nep-mkt New Economics Papers
on Marketing
Issue of 2013‒04‒13
nine papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. The Impact of Brand Communication on Brand Equity Dimensions and Brand Purchase Intention Through Facebook By Bruno Schivinski; Dariusz Dabrowski
  2. Pricing Strategies in Advance Selling: Should a Retailer Offer Pre-order Price Guarantee? By Oksana Loginova
  3. Discount Pricing By Armstrong, Mark; Chen, Yongmin
  4. Farm Market Patron Behavioral Response to Food Sampling By Yang, Shang-Ho; Woods, Timothy A.
  5. E-commerce as a Stockpiling Technology - Implications for Consumer Savings By Andrea Pozzi
  6. Coordinating Static and Dynamic Supply Chains with Advertising through Two-Part Tariffs By L. Lambertini
  8. Music Piracy: Bad for Record Sales but Good for the iPod? By Leung, Tin Cheuk
  9. Determinants of Mobile Phone Customer Satisfaction in the Kurdistan Region of Iraq By Nabaz T. Khayyat; Almas Heshmati

  1. By: Bruno Schivinski (Gdansk university of Technology, Gdansk, Poland); Dariusz Dabrowski (Gdansk university of Technology, Gdansk, Poland)
    Abstract: Companies are now using social networking sites, such as Facebook, to enhance their brand communication and to promote and disseminate their product information among consumers. Such brands as Coca-Cola, Converse, and Starbucks reach millions of people through their social media communication; however, companies do not have complete control over this phenomenon. Consumers actively “like” brands, comment on posts, share information and share their opinions with other people on the Internet. The purpose of this study is to fill the gaps in the discussion of the ways in which firm-created and user-generated social media communication techniques impact consumer-based brand dimensions through Facebook. Moreover, we studied brand purchase intentions to achieve a behavioral understanding of the influence of these two communication instruments. We evaluated 302 data sets that were generated through a standardized online-survey to investigate the impact of social media communication on brand equity metrics. We subsequently applied structural equation modeling techniques for data analysis. The results of our empirical studies showed that user-generated social media communication had a positive impact on two measures of consumer-based brand equity, which included brand loyalty and perceived brand quality. In addition, the analysis indicated that firm-created social media communication had no influence on consumers’ brand purchase intention. This study also offers valuable insights for brand managers and scholars
    Keywords: Social media, Facebook, Brand communication, Brand equity, Brand purchase intention
    JEL: M31 M39 D83
    Date: 2013–04
  2. By: Oksana Loginova (Department of Economics, University of Missouri-Columbia)
    Abstract: Advance selling is a marketing strategy by a firm that allows consumers to submit pre-orders for a new to-be-released product. It helps the firm to reduce uncertainty about future demand and consumers to avoid stock-out risks. At the same time, consumers might be reluctant to place advance orders if they are uncertain about their valuations for the product or when they expect future price cuts. To induce early purchases, the firm may offer pre-order price guarantee. This paper examines the firm's profit-maximizing strategy in a two-period setting characterized by market size uncertainty, consumer valuation uncertainty, and consumer experience/inexperience with the product. I show that when consumers are less heterogeneous in their valuations, the firm should implement advance selling and offer pre-order price guarantee. For some parameter configurations pre-order price guarantee acts as a commitment device not to decrease the price in the regular selling season. In other situations, it enables the firm to react to the information obtained from pre-orders by increasing or decreasing the price. When consumers are more heterogeneous in their valuations and the market size uncertainty is small, or the fraction of experienced consumers in the population is high, the firm should not implement advance selling.
    Keywords: advance selling, price guarantee, price commitment, the Newsvendor Problem, demand uncertainty, experienced consumers, inexperienced consumers
    JEL: C72 D42 L12 M31
    Date: 2013–03–15
  3. By: Armstrong, Mark; Chen, Yongmin
    Abstract: We investigate the marketing practice of framing a price as a discount from an earlier price. We discuss two reasons why a discounted price---rather than a merely low price---can make a consumer more willing to purchase. First, a high initial price can indicate the product is high quality. Second, a high initial price can signal a bargain relative to other options, and there is less incentive to search. We also discuss a behavioral model where the propensity to buy increases when others pay more. A seller has an incentive to offer false discounts, where the initial price is exaggerated.
    Keywords: consumer protection; consumer search; false advertising; price discrimination; Reference dependence
    JEL: D03 D18 D83 M3
    Date: 2013–02
  4. By: Yang, Shang-Ho; Woods, Timothy A.
    Abstract: This study examines farm market patron responses to food sampling experiences and provides a baseline of regional differences of consumer interest in various products selling in the farmers market. Results show that the sampling strategy can highly engage consumers’ attention and easy to spread the product information. Food sampling showed a number of immediate product purchasing impacts, as well as other behaviors positively impacting vendor sales. The most important reason patrons identified that encouraged them to try a sample was friendliness of vendors. Sampling is a highly experiential merchandising strategy that fits in well with the farm market venue. More than half of the patrons indicated actually purchasing after sampling that were not planning to buy the product that day before the food sampling.
