nep-mkt New Economics Papers
on Marketing
Issue of 2015‒09‒18
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Going to the Discounter: Consumer Search with Local Market Heterogeneities By Obradovits, Martin
  2. Too Much Attention on Low Prices? Loss Leading in a Model of Sales with Salient Thinkers By Inderst, Roman; Obradovits, Martin
  3. Large-Scaled Chain Stores versus Small-Scaled Local Stores of the Local Production for Local Consumption By Hiroaki Sandoh; Risa Suzuki
  4. Developing food labelling strategies with the help of extremeness aversion By Weinrich, Ramona; Spiller, Achim
  5. Competition, product safety, and product liability By Chen, Yongmin; Hua, Xinyu
  6. Multi-level labelling: Too complex for consumers? By Weinrich, Ramona; Franz, Annabell; Spiller, Achim
  7. The Influence of Green Condominium Purchase Attitude toward Intention to Purchase: Generation Y Consumers By P. Kongkajaroen
  8. Global brands the new global badge of real estate service quality? By É. D'Arcy; S. Roulac
  9. Health and wellbeing sector actors embrace collaboration and even competition on-campus By R. Kyrö; A. Peltokorpi; K. Artto
  10. The Price Effect of EEWH Certification By F.Y. Chen; J.H. Liang
  11. Anchoring effects in appraisals - a study of Swedish Real Estate students By P. Palm; H. Bohman; M. Andersson
  12. Culture-based products: integrating cultural and commercial strategies. Cases from the luxury perfumery industry By Chiara Isadora Artico; Michele Tamma
  13. Why Do More British Consumers Not Switch Energy Suppliers? The Role of Individual Attitudes By Xiaoping He and David Reiner

  1. By: Obradovits, Martin
    Abstract: This article proposes a new rationale for consumer search and mixed-strategy pricing: the presence of local market heterogeneities. In the model, two spatially separated markets, each home to an identical local monopolist, differ in size and their consumers' willingness to pay (e.g., as caused by differences in local income). Consumers observe their native market's price and a flexible subset of them may travel to the other market at strictly positive cost, hoping for a bargain. I show that as long as the proportion of flexible consumers in the high-valuation market is not too large, directed search to the low-valuation market will occur in equilibrium. If the high-valuation market is relatively large in size, the opposed firm faces a commitment problem that induces non-trivial mixed-strategy pricing in equilibrium. In particular, low-valuation consumers are excluded from the product market with positive probability. Informative advertising with price-commitment may decrease market performance.
    Keywords: consumer search; directed search; mixed-strategy pricing; discounter; commitment problem; advertising; market heterogeneity
    JEL: D43 D83 L11 L13
    Date: 2015–09–03
  2. By: Inderst, Roman; Obradovits, Martin
    Abstract: Loss leading is analyzed in a model of promotions (as in Varian 1980) with limited consumer attention: (i) Consumers only compare prices of a selected number of products and (ii) they may pay more attention either to price or quality, depending on the salience of the respective attributes. When consumers have standard preferences, which is our benchmark case, manufacturers benefit when one-stop shopping induces retailers to discount their products, as this expands demand. Results are strikingly different when consumers are salient thinkers. When one-stop shopping or retail competition increases the scope for loss leading, manufacturers' profits decline and there may be an inefficient substitution to lower-quality products. In particular, shoppers who compare products may end up with a choice that is strictly inferior to that of non-shoppers who are locked in to a (local) retailer. Our analysis has implications both for competition policy, as we analyze the implications of a ban on loss leading, and for marketing, as we also analyze how salience affects retailers' product and promotion strategies.
    Keywords: limited attention; loss leading; manufacturer profits; product choice; promotions; quality choice; retailing; sales; salience
    JEL: D21 D43 D83 L11 L13 L15
    Date: 2015–09
  3. By: Hiroaki Sandoh (Graduate School of Economics, Osaka University); Risa Suzuki (Yuki, Co., Ltd.)
    Abstract: In some localities, a large-scale chain retailer competes against a small-scale local independent retailer that specializes in, for instance, vegetables, fruits, and owers produced locally for local consumption. The former usually attracts consumers by emphasizing its width and depth of products variety, whereas the latter seeks to overcome its limited products assortment by offering lower prices for them than the chain store. This is possible for the local store partly because of lower labor costs and for various other reasons. This study employs the Hotelling unit interval to examine price competition in a duopoly featuring one large-scale chain retailer and one local retailer. To express differences in their product assortments, we assume that the large-scale retailer denoted by A sells two types of product, G 1 and G 2 , whereas the local retailer denoted by B sells only G 1 . Moreover, we assume that all consumers purchase G 1 at A or B after comparing prices and buy G 2 at A . We examine both Nash and Stackelberg equilibrium to indicate that the local retailer can survive competition with the large-scale chain retailer. We also reveal that a monopolistic market structure, not duopoly, optimize the social welfare if consumers always purchase both G 1 and G 2 .
