesale price, which is a manufacturer’s list price, but there is no strong indication that either consumer- or provider-directed promotion substantially raises retail-level prices. However, this is not to imply that potential promotion-driven substitution from non-advertised to advertised drugs cannot have effects on total drug costs. While most of these effects point to potential welfare improvements as a result of pharmaceutical promotion, there is also evidence that consumer ads may induce overuse and overtreatment in certain cases. Market expansion, overtreatment and shifting brands for non-therapeutic reasons further raise the concern of a sub-optimal patient-drug match at least for some marginal patients. A comprehensive evaluation of the welfare effects of pharmaceutical promotion requires a balanced assessment of these benefits and costs.
    JEL: D22 I0 I11 I12 I18 M3
    Date: 2013–02
  4. By: John Cawley; Rosemary Avery; Matthew Eisenberg
    Abstract: This paper is the first to estimate the impact of exposure to deceptive advertising on consumption of the advertised product and its substitutes. We study the market for over-the-counter (OTC) weight-loss products, a market in which deceptive advertising is rampant and products are generally ineffective with potentially serious side effects. We control for the targeting of ads using indicator variables for each unique magazine read and television show watched. Our estimates indicate that exposure to deceptive advertising is associated with a lower probability that women, and a higher probability that men, consume OTC weight loss products. We find evidence of spillovers; exposure to deceptive print ads is associated with a higher probability of dieting and exercising for both men and women. We also find evidence that better-educated individuals are more sophisticated consumers of advertising and use it to make more health-promoting decisions.
    JEL: D83 I1 I18 M37 M38
    Date: 2013–03
  5. By: Justine S. Hastings; Ali Hortaçsu; Chad Syverson
    Abstract: This paper examines how advertising impacts competition and equilibrium prices in the context of a privatized pension market. We use detailed administrative data on fund manager choices and worker characteristics at the inception of Mexico’s privatized social security system, where fund managers had to set prices (management fees) at the national level, but could select sales force levels by local geographic areas. We develop a model of fund manager choice, price and advertising competition (in terms of sales force deployment), nesting models of informative and persuasive advertising. We find evidence in favor of the persuasive view; exposure to sales force lowered price sensitivity and increased brand loyalty, leading to inelastic demand and high equilibrium fees. We simulate oft-proposed policy solutions: a supply-side policy with a competitive government player, and a demand-side policy which increases price elasticity. We find that demand-side policies are necessary to foster competition in social-safety-net markets with large segments of inelastic consumers.
    JEL: D14 D18 G11 L20 L21 L51
    Date: 2013–03
  6. By: Alvi, Mohsin; Siddiqui, Bilal
    Abstract: A biggest task for strategy maker, to perform market insights and its research by designing, collection of data with analyzing and reporting data (relevant) for specific purpose and market situation (problem) facing the company. However it requires spending a lot of time over it so several companies hire many professional experts having a knowledge regarding with technical operation of research like (syndicated-service research firms, custom-marketing research firms and specialty-line marketing research firms).
    Keywords: Market Research Models, New Product's Strategies.
    JEL: M1 M3
    Date: 2013–02–15
  7. By: Elena Casprini (Istituto di Management - Scuola Superiore Sant’Anna, Pisa); Alberto Di Minin (Istituto di Management - Scuola Superiore Sant’Anna, Pisa)
    Abstract: This paper investigates how companies are facing the social media revolution en course. Web 2.0 technology has forced firms to reconsider their business models and strategies. As well as it happened in the first digital revolution led by Web 1.0 technology, the advent of the second digital revolution led by Web 2.0 has created new opportunities and threats that firms need to cope with. Internet has had an impact on both business models and firms’ practices, since it has created a new market space, changed the role of the customers and modified marketing strategies. Based on both theory as well as empirical cases, the study shows that strong similarities exists between the two digital revolutions. Old economic and managerial models are still valid while companies can either take a passive approach or they can try to adapt, but only outliers are leading the transformations and are redefining business models and practices in their industries.
    Keywords: Social media, Web 2.0, business model, strategy
    JEL: O30
    Date: 2013–02–01
  8. By: Piotr Przybyla; Katarzyna Sznajd-Weron; Rafal Weron
    Abstract: We modify a two-dimensional variant of a two-state non-linear voter model and apply it to understand how new ideas, products or behaviors spread throughout the society in time. In particular, we want to find answers to two important questions in the field of diffusion of innovation: Why does the diffusion of innovation take sometimes so long? and Why does it fail so often? Because these kind of questions cannot be answered within classical aggregate diffusion models, like the Bass model, we use an agent-based modeling approach.
    Keywords: Agent-based model; Diffusion of innovation; Word of mouth marketing; Conformity; Advertising; Spinson
    JEL: C63 D70 M37
    Date: 2013

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