nep-mkt New Economics Papers
on Marketing
Issue of 2014‒09‒05
six papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. 移动互联网背景下全渠道零售策略研究 By Feng, Lipan
  2. 随机需求下的WEEE双回收渠道管理研究 By Li, Chuanfa; Feng, Lipan; Wang, Xuehong
  3. Perverse Nudges: Minimum Payments and Debt Paydown in Consumer Credit Cards By Jialan Wang; Benjamin Keys
  4. The Investor in Structured Retail Products: Marketing Driven or Gambling Oriented? By Victor Mendes; Margarida Abreu
  5. Pricing-to-Market and Optimal Interest Rate Policy By Cooke, Dudley
  6. Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-border Integration By Yuriy Gorodnichenko; Oleksandr Talavera

  1. By: Feng, Lipan
    Abstract: With more and more retailers claimed their strategic layout of Omni-channel retailing, and the model of offline to mobile regarded as a shortcut to carry it out. In this paper, we construct a consumer choice model in which both the risk of direct marketing channel and the searching cost of the retailing channel are considered, and two kinds of models are analyzed to derive the optimal pricing policies, demands and efficiency of different scenario. The result demonstrates that the retailer can also benefit from the offline to mobile model for Omni-channel retailing although the market coverage level doesn’t improve. Moreover, we analytically reveal that the relative advantage of the offline of mobile model decreases with the customer acceptance of the network selling channel, whereas it increases with the customer acceptance of mobile Internet selling channel.
    Keywords: mobile Internet; Omni-channel retailing; offline to mobile; game theory
    JEL: M11
    Date: 2014–08–21
  2. By: Li, Chuanfa; Feng, Lipan; Wang, Xuehong
    Abstract: More and more enterprises collecting e-wastes through the online recycling channel as the rapidly improving of the customer acceptance of the online recycling channel. And they are facing a problem, however, that they have to offer a higher price in the online recycling channel than the traditional recycling channel as well as reducing the searching cost by using the online recycling channel. Base on that, we incorporate a detailed consumer recycling channel choice model where the collection quantity faced in each channel relies on both the excessive price level in the online recycling channel and the waiting or timing cost in the traditional recycling channel with stochastic demand. Furthermore, three reverse channel models are addressed to derive the optimal decisions, collection quantities as well as the maximal profits. The result shows that the dual-recycling channel strategies that depends on the excessive price level, searching or timing cost, and the demand of the processed products. Moreover, we also depicted that when these enterprises should establish dual recycling channel if they are already have one of these recycling channel, with the change of the demand and excessive price level.
    Keywords: stochastic demand; WEEE; dual-recycling channel; consumer behavior
    JEL: M11
    Date: 2014–08–15
  3. By: Jialan Wang (Consumer Financial Protection Bureau); Benjamin Keys (University of Chicago)
    Abstract: What factors impact how much consumers repay on their credit cards each month? This paper examines the drivers of payment behavior using the CFPB credit card database, which includes the monthly account activity of a large fraction of U.S. consumers from 2008-2012. We find that consumers' payment behavior is consistent and strongly bimodal. Most accounts are either paid in full or paid near the minimum amount each month, with very few intermediate payment amounts. We then evaluate the impact of two types of policy changes: 1) changes in the minimum payment formulas implemented by individual issuers, and 2) new payment disclosures mandated by the CARD Act of 2010. The policy changes led to small increases in the payments made by consumers previously paying the minimum. On average, the CARD Act disclosures increased consumer payments by $19 per month from February 2010 to December 2012. However, both the formula changes and the CARD Act's 3-year payment disclosure had the perverse effect of decreasing the fraction of accounts paid in full by 1%. These findings are difficult to reconcile with rational economic models, and imply that setting suggested payments at low amounts lead some consumers to reduce their overall debt payments. Our results suggest that anchoring and the salience of minimum payments play an important role in the credit card market.
    Date: 2014
  4. By: Victor Mendes; Margarida Abreu
    Abstract: Structured retail products (SRP) are one of the most visible faces of financial innovation and are becoming increasingly popular amongst retail investors. However, there is strong consensus that retail investors’ preference for structured products is difficult to explain using the standard rational theory, those products being in general sold at a significant premium. Studying the actual trading behavior of individual investors we provide evidence consistent with the view that SRP likely offer value to some informed investors compared to other products, that product complexity is a way to complete markets and that SRP allow investors to access segments otherwise not available to them. Nonetheless, our results also suggest that the increasing popularity of SRP is deeply related to investors’ behavioral biases, particularly overconfidence and gambling. Moreover, results also show that SRP trading activity cannot be dissociated from aggressive marketing practices. The study is structured as follows: The next section describes the database used. The third section traces the socio-demographic profile of investors in SRP, making a comparison with equity investors and the general Portuguese population. In section 4 alternative models are estimated to help define the profile of investors in SRP and evaluate the influence of behavioral traits in this characterization. In the last section some final conclusions are drawn. We start out documenting that investors in SRP are different than investors in other instruments. We then test the impact of financial literacy on the investment in SRP and conclude that more knowledgeable and sophisticated investors are more likely to invest in SRP. This is consistent with the idea that if product complexity is a way to complete markets, then more knowledgeable and sophisticated retail investors will be offered (and will invest in) more complex structured products. We also conclude that overconfident investors participate (and trade) more in the structured retail product market, and that the contact between the product distributor and the investor is most relevant. Therefore, marketing is a strong determinant of the investment is SRP thus providing a rationale for overpricing. Finally, our results allow us to conclude that gambling may justify investors’ irrationality when they opt for SRP.
    Keywords: Portugal, Finance, Miscellaneous
    Date: 2014–07–03
  5. By: Cooke, Dudley (University of Exeter)
    Abstract: I study optimal interest rate policy in a small open economy with consumer search in the product market. When there are search frictions, firms price-to-market, with implications for the design of monetary policy. Country-specific shocks generate deviations from the law of one price for traded goods which monetary policy acts to stabilize by influencing firm markups. However, stabilizing law of one price deviations results in greater fluctuations in output.
    Keywords: interest rates; monetary policy; price
    JEL: E31 E52 F41
    Date: 2014–08–01
  6. By: Yuriy Gorodnichenko; Oleksandr Talavera
    Abstract: We document basic facts about prices in online markets in the U.S. and Canada, a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible as well as exhibit stronger pass-through (60-75 percent) and faster convergence (half-life less than 2 months) in response to movements of the nominal exchange rate. Multiple margins of adjustment (frequency of price changes, direction of price changes, size of price changes, exit of sellers) are active in the process of responding to nominal exchange rate shocks. Furthermore, we use the richness of our dataset to show that degree of competition, stickiness of prices, synchronization of price changes, reputation of sellers, and returns to search effort are important determinants of pass-through and speed of price adjustment for international price differentials.
    JEL: E3 F40 F41
    Date: 2014–08

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