    Keywords: Large-scale chain retailer, Small-scale local independent store, Duopoly, Hotelling, Price competition
    JEL: D43 M21
    Date: 2015–06
  4. By: Weinrich, Ramona; Spiller, Achim
    Abstract: Labelling is an important cue for consumers as it helps to quickly communicate information about a product or production process. However, the majority of labels on the market are binary, such as labels that indicate whether a product was produced using animal welfare friendly standards or not. Yet, there are many intermediate qualities that binary labels do not display. In the long run, if consumers are not able to identify if high quality attributes are contained in the product, due to a lack of information on the product label, then these attributes may disappear from the food market. In turn, this could lead to a market failure. A multi-level label can show different process standards of products explicitly. Nonetheless, before launching a multi-level labelling system, it should be tested if a multi-level labelling system can shift market shares in favour of the labelled products. Using a consumer study with 1538 German consumers (approximately representative for the German population regarding age, gender, income, education and regional distribution) the shares of product choices are calculated. Two comparisons of the shares of product choices will be made, one between no label and a binary label and the other between no label and a multi-level label. The results suggest that a multi-level labelling system achieves higher market shares, can improve animal welfare and can result in higher revenues or sales. The results deliver important information for policymakers in consumer policy and industry.
    Keywords: labelling,multi-level labelling,consumer research,animal welfare
    Date: 2015
  5. By: Chen, Yongmin; Hua, Xinyu
    Abstract: A firm's incentive to invest in product safety is affected by both the market environment and the liability when its product causes consumer harm. A long-standing question in law and economics is whether competition can (partially) substitute for product liability in motivating firms to improve product safety. We investigate this issue in a spatial model of oligopoly with product differentiation, where reputation provides a market incentive for product safety and higher product liability may distort consumers' incentive for proper product care. We find that partial liability, together with reputation concerns, can motivate firms to make socially desirable safety investment. Increased competition due to less product differentiation lowers equilibrium market price, which diminishes a firm's gain from maintaining reputation and raises the socially desirable product liability. On the other hand, an increase in the number of competitors reduces both the benefit from maintaining reputation and the potential cost savings from cutting back safety investment; consequently, the optimal liability may vary non-monotonically with the number of competitors in the market. In general, therefore, the relationship between competition and product liability is subtle, depending on how competition is measured.
    Keywords: product safety, product liabilty, competition
    JEL: K13 L13 L15
    Date: 2015–09–04
  6. By: Weinrich, Ramona; Franz, Annabell; Spiller, Achim
    Abstract: As more food labels enter the retail market, it is becoming increasingly difficult for consumers to review the underlying standards of products. The most common labels communicating ethical values tend to be binary. However, many attributes, such as animal welfare, are of a continuous nature and are not binary. One solution to communicate differentiated information about the process or product standards is through the use of multi-level labels, which indicate various levels of standards. This way, consumers might realize the differences in the production or process qualities more easily. However, since multi-level labels are more complex, the impact on consumers' comprehension is not clear. The objective of this paper is to test whether a multi-level labelling approach is comprehensible for consumers and could therefore be an effective tool to communicate information about standards and thus enhancing willingness to pay. The results show that when an explanation about the levels of the label is provided, there is an increasing willingness to pay for products with higher standards of animal welfare. Hence, a multi-level label can work if information is provided.
    Keywords: labelling,multi-level labelling,binary labels,animal welfare,consumer research
    Date: 2015
  7. By: P. Kongkajaroen
    Abstract: In the world today, qualities of lives among humans are decreasing at a rapid stage. This is caused by our never-ending wants and needs. In order to satisfy our greed, our mother-earth are being destroyed at a rapid stage. More natural resources have to be harvested and of course more pollution are being created inevitably. With this rising concerns, organizations around the world are creating awareness of this phenomenon as part of their corporate social responsibilities.The real estate industry too, is on this trends. No doubt that this industry contributed most to the environmental impacts. They can cause both direct and indirect impacts on the environment. Even the first step in planning, developing to even managing the estates cause an environmental impacts. In recent years, both developers and consumers are being aware of these negative circumstances, in response to this, they are now more concerned when buying and/or developing the real estates.This study have emphasized on the relationships between purchasing attitudes and intentions to purchase green condominiums on Generation Y. Why Gen Y? Research conducted found that this generation of people are more aware of this environmental issues and willing to act accordingly. This research is conducted based on the quantitative method and the questionnaires used to reach the respondents will be online-administered. The target group will be between 18-35 years old and live in Bangkok. After filtering the questionnaire collected, 220 sets were used in analyzing. There are 2 steps in the process when analyzing the data. The descriptive statistic were used on the first step to obtain the demographic characteristics of the respondents. While on the second ,regressions were employed respectively. The results obtained from this study found that “Intentions to Purchaseâ€green Condominium on generation Y has a positive relationship on “purchase attitudeâ€. While “environmental knowledgeâ€, “Perceived Benefitsâ€, “Environment Concernâ€, “health conscious†and “subjective norms†also have a relationship on “purchase attitude†and indirect effect with “intention to purchaseâ€.After knowing all these relationships developers can apply this knowledge to their business in advertising and analyzing consumers’ targets.
