nep-mkt New Economics Papers
on Marketing
Issue of 2014‒12‒29
eleven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Pricing a Package of Services - When (not) to bundle By Ketelaar, Felix; Szalay, Dezsö
  2. Consumer Price Search and Platform Design in Internet Commerce By Michael Dinerstein; Liran Einav; Jonathan Levin; Neel Sundaresan
  3. Trademark Rights, Comparative Advertising, and “Perfume Comparison Lists” – An Untold Story of Law and Economics By Tim W. Dornis; Thomas Wein
  4. Diagnostiquer la proximité perçue en vente directe de produits alimentaires By Catherine Hérault-Fournier; Aurélie Merle; Anne-Hélène Prigent-Simonin
  5. Consumer Search Costs and Preferences on the Internet By Jolivet, Grégory; Turon, Hélène
  6. Menu Labeling Imparts New Information About the Calorie Content of Restaurant Foods By Stewart, Hayden; Hyman, Jeffrey; Dong, Diansheng
  7. The multi-product nature of the firm in the arts sector: A case study on ‘Centro Zo’ By Cellini, Roberto; Martorana, Marco Ferdinando; Platania, Felicita
  8. Gender Marketing im Retail Management By Nufer, Gerd; Fischer, Florian
  9. Not All Price Endings Are Created Equal: Price Points and Asymmetric Price Rigidity By Snir, Avichai; Levy, Daniel; Gotler, Alex; Chen, Haipeng (Allan)
  10. The Organic Food Premium: A Canterbury Tale By Adelina Gschwandtner
  11. Reassessing competition concerns in electronic communications markets By Peitz, Martin; Valletti, Tommaso

  1. By: Ketelaar, Felix; Szalay, Dezsö
    Abstract: We study a tractable two-dimensional model of price discrimination. Consumers combine a rigid with a more flexible choice, such as choosing the location of a house and its quality or size. We show that the optimal pricing scheme involves no bundling if consumer types are affiliated. Conversely, if consumer types are negatively affiliated over some portion of types then some bundling occurs.
    Keywords: Price discrimination; Bundling; Monopoly; Multidimensional screening
    JEL: D42 D82 D86
    Date: 2014–12
  2. By: Michael Dinerstein (Stanford University); Liran Einav (Stanford University); Jonathan Levin (Stanford University); Neel Sundaresan (eBay Inc)
    Abstract: Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low, yet price dispersion is common. We use browsing data from eBay to estimate a model of consumer search and price competition when retailers offer homogeneous goods. We find that retail margins are on the order of 10%, and use the model to analyze the design of search rankings. Our model explains most of the effects of a major re-design of eBay's product search, and allows us to identify conditions where narrowing consumer choice sets can be pro-competitive. Finally, we examine a subsequent A/B experiment run by eBay that illustrates the greater difficulties in designing search algorithms for differentiated products, where price is only one of the relevant product attributes.
    Date: 2014–08
  3. By: Tim W. Dornis (Leuphana University of Lueneburg, Germany); Thomas Wein (Leuphana University of Lueneburg, Germany)
    Abstract: Regarding trademarks, the EU and US regulate comparative advertising differently. One particular matter of significant difference is whether or not competitors are allowed to say they offer an imitation or replica of a trademarked product. In the US, competitors may claim equality of their product as long they clearly eliminate confusion and distinctly market their product as separate from the original. European firms, by contrast, face more obstacles concerning advertising statements conceived to establish their product as equal or identical to a competitor’s trademarked product. If the economic functions of trademarks are clear, it is easier to answer a number of legal questions in the comparative advertising field. One facet rarely explored is the fact that trademarks are the “name” of a product and the legal bridge between consumers’ past and future experiences. Such experiences are referred to as attributes or qualities of a product. Attributes describe product characteristics driving individual consumer experiences. Because such experiences are difficult to objectively verify, statements of this kind must submit to particular scrutiny. In principle, the same is true regarding product qualities. Quite often, it is easy to measure quality experiences, but sometimes measuring is not possible depending on whether qualities are public or private. Like with attributes, the legality of referring to product qualities depends on verifiability. Uncertainty of an attribute’s verifiability or quality information creates a risk of undue exploitation, particularly consumer confusion. In such cases, strict regulation of comparative advertising is important. In other words, the legal system must prevent confusion in advertising because confusion increases consumer search costs. In addition to preventing confusion, the issue of trademark dilution is another aspect relevant in analyzing comparative advertising. According to European doctrine, using a competitor’s trademark in comparative advertising can be improper goodwill misappropriation. Displaying a competitor’s trademark may diminish its distinctiveness, tarnish its image and reputation, or constitute what the ECJ defines as freeriding or parasitic competition. The meandering standards of legal doctrine, however, hardly provide for consistent guidelines. Whether misappropriation is a justifiable term to use in defining comparative advertising requires a closer look at the field’s underlying economics. As we will show, in none of these constellations will the appropriation of the competitor’s investment be implemented through the market mechanism. It is not a pecuniary, but a technological externality. The metric for assessing admissibility of appropriation must thus be changed from the governing European doctrine of necessity or proportionality to a principle of economic efficiency taking into account both the trademark owner’s and the advertising competitor’s costbenefitratio.
