nep-mkt New Economics Papers
on Marketing
Issue of 2014‒06‒14
ten papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Unusual Location and Unexpected Execution in Advertising: Content Analysis and Test of Effectiveness in Ambient Advertisements By Hutter, Katharina
  2. The Interaction of Signals: A Fuzzy set Analysis of the Video Game Industry By Daniel Kaimann; Joe Cox
  3. The Effects of Non-binding Retail-price Recommendations on Consumer and Retailer Behavior By Lisa Bruttel
  4. Consumer benefits from the EU Digital Single Market: evidence from household appliances markets By Nestor Duch-Brown; Bertin Martens
  5. Designing luxury experience By Vadim Grigorian; Francine Espinoza Petersen
  6. Sellouts, Beliefs, and Bandwagon Behavior By Nick Vikander
  7. The Signaling Effect of Critics - Evidence from a Market for Experience Goods By Joe Cox; Daniel Kaimann
  8. The Impact of Service Bundling on Consumer Switching Behaviour: Evidence from UK Communication Markets By Tim Burnett
  9. Public and private regulation of sanitary risks in fresh produce marketing chains: the case of Morocco and Turkey By Jean Marie Codron; Hakan Hadanacioglu; Magali Aubert; Zouhair Bouhsina; Abdelkader Ait El Mekki; Sylvain Rousset; Selma Tozanli; Murat Yercan
  10. Building a reputation as a socially responsible firm By Aleix Calveras; Juan José Ganuza

  1. By: Hutter, Katharina
    Abstract: Ambient advertising is a creative, innovative form of outdoor advertising that explicitly intends to surprise consumers by placing unexpected advertisements at unusual locations. The rising relevance of ambient advertising is not mirrored in marketing literature yet. No study has empirically considered the key elements of location and execution of ambient advertising. This paper uses a mixed-method approach to (1) identifying the locational and executional elements used in ambient advertising practice and (2) to analyzing the effectiveness of ambient advertising. Study 1 (n=340) reveals that ambient advertising mainly uses unconventional 2D elements often combined with unexpected visual elements such as optical illusion. Study 2 (n=234) examines that advertisements using unconventional location and execution have a stronger impact on consumer perception (e.g. attention, attitude towards the ad) than conventional outdoor advertising. The paper provides contributions for marketing managers and further research. --
    Keywords: Ambient advertising,guerrilla marketing,surprise,advertising effectiveness,execution,location
    JEL: M37
    Date: 2014–06–03
  2. By: Daniel Kaimann (University of Paderborn); Joe Cox (Portsmouth Business School)
    Abstract: Customers continuously evaluate the credibility and reliability of a range of signals both separately and jointly. However, existing econometric studies pay insufficient attention to the interactions and complex combinations of these signals, and are typically limited as a result of difficulties controlling for multicollinearity and endogeneity in their data. We develop a novel theoretical approach to address these issues and study different signaling effects (i.e., word-of-mouth, brand reputation, and distribution strategy) on customer perceptions. Using data on the US video games market, we apply a fuzzy set qualitative comparative analysis (fsQCA) to account for cause-effect relationships. The results of our study address a number of key issues in the economics and management literature. First, our results support the contention that reviews from professional critics act as a signal of product quality and therefore positively influence unit sales, as do the discriminatory effects of prices and restricted age ratings. Second, we find evidence to support the use of brand extension strategies as marketing tools that create spillover effects and support the launch of new products.
    Keywords: Signaling Theory, Information Asymmetry, Interactions, Fuzzy sets, Qualitative Comparative Analysis, Video Game Industry
    JEL: C18 D82 L10 L82
    Date: 2014–06
  3. By: Lisa Bruttel
    Abstract: This paper presents results from an experiment on the effects of retail-price recommendations (RPRs) on consumer and retailer behavior. Despite their non-binding nature, RPRs may influence consumersÕ willingness to pay by setting a reference point. Loss averse consumers will then be reluctant to pay a price higher than the recommended one. Furthermore, at a given price level consumers will demand a larger quantity the higher the RPR is. We find evidence for both effects. They are stronger when the price recommendation contains information about the value of the product to the consumer instead of providing an uncorrelated anchor only. Retailers in this study react to RPRs in a similar way as consumers do, but they do not anticipate consumersÕ behavior well.
    Keywords: recommended retail price, consumer behavior, retailer behavior, experiment
    Date: 2014
  4. By: Nestor Duch-Brown (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: This paper investigates price differences between online and offline retail channels in the EU Digital Single Market. Using price and sales data for ten different product categories sold both offline and online in 21 EU countries in 2009, and correcting for product characteristics, we find evidence that confirms the theory: online prices are lower than offline prices, price dispersion also tends to be lower online and online demand is more price-elastic than offline demand. In addition, from our demand estimates we compute the consumers' welfare effects of different scenarios. Our results indicate that a full price convergence across EU member states towards the lowest observed average price would significantly benefit consumers. Moreover, eliminating e-commerce would reduce consumer surplus in €34 billion while an increase in online sales between 10% and 25% would represent a change in consumer welfare in the range of €3.4 billion to €13 billion.
    Keywords: price dispersion; e-commerce; consumer welfare
    JEL: L11 L15 L68
    Date: 2014–06
  5. By: Vadim Grigorian (Pernod Ricard); Francine Espinoza Petersen (ESMT European School of Management and Technology)
    Abstract: In luxury brand management, experiences are essential. However, most of what we know about designing customer experiences originates from work developed with and/or for mass brands. Luxury brands are conceptually different and require a specific approach to brand management. Using a grounded theory approach, we present a framework consisting of seven principles to design luxury experience. Our research suggests that to create a true luxury experience brands should go beyond traditional frameworks of brand management. By compiling best practices and the commonalities amongst the interviewed companies’ most successful efforts to create a luxury experience, the framework can help brands to implement a “trading-up” strategy: Luxury brands can enhance their desirability by offering a true luxury experience and non-luxury brands can adopt principles of luxury experience and become life-style brands.