    Keywords: Environment; Green; Intention To Purchase; Purchase Attitude; Real Estate
    JEL: R3
    Date: 2014–01–01
  8. By: É. D'Arcy; S. Roulac
    Abstract: This paper examines the strategic implications for the future of real estate services (RES) of the creation of global real estate service brands as a result of a long-standing process of internationalisation in this sector. This process has had two distinct phases; an initial period of consolidation from 1997 which resulted in the evolution of embryonic global service delivery platforms and a second phase of consolidation post the global financial crises where the creation of truly global brands was a key driving force. The analysis examines how a strong brand image has created new intangible assets for the sectors principal global delivery platforms and thus has altered the competitive landscape in the sector on a number of levels. It also considers brand image as a proxy for service quality and reputation and how branding in the sector has displaced the role of professional bodies and affiliations as badges of service quality. It concludes with an assessment of the prospects for further consolidation in the sector creating fewer but potentially stronger global brands.
    Keywords: Global Brands; Internationalisation; Real Estate Services
    JEL: R3
    Date: 2015–07–01
  9. By: R. Kyrö; A. Peltokorpi; K. Artto
    Abstract: The purpose of this study is to understand how multiple actors from the same business sector perceive operating on a campus setting. The main focus is on the relationships between tenants on-campus, as well as on identifying potential derived from the location on-campus. The study is a qualitative case study of two health and wellbeing campuses in Finland. The cases share some key characteristics, but are in different phases of their life-cycles. The similarities and differences between the two campuses provide fertile ground for comparison. Altogether 19 semi-structured interviews of organisations operating on the two campuses comprise the main source of data. The interviewed actors appreciated the joint resources and facilities provided by the campus. Joint resources were thought to comprise human capability and technology, but also reputation and brand. Specialised health care equipment and facilities are particularly beneficial to share due to their expense and lower utilisation rate. However, also joint restaurant, parking, reception and other facility services were appreciated. Additionally, informal joint areas allowing spontaneous interaction, such as coffee rooms and open hallways were mentioned as a preference. The campus enables providing supplementing services and products for a shared customer segment in a Ã’Health and Wellbeing Shopping CentreÓ type of setting. Interestingly, even competition was tolerated and welcomed by the actors. The reasoning was that, access to a wider offering would be beneficial for potential customers, and therefore the whole campus. The informants considered essential that all actors on-campus share a common vision and goals. A potential threat was identified in the lack of an impartial integrator onsite. The study indicates that tenants benefit from the possibility to operate on a campus designated for a specific business sector from both practical (joint facility services) and strategic (joint vision) perspective. The findings provide interesting insight for both real estate owners and corporate real estate professionals. For the former, the findings may be useful when planning a tenant-mix, or retrofitting facilities. The latter might consider the findings when re-locating and selecting new facilities. It should be noted that, the study is explorative in nature and the findings cannot necessarily be generalised beyond their context. Further studies with cases from outside Finland would be of interest.
    Keywords: Campus; Corporate real estate; Facilities; Health And Wellbeing; Multi-Tenant
    JEL: R3
    Date: 2015–07–01
  10. By: F.Y. Chen; J.H. Liang
    Abstract: Energy depletion and Ecological sustainability are two global-wide issues that most countries seriously concern about, and construction industry takes a big share of energy consumption and ecological damage. Therefore, the promotion of the green building gradually becomes the trend and leads the direction of national policy. The EEWH (Ecology, Energy Saving, Waste Reduction, Health),the Taiwanese green building labeling system, was established in 1999. This article exams the price effect of the green label with hedonic regression model in New Taipei City, and the result shows that the building certificated with EEWH gets 8% premium on average. Price premium varies at different levels of labels, and they are 14.3%, 2.7%, 4.8% and 8% for qualified, bronze, silver and gold levels. Low-priced areas have significantly higher premium of 16.8% comparing to the High-priced areas of 4.5%. In terms of space and location, the buildings in CBD obtain lower green premium than those in outskirts. We believe higher premium is seen in low-price outskirt area due to the extra marketing green labels have for these buildings.