    Date: 2014–12
  4. By: Catherine Hérault-Fournier (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA; Université Nantes Angers Le Mans); Aurélie Merle (Grenoble Ecole de Management); Anne-Hélène Prigent-Simonin (COACTIS, Université Jean Monnet (Saint-Etienne))
    Abstract: Dans le prolongement de l’éditorial de Décisions Marketing : « La proximité est-elle une nouvelle mode du marketing ? », cet article interroge la pertinence managériale du concept de proximité en vente directe de produits alimentaires. Via des études empiriques menées dans trois circuits - l’AMAP, le Point de Vente Collectif et le marché – nous montrons qu’il est pertinent de diagnostiquer la proximité perçue par les consommateurs car elle influence positivement la confiance à l’égard des circuits étudiés et permet de les discriminer. Une fois l’intérêt du concept démontré, des recommandations sont formulées autour de deux interrogations : quels types de proximité encourager et comment développer la proximité perçue en vente directe.
    Abstract: In line with the Editorial of Décisions Marketing “Is proximity a new marketing trend?â€, the aim of this article is to question the managerial relevance of the concept of proximity within the context of direct selling of food products. Through empirical studies in three supply chains - French CSA (AMAP), farm shops and direct selling on markets- we show the interest of assessing perceived proximity since it has a positive influence on consumers trust towards the studied supply chains and allows to discriminate them. The relevance of the concept of proximity being supported, recommendations are then emphasized on two points: which kinds of proximity to encourage and how to enhance proximity in food direct selling.
    Keywords: lien producteur-consommateur, proximitévente directe, distribution alimentaire, agroalimentairecircuit court, marketing
    Date: 2014
  5. By: Jolivet, Grégory (University of Bristol); Turon, Hélène (University of Bristol)
    Abstract: We analyse consumers' search and purchase decisions on an Internet platform. Using a rich dataset on all adverts posted and transactions made on a major French Internet platform (PriceMinister), we show evidence of substantial price dispersion among adverts for the same product. We also show that consumers do not necessarily choose the cheapest advert available and sometimes even choose an advert that is dominated in price and non-price characteristics (such as seller's reputation) by another available advert. To explain the transactions observed on the platform, we derive and estimate a structural model of sequential directed search where consumers observe all advert prices but have to pay a search cost to see the other advert characteristics. We allow for flexible heterogeneity in consumers' preferences and search costs. After deriving tractable identification conditions for our model, we estimate sets of parameters that can rationalize each transaction. Our model can predict a wide range of consumer search strategies and fits almost all transactions observed in our sample. We find empirical evidence of heterogenous, sometimes positive and substantially large search costs and marginal willingness to pay for advert hedonic characteristics.
    Keywords: consumer search, revealed preferences, individual heterogeneity, price dispersion, internet
    JEL: C13 D12 D81 D83 L13
    Date: 2014–11
  6. By: Stewart, Hayden; Hyman, Jeffrey; Dong, Diansheng
    Abstract: Restaurant foods are typically higher in calories than meals consumed at home. Menu labeling regulations by the U.S. Food and Drug and Administration aim to inform consumers about the calorie content of menu items. However, some consumers may already be making at least partially informed decisions. For example, as a rule of thumb, a consumer may be aware that deep-fried foods are higher in calories. He or she may also know to avoid side dishes like French fries and onion rings. Indeed, it has been argued that some consumers can already identify which foods best satisfy their needs and wants and gain little new information from menu labeling. In this study, following research in marketing science and behavioral economics, we assume that a representative consumer employs rules-of-thumb nutrition knowledge to judge the calorie content of restaurant foods when explicit information is unavailable. We then investigate whether rules of thumb accurately predict the calorie content of 361 meals sold by 2 major fast-food restaurants and 5,752 meals sold by 5 major full-service restaurants. Results show that some simple rules of thumb are fairly reliable predictors of actual calorie content. They and other information available at the point of sale also explain about half of the total variation in calories in restaurant foods. Nonetheless, we find that menu labeling still imparts substantial new information. In particular, it is likely that many Americans are already able to make crude choices between high- and low-calorie foods, based on their pre-existing understandings of nutrition. Menu labeling allows them to make finer adjustments in their food choices and behavior, if they wish to.
