nep-mkt New Economics Papers
on Marketing
Issue of 2015‒07‒11
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Developments in Promotion Strategies Review on Psychological Streams of Consumers By Alam Kazmi, Syed Hasnain
  2. Quality Predictability and the Welfare Benefits from New Products: Evidence from the Digitization of Recorded Music By Luis Aguiar; Joel Waldfogel
  3. Location and Product Choice in Option Demand Markets By Gilad Sorek
  4. Evaluating the Purchase Process of Household Appliances Accounting for Consumers’ Attitudes towards Eco-Friendly and Sustainable Consumption Behavior By Banerjee, Tanushri; Banerjee, Arindam
  5. The economics of television and online video markets By Gregory S. Crawford
  6. Value Co-creation, Dynamic Capabilities and Customer Retention in Industrial Markets By Preikschas, Michael W.; Cabanelas, Pablo; Rüdiger, Klaus; Lampón, Jesús F.
  7. Language, copyright and geographic segmentation in the EU Digital Single Market for music and film By Estrella Gomez Herrera; Bertin Martens

  1. By: Alam Kazmi, Syed Hasnain
    Abstract: Theoretical decision-making models and theories in context to promotions at both brand and product level have focused and studied on several thought-provoking research explorations with three steams of research in promotion strategies. Researchers have studied the impact of price promotion strategies on consumers in several distant behaviors. Developmental theoretical models provide managers and researchers insights with deep understandings for many vital concerns like, why need in-depth study to the practice of promotion strategies, dilemmas like stock pressure, sales promoting decline after promotion events and its consequences. Branding and pricing have vital influence on decisions by consumers. Psychophysiological models are useful in the context, for instance, in decision and media research. Many theoretical researches in promotions have focused its aspects on pricing and its impact on consumer decision making. This is might because much of the literature has focused on building and evaluating price promotion strategies. This paper provides an indepth review on theoretical models, which are valuable for both researchers and for marketing executives.
    Keywords: decision-making models, promotion strategies, theory, consumer, brand, sales promotion
    JEL: C90 M1 M31
    Date: 2015–05–31
  2. By: Luis Aguiar (European Commission - JRC - IPTS); Joel Waldfogel (University of Minnesota - Carlson School of Management)
    Abstract: We explore the consequence of quality unpredictability for the welfare benefit of new products, using recent developments in recorded music as our context. Digitization has expanded consumption opportunities by giving consumers access to the "long tail" of existing products, rather than simply the popular products that a retailer might stock with limited shelf space. While this is clearly beneficial to consumers, the benefits are somewhat limited: given the substitutability among differentiated products, the incremental benefit of obscure products - even lots of them - can be small. But digitization has also reduced the cost of bringing new products to market, giving rise to a different sort of long tail, in production. If the appeal of new products is unpredictable at the time of investment, as is the case for cultural products as well as many others, then creating new products can have substantial welfare benefits. Technological change in the recorded music industry tripled the number of new products between 2000 and 2008. We quantify the effects of new music on welfare using an explicit structural model of demand and entry with potentially unpredictable product quality. Based on plausible forecasting models of expected appeal, a tripling of the choice set according to expected quality adds more than fifteen times as much consumer surplus as the usual long-tail benefits from a tripling of the choice set according to realized quality.
    Keywords: music, Welfare, Entry, Digitization, Recorded Music
    JEL: D60 L13 L82 O33
    Date: 2015–02
  3. By: Gilad Sorek
    Abstract: Consumers' uncertainty regarding their future needs generates demand for options to utilize different products. Such options are commonly sold in the form of insurance. A prime example for option demand presents in health care markets and other repair markets. This work studies two-dimensional spatial competition between medical providers who choose their geographical location and medical-care specialization (i.e. product differentiation). Consumers know their geographical address but do not know their preferred medical treatment before getting sick. Providers make location and product choices and then compete by selling options to utilize their services (i.e. health insurance). I characterize two types of equilibria: one with Min-Min differentiation that is complete assimilation and the other with Min-Intermediate differentiation, in which both providers locate at the city center and product differentiation is efficient. In the first equilibrium each consumer buys insurance for one provider only and in the second all consumers are buying insurance for both providers. I further show that under regulated locations product differentiation first increases with regulated geographic distance and then it decreases. For intermediate regulated distance consumers who reside around the city center buy insurance for both providers and those at the city ends buy insurance only for the nearby provider.