    Keywords: Eewh Green Building Labeling System; Green Building; Hedonic Pricing Model; Taiwan
    JEL: R3
    Date: 2015–07–01
  11. By: P. Palm; H. Bohman; M. Andersson
    Abstract: Purpose -Â The objective of the research is to investigate the anchor effect in appraisal of residential property based on a quantitative survey among Swedish students at a program for real estate brokerage. Prior research has identified various factors that influence price perceptions, including factors that affect assessments of the perceived value of products to consumers and, relatedly, the reference prices consumers use to evaluate the attractiveness of given prices (e.g., Winer 1986). Although the determinants of reservation prices have been extensively studied, there has been much less research regarding the manner in which consumers decide on the lowest price they are willing to accept for a product (for exceptions, see, e.g., Carmon and Ariely 2000; Kahneman, Knetsch, and Thaler 1990). The value appraised is individual and may depend on different parameters such as tacit knowledge and personal taste. Tversky and Kahneman's (1974) seminal work on anchor effects reveal that an external number, referred to as anchors, influence the value people will estimate a given object. Within real estate valuation Northcraft and Neale (1987) applied the same idea on real estate, conducting a study in which both students and real estate agents were to value the same house while changing the conditions regarding asking price for the house. Although the asking price should not affect the valuation of the market value, the study concluded that both real estate agents and students were positively affected by the asking price. Design/methodology /approach - An experiment with students was conducted where they were to value two different properties. The experiment tasks were design to be both representative of real valuation situation and to be relevant for the students in their course as a kind of rehearsal. They were not informed of the experiment's manipulative design nor the research objectives. A total of 53 students, all in their last semester in the real estate broker education within the course of Real estate valuation, participated in the experiment and were divided into group A and B. In addition one more group was included. This group C consists of 17 participants who all are employed as assistant at broker firms and undertaking in service-training in order to become licensed real estate brokers. This group was included to be used as a control group since they can be considered as semi-professionals or at least to have practical pre-knowledge.
    Keywords: Anchor Effect; Appraisal; Real Estate Broker; Residential Property
    JEL: R3
    Date: 2015–07–01
  12. By: Chiara Isadora Artico (Dept. of Management, Università Ca' Foscari Venice); Michele Tamma (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: Today it is customary to speak of the collaborative potential of culture and business to achieve benefits in both cultural and business life. Making sense of the involvement of firms in culture, however, requires a better understanding of the link between cultural practices and projects and the development of business models.The aim of this paper is to focus on those companies that put culture at the core of their offering, with particular reference to those that can be defined as culture-based products. For these kinds of products, the creation, preservation, enhancement and transmission of a specific culture play a vital role of embedding a particular aesthetic and symbolic content in the cultural and consumption experience they offer. In order to explore the integration of cultural and commercial strategies that culture-based products seem to drive, we propose a framework of analysis, followed by an early comparative study through the investigation of a set of brands competing in the same field.
    Keywords: Integrated commercial and cultural strategies; Culture-based products; Cultural activities; Retail; Luxury Perfumery Industry
    Date: 2015–09
  13. By: Xiaoping He and David Reiner
    Abstract: Consumers’ activities play an important role in determining the extent to which any market may become competitive. Although energy prices and switching tariffs and suppliers become very salient politically over 2013-14 in the UK and the number and share of small suppliers increased dramatically over that period, relatively fewer customers switched suppliers in UK electricity and gas markets despite the potential for financial gains, suggesting that non-price factors may affect switching decisions. Using a unique nation-wide British survey, we investigate the determinants of consumers’ switching behavior in electricity and gas markets, by emphasizing the effects of individual attitudes towards energy issues as well as perception of switching cost and benefit. We find that the complexity of household energy tariffs, consumers’ lack of attention to issue of energy prices, expectation on the costs of switching process and lack of switching experience discourage switching. Political allegiance also appears to play a role as Labour Party voters are more likely to switch. Few demographic factors are found to affect the likelihood of switching. Higher education qualifications are related to increased activity in energy markets. Households paying by direct debit are more likely to switch than those paying by other ways. Financial hardship a household suffers does not matter for switching decisions, suggesting there is no clear relationship between switching and income. We conclude that policies which emphasize simplification of energy tariffs, increasing convenience of switching, improving consumers’ concerns about energy issues, improving consumers’ confidence to exercise switch are likely to increase consumer activity.
    Keywords: Energy markets; switching supplier; household behaviors; logit model
    JEL: C25 D21 Q49 R29
    Date: 2015–09–10

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