    Keywords: Menu labeling, restaurant menu, calorie, food choices, obesity, nutrition information, menu board, Patient Protection and Affordable Care Act, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Marketing,
    Date: 2014–12
  7. By: Cellini, Roberto; Martorana, Marco Ferdinando; Platania, Felicita
    Abstract: This article studies the relevance of the multi-product nature of a firm whose core-business rests in the performing arts sector. A specific case study is presented, concerning ‘Centro Zo’, a firm which was born in Catania (Italy) about 15 years ago, to supply performing arts pieces. Now it is a multi-product firm, offering different goods and services. The multi-product choice is investigated from the firm’s perspective, and from the consumers’ standpoint. Fresh data, collected in 2013, are used to investigate the evaluations of the consumers about the different products, and their propensity to joint consumption. We show that the importance of different goods changes across different groups of consumers attending the live performances at Centro Zo. However, the multi-product choice allows the firm to sustain its core business, and –we suggest– makes it more independent from the local policy-makers.
    Keywords: Arts, multi-product firm, policy-makers, product diversification.
    JEL: Z11
    Date: 2014–08
  8. By: Nufer, Gerd; Fischer, Florian
    Abstract: Männer und Frauen sind unterschiedlich und handeln unterschiedlich. Diese Erkenntnis bildet das Fundament des Gender Marketing, das sowohl in der Theorie als auch in der Praxis zunehmend an Bedeutung gewinnt. Eine erfolgreiche Umsetzung dieser Disziplin ist für Unter-nehmen eine wichtige Herausforderung für die Zukunft und kann darüber hinaus ein entscheidendes Differenzierungsmerkmal im Wettbewerb sein. Im Rahmen dieser Arbeit wird zunächst auf aktuelle Entwicklungen und Erkenntnisse aus der Theorie des Gender Marketing eingegangen. Im Anschluss werden Umsetzungsbeispiele aus der Handelspraxis vorgestellt. Hierbei werden sowohl Best Practices als auch mögliche Risiken aufgezeigt. Es folgt die Vorstellung der Aktivitäten von ALDI SÜD im Bereich des Gender Marketing. Abschließend werden die gesammelten Erkenntnisse zusammengefasst und Handlungsempfehlungen ausgesprochen.
    Date: 2014
  9. By: Snir, Avichai; Levy, Daniel; Gotler, Alex; Chen, Haipeng (Allan)
    Abstract: Using data from three sources (a laboratory experiment, a field study, and a large US supermarket chain), we document a surprising asymmetric behavior of 9-ending prices: they are more rigid upward, but not downward, in comparison to non 9-ending prices. The data from the lab experiment and the field study suggest that shoppers are less likely to notice higher prices when they end with 9, or price increases when the new prices end with 9, in comparison to other endings. The consumers' misperception seems to be caused by their use of 9-endings as a signal for low prices, which interferes with price information processing. The supermarket data suggest that retail price setters respond strategically to the consumer misperception by setting 9-ending prices more often after price increases than after price decreases. 9-ending prices, therefore, usually increase only if the new prices are also 9-ending. Consequently, 9-ending prices exhibit asymmetric rigidity: they are more rigid than non 9-ending prices upward but not downward.
    Keywords: Price Points,Price Recall,Sticky Prices,Rigid Prices,Price Rigidity,Price Adjustment,9-Ending Prices,Psychological Prices,Asymmetric Price Adjustment
    JEL: E31 L16 C91 C93 D03 D80 M31
    Date: 2014–11–05
  10. By: Adelina Gschwandtner
    Abstract: The present paper attempts to bring further evidence on the behavioural gap for organic food in Britain. The stated preferences are analysed by contingent valuation, while the revealed preferences are estimated by hedonic pricing. A small but significant gap in the premium for organic food between stated and revealed preferences has been found. This gap may suggest a need for price premium intervention. The estimated price elasticity for organic products is on average above one in absolute value suggesting that a pricing policy could be very effective.
    Keywords: Contingent Valuation; Hedonic Pricing Method; Convergent Validity; Behavioral Gap; Organic Food; Price Premium
    JEL: H29 Q18 Q21
    Date: 2014–11
  11. By: Peitz, Martin; Valletti, Tommaso
    Abstract: Central features of today's electronic communications markets are complementarities between the different layers of the value chain, substitutability between some applications, network effects in the provision of content and services, two-sided business models that partly involve indirect revenue generation (such as advertising and data profiling), and a patchwork of regulated and unregulated segments of the market. This complexity requires a fresh look at the market forces shaping the industry and a rethinking of market definitions and of the assessment of market power. This article presents the state of play in European electronic communication markets, with a particular emphasis on the recent development of 'over the tops'. We also use a stylised model of an electronic communications market to draw some central lessons from economic theory and to elaborate on market definition and market power.
    Keywords: telecommunications,OTT,relevant market,two-sided markets,market power
    JEL: D82 L13 L41 L51 L86 L96
    Date: 2014

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