    Keywords: Location; Product Differentiation; Option Demand
    JEL: I11 I13 L1
    Date: 2015–06
  4. By: Banerjee, Tanushri; Banerjee, Arindam
    Abstract: Globally depleting fuel resources like coal, oil and gas has triggered discussions in various forums in India emphasizing the significance of renewable energy sources like solar, hydro, wind and bio gas for future sustenance of society. Anticipating a shift of the consumer mindset towards Greener Technology products, organizations have identified this niche market and introduced a range of products for various customer segments. We have used the Howard Sheth Model of consumer behavior to understand how consumers generally look at broad range of factors including energy efficiency when purchasing major appliances, with the factors differing both in nature and order of importance across appliance types. Although there exists significant literature on consumers’ purchase decision, there is not much literature available for consumers’ purchase decision in emerging countries of home appliances considering environmentally friendly factors. This research work aims to study the growing energy saving consciousness and environmental friendly considerations during purchase decision of consumers in India. This is in the context of the purchase of 2 home appliances – the refrigerator and the air-conditioner in Gujarat post 2010. Indicators like star rating have been used as influencing factor on consumers’ decision during purchase. It will provide an understanding of the various parameters that are considered by consumers and the degree to which they influence during the purchase of air-conditioners and refrigerators.
  5. By: Gregory S. Crawford
    Abstract: Television is the dominant entertainment medium for hundreds of millions. This chapter surveys the economic forces that determine the production and consumption of this content. It presents recent trends in television and online video markets, both in the US and internationally, and describes the state of theoretical and empirical research on these industries. A number of distinct themes emerge, including the growing importance of the pay-television sector, the role played by content providers (channels), distributors, and negotiations between them in determining market outcomes, and concerns about the effects of market power throughout this vertical structure. It also covers important but unsettled topics including the purpose for and effects of both the old (Public Service Broadcasters) and the new (online video markets). Open theoretical and empirical research questions are highlighted throughout.
    Keywords: Economics, television, online video, public service broadcasting, advertising, pay television, bundling, bargaining, market power, net neutrality, foreclosure, policy
    JEL: L82 L86 L32 M37 C72 D40 L40 L50
    Date: 2015–06
  6. By: Preikschas, Michael W.; Cabanelas, Pablo; Rüdiger, Klaus; Lampón, Jesús F.
    Abstract: The paper analyses how value co-creation processes can influence the generation of dynamic capabilities and the retention of industrial customers. The authors explore its influence with the support of Social Exchange Theory, Resource-Based View and Service-Dominant Logic. The methodology applied was qualitative research, based on 29 semi-structured in depth interviews with owners, managing directors, and technical managers with previous experience in co-creation processes. The research was performed in four different European countries and is focused on the mobile crane industry. The findings confirm that co-creation processes promote the generation of dynamic capabilities linked to adaptation, knowledge, innovation and relationship management. In addition, the closer contact with customers and the availability of their expertise favour the development of solutions that better meet their needs, bridging the cognitive gap which often exists between partners. Regarding customer retention, the results show that there is a correlation between the co-creation processes and the customers’ predisposition to buy and cross selling. Although value co-creation is a topical subject, research in industrial marketing literature analysing the effects of co-creation processes has been scarce up to now. This paper aims to contribute to the debate by analysing how the co-creation of value can influence the generation of dynamic capabilities in companies and how it affects the retention of industrial customers. Through an eclectic approach, based on social exchange theory and the resource-based view as well as service-dominant logic, the researchers can address the dual challenge associated with the main research question: on the one hand encouraging cooperation and on the other managing relations to seek mutual benefit.
    Keywords: Value co-creation; Dynamic Capabilities; Customer Retention; Industrial Markets; co-Innovation; Qualitative Research.
    JEL: M10 M31 M39
    Date: 2014–11
  7. By: Estrella Gomez Herrera (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: The EU seeks to create a seamless online Digital Single Market for media products such as digital music and film. The territoriality of the copyright regime is often perceived as an obstacle that induces geographical segmentation. This paper provides empirical evidence on the extent of market segmentation in the EU on the supply and demand side and measures the contribution of several drivers of this market segmentation. We use data from the Apple iTunes country stores in 27 EU Member States to measure geographical market segmentation in supply (availability), demand (sales) and prices across the EU for downloadable digital music and film. We find that availability of EU media products across country stores in the EU is close to 80% for music and 40% for films but only 27% for EU-produced films. Recent industry initiatives to reduce the transaction costs of making digital music available across borders result in a reasonably wide availability though still short of the 100% mark. Vertical agreements in the supply chain of films remain an obstacle for wider availability of digital films. Consumer preference variables such as cultural proximity, a shared language or border and inherent preferences for home market products are the main drivers for the observed geographical market segmentation in supply and demand patterns. Supply side factors including copyright-related trade costs probably still play a role though we can only infer this indirectly in the absence of data on copyright licensing arrangements at product level. Commercial strategies in general and competition-restricting territorial agreements in film distribution in particular will also reduce availability. We also find evidence of price differentiation across iTunes EU country stores, correlated with overall country price levels.
    Keywords: digital music, online trade, music downloads, trade in cultural products, gravity model, cultural diversity
    JEL: F15 O52
    Date: 2015–04

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