nep-mkt New Economics Papers
on Marketing
Issue of 2013‒08‒31
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Strategic Positioning of Goods in a Market with a Niche By Eleftherios Zacharias
  2. First Degree Price Discrimination Using Big Data By Benjamin Reed Shiller
  3. Consumer Perceptions of Seafood Industries in the Wake of the Deepwater Horizon Oil Spill and Fukushima Daiichi Nuclear Disaster By McKendree, Melissa G.S.; Ortega, David L.; Widmar, Nicole Olynk; Wang, H. Holly
  4. Understanding diamond pricing using unconditional quantile regressions By Nicolas G. Vaillant; François-Charles Wolff

  1. By: Eleftherios Zacharias (Department of Economics, Athens University of Economics and Bussiness, Greece; The Rimini Centre for Economic Analysis, Italy)
    Abstract: We use the Hotelling's model allowing for a "gap" in the consumers' preferences. As a result, the characteristics space is divided in two separate intervals. The largest one represents the main market, and the smallest represents a niche. We find that in this set up the principle of maximum differentiation may not hold. We also, examine the incentives of a firm to adopt a niche marketing strategy. That is, to relocate and price its product so that to maximize its profits from the niche market only. We show that, as the reservation value of the consumers for the product increases, it is more profitable for a firm to adopt a nich marketing strategy.
    Keywords: Hotelling model, niche marketing, market segmentation
    JEL: M31 M21 L13
    Date: 2013–07
  2. By: Benjamin Reed Shiller (Economics Department, Brandeis University)
    Abstract: Second and 3rd degree price discrimination (PD) receive far more attention than 1st degree PD, i.e. person-speci?c pricing, because the latter requires previously unobtainable information on individuals’ willingness to pay. I show modern web behavior data reasonably predict Net?ix subscription, far outperforming data available in the past. I then present a model to estimate demand and simulate outcomes had 1st degree PD been implemented. The model is structural, derived from canonical theory models, but resembles an ordered Probit, allowing methods for handling massive datasets. Simulations show using demographics alone to tailor prices raises pro?ts by 0.14%. Including web browsing data increases pro?ts by much more, 1.4%, increasingly the appeal of tailored pricing, and resulting in some consumers paying twice as much as others do for the exact same product.
    Date: 2013–08
  3. By: McKendree, Melissa G.S.; Ortega, David L.; Widmar, Nicole Olynk; Wang, H. Holly
    Abstract: The impact of environmental disasters on consumers’ perceptions and preferences for specific food items has seldom been studied in the applied economics literature. Recent aquatic disasters, namely the Deepwater Horizon Oil Spill and Fukushima Daiichi Nuclear Disaster, have had profound impacts on fisheries serving US consumers and on agribusinesses within the aquaculture industry. This study explores consumer preferences using a nation-wide representative sample, and finds that twenty-nine percent of US consumers sought to reduce their seafood consumption due to the Deepwater Horizon Oil Spill and one-third of respondents indicated they sought to reduce their seafood consumption in the wake of the Daiichi nuclear disaster Additionally, over 50% believed that Asian seafood poses a consumer health risk because of the Japanese nuclear disaster. Understanding key factors that influence consumer behavior in the wake of environmental disasters can make fisheries, seafood industries and agribusiness more resilient when facing such catastrophic events. Our results find that key socio-demographic variables affect consumer behavior including gender, age, food safety concerns, value for country of origin labeling, and geographic location. Careful and efficient response by the seafood supply chain will enable effective communication with consumers and allow for optimal policy decision-making.
    Keywords: Seafood, Consumer perceptions, Deepwater Horizon, Fukushima Daiichi, Aquatic disaster, Agribusiness, Environmental Economics and Policy, Livestock Production/Industries, Marketing, Q00, Q18, Q22,
    Date: 2013–08
  4. By: Nicolas G. Vaillant (LEM - Lille - Economie et Management - CNRS : UMR8179 - Université Lille I - Sciences et technologies - Fédération Universitaire et Polytechnique de Lille); François-Charles Wolff (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: This paper investigates the relationship between the selling price of diamonds and their weight in carats. For this purpose, we use a unique sample of 112,080 certified diamonds collected from during the first week of July 2011. We find substantial differences in pricing depending on cut shape. The price of diamonds increases markedly with the carat weight, with a price elasticity equal to 1.94. However, estimates from unconditional quantile regressions show that the price-weight elasticity is not constant since it rises along the price distribution of diamonds. Finally, we observe the existence of significant increases in prices for diamonds featured with round weights compared to gems just below these threshold weights.
    Keywords: diamonds, discontinuity in price, hedonic equation, unconditional quantile regressions
    Date: 2013

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