    Keywords: Brand management, luxury brands, luxury marketing, emotions, customer experience, experience design, luxury consumption
    Date: 2014–05–26
  6. By: Nick Vikander (Department of Economics, Copenhagen University)
    Abstract: This paper examines how a firm can strategically use sellouts to influence beliefs about its good's popularity. A monopolist faces a market of conformist consumers, whose willingness to pay is increasing in their beliefs about aggregate demand. Consumers are broadly rational but have limited strategic reasoning about the firm's incentives. I show that in a dynamic setting, the firm can use current sellouts to mislead consumers about future demand and increase future profits. Sellouts tend to occur when demand is low, they are accompanied by introductory pricing, and certain consumers benefit from others being misled.
    Keywords: sellouts, conformity, bounded rationality, obfuscation
    JEL: D03 D42 D83
    Date: 2014–04–01
  7. By: Joe Cox (Portsmouth Business School); Daniel Kaimann (University of Paderborn)
    Abstract: Experience goods are characterized by information asymmetry and a lack of ex ante knowledge of product quality, such that credible and reliable external signals of product quality are likely to be highly valued. Due to their independence and expert reputations, professional critics therefore have the potential to significantly influence buyer behavior and hence product demand. In order to empirically verify the influence of critic reviews on market success, we analyze a sample of 1,480 video games and their sales figures between 2004 and 2010. We find strong evidence to suggest that reviews from professional critics have a significant effect upon sales and serve as a signal that helps consumer to overcome uncertainty and support the decision making process. The influence of professional critics on sales is also found to substantially outweigh that of word-of-mouth reviews from other consumers.
    Keywords: Signaling Theory, Information Asymmetry, Critics, Video Games
    JEL: C31 D82 L14 L82
    Date: 2013–09
  8. By: Tim Burnett
    Abstract: This paper empirically analyses the impact of the bundling of four common home communication services with a single supplier on the probability that an individual changes supplier using a survey-elicited dataset of 2,871 individuals. Implementing a random effects probit approach to control for individual heterogeneity, the results strongly show that when individuals bundle their service then they are significantly less likely to change supplier. A second result indicates that service- and supplier- related variables are better predictors of an individual's likelihood of switching than are the characteristics of the individual, suggesting that future research in this area should prioritise their inclusion.
    Keywords: Bundling, Consumers, Panel-data, Regulation, Switching, telecommunications
    JEL: C3 C5 D1 L5 L8
    Date: 2014–05
  9. By: Jean Marie Codron (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA); Hakan Hadanacioglu (Faculty of Agriculture, Department of Agricultural Economics, Ege university); Magali Aubert (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA); Zouhair Bouhsina (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA); Abdelkader Ait El Mekki (National School of Agiculture); Sylvain Rousset (UR ADBX, Institut National de Recherche en Sciences et Technologies pour l'Environnement et l'Agriculture); Selma Tozanli (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA; Centre International de Hautes Etudes Agronomiques Méditerranéennes); Murat Yercan (Faculty of Agriculture, Department of Agricultural Economics, Ege university)
    Abstract: Chemical contamination of fresh produce through pesticide spraying is considered a minor risk for consumer health. As a result, a high proportion of safety controls may be delegated to the private sector by public agencies. Private control is even greater when fresh produce is sold to safety-conscious consumers, given the high exposure of retailers' commercial reputations. Performed within the framework of the European project Sustainmed, our paper is a case study of public and private management and control of safety risks and the determinants thereof in the fresh produce industry of two contrasting Mediterranean countries: Morocco and Turkey. Based on expert surveys and face-to-face interviews with a high number of tomato growers, it provides an insight into the factors influencing the role of the different players in managing and controlling safety risks. A clear distinction is made between the individual parameters at growing and shipping levels and country-wide parameters at the market and institutional level. Both categories of parameters significantly influence the level of safety management at production level (IPM schemes and GAP certificates) and help understand the respective contributions of public and private operators in the safety risk management of the whole system.
    Keywords: food safety, pesticide, integrated pest management, IPM, good agricultural practices, GAP, private regulation, vertical organization, fresh vegetables, turquie, marocpesticide, sécurité des alimentsgestion de risques, intégration verticale, fruit, légume, produit fraissécurité sanitaire, pratique agricolerégulation
    Date: 2013
  10. By: Aleix Calveras; Juan José Ganuza
    Abstract: Many of the attributes that make a good "socially responsible" are credence attributes that cannot be learned by consumers either through search or experience. Consumers aggregate information about them from several channels (media, advertisement, NGOs, etc.). Since these sources may send contradictory messages, the information available to consumers is noisy. In this paper we model such informational environment and show the positive relationship between the accuracy of the information transmitted to consumers and CSR. We also show that firms may be tempted to adding noise to the information channel (e.g., through lobbying of the media), which might reduce the supply of the credence attributes and even harm firms themselves. As a consequence, firms might find profitable, for instance by means of forming a partnership with an NGO, to commit to not manipulate the information. Finally, we also show that such self-commitment by firms is a strategic substitute of transparency regulation by the public sector.
    Keywords: credence good, information asymmetry, corporate social responsibility, regulation
    JEL: D72 H42 L51 M14 Q52
    Date: 2014–05

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