    Keywords: consumer behavior, farm market, food sampling, Community/Rural/Urban Development, Consumer/Household Economics, Marketing, Q13, Q18,
    Date: 2013–01
  5. By: Andrea Pozzi (EIEF)
    Abstract: Shopping on the Internet spares customers the discomfort of carrying around heavy and bulky baskets of goods, since the service usually includes home de- livery. This makes e-commerce a technology well suited to helping consumers to buy in bulk or to stockpile items on discount. I use grocery scanner data provided by a supermarket chain selling both online and through traditional stores to show that the introduction of e-commerce leads to an increase in bulk purchase and stockpiling behavior by customers. Since bulk and discounted items are sold at a lower price per unit, my findings highlight a new dimension in which online shopping can be beneficial to consumers. According to my calculations, the reduction in the cost of stockpiling triggered by the introduction of electronic commerce generates significant savings.
    Date: 2013
  6. By: L. Lambertini
    Abstract: Zaccour (2008) investigates the behaviour of a marketing channel where firms invest in advertising to increase brand equity, showing that an exogenous twopart tariff cannot be used to replicate the vertically integrated monopolist’s performance. I revisit the same model proving the existence of a multiplicity of franchising contracts taht can do the job. In particular, I set out by illustrating an optimal two-part tariff specified as a linear function of the upstream firm’s advertising effort, performing this task both in the static and in the dynamic game. then, I show that an analogous result emerges (i) in the static game by writing the fixed component of the two-part tariff as a non-linear function of the manufacturer’s advertising effort; and (ii) by using a contract which is linear in the brand equity, in the dynamic case.
    JEL: L21 M31 M37
    Date: 2013–03
  7. By: Meena Rambocas (Department of Management Studies, The University of the West Indies (St. Augustine Campus)); João Gama (Laboratory of Artificial Intelligence andDecision Support & Faculty of Economics University of Porto)
    Abstract: This article promotes sentiment analysis as an alternative research technique for collecting and analyzing textual data on the internet. Sentiment analysis is a data mining technique that systematically evaluates textual content using machine learning techniques. As a research method in marketing, sentiment analysis presents an efficient and effective evaluation of consumer opinions in real time. It allows data collection and analysis from a very large sample without hindrances, obstructions and time delays. Through sentiment analysis, marketers collect rich data on attitudes and opinion in real time, without compromising reliability, validity and generalizability. Marketers also gather feedback on attitudes and opinions as they occur without having to invest in lengthy and costly market research activities. The paper proposes sentiment analysis as an alternative technique capable of triangulating qualitative and quantitative methods through innovative real time data collection and analysis. The paper concludes with the challenges marketers can face when using this technique in their research work.
    Keywords: Sentiment analysis; Machine leaning; Marketing research; Triangulation; Qualitative research; Quantitative research
    JEL: M10 M30 M31 M39
    Date: 2013–04
  8. By: Leung, Tin Cheuk
    Abstract: Music piracy is a double-edged sword for the music industry. On the one hand, it hurts record sales. On the other hand, it increases sales of its complements. To quantify the effect of music piracy, I construct a unique survey data set and use a Bayesian method to estimate the demand for music and iPods, and find three things. First, music piracy decreases music sales by 24% to 42%. Second, music piracy contributes 12% to iPod sales. Finally, counterfactual experiments show that Apple's revenue could increase by $36 per student if music were free.
    Keywords: demand estimation, iPod, music piracy
    JEL: K42 L14 L82 O34
    Date: 2012
  9. By: Nabaz T. Khayyat (College of Engineering, Seoul National University); Almas Heshmati (College of Economics, Sogang University)
    Abstract: This study examines the customer satisfaction of telecomm-unication service in the Kurdistan region of Iraq. The purpose is to identify the key factors determining the customer satisfaction of telecommunication service. A conceptual model is specified and a number of hypotheses tested with a sample of 1,458 Kurdish mobile phone users in 2010. Discrete choice methodology is used to test three models of user satisfaction: Binomial logit model for overall satisfaction, and multinomial logit model for brand use and for handset preferred features. Overall the findings show that the Kurdish customers are generally satisfied with purchased mobile telecomm-unication service. The findings have implications for competition in the market and flows of investment resources to targeted market segments with potential expansion.
    Keywords: Logit model, Mobile Telecommunication, Customer Satisfaction, Service Providers, Kurdistan Region, Iraq.
    JEL: C25 C51 C81 L96 N35
    Date: 2012–09

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