nep-mkt New Economics Papers
on Marketing
Issue of 2015‒11‒15
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Curious about the price? Consumers' behavior in price reveal auctions By Andrea Gallice; Giuseppe Sorrenti
  2. Search Online – Purchase Online in Franchising: An Empirical Analysis of Franchisor Website Functionality By Thierry Pénard; Rozenn Perrigot
  3. Retail competition with switching consumers in electricity markets By Carlos Ruiz Mora; Francisco J. Nogales Martín; Francisco Javier Prieto Fernández
  4. A Threshold Model for Discontinuous Preference Change and Satiation By Nobuhiko Terui; Shohei Hasegawa; Greg M. Allenby
  5. Measuring the Unequal Implications of One Size Fits All Regulation By Jeff Thurk
  6. Why Customer Orientation Does not Necessarily Stimulate Complaint Management Efficiency: The Neglected Role of Orientation Towards Complaints By Daniel Ray; William Sabadie; David Gotteland
  7. An Economic Model of the Stages of Addictive Consumption By Marysia Ogrodnik

  1. By: Andrea Gallice; Giuseppe Sorrenti
    Abstract: We exploit several specific features of a recent online selling mechanism, the so- called price reveal auction, to empirically investigate how consumers' behavior changes in response to an item's intrinsic characteristics and 'social attributes'. We document a significant effect of the item's brand and intended use (outdoor vs. indoor) in influencing an agent's degree of impatience and willingness to pay. We show that, while both vari- ables have some explanatory power when considered in isolation, it is their interaction that really matters. We also study the determinants of the mechanism's profitability and show how, in the context of a price reveal auction, the sale of positional goods may backfire and harm revenues.
    Keywords: price reveal auction, willingness to pay, social attributes, positional goods
    JEL: D44 D12
    Date: 2015
  2. By: Thierry Pénard (CREM, UMR CNRS 6211, Faculty of Economics, University of Rennes 1, France); Rozenn Perrigot (CREM, UMR CNRS 6211, Graduate School of Management (IGR-IAE Rennes), University of Rennes 1, France)
    Abstract: Many retailers use the Internet not only to provide final customers with information about their products/services, but also to allow these final customers to buy their products/services online. In the particular case of franchising, franchisors and franchisees can create their own websites, which may raise some issues, mostly in terms of uniformity and encroachment. The aim of this paper is to characterize franchisors’ e-commerce strategies by studying their website functionality. Franchisors can use their website to facilitate consumer search. They can also provide content and tools to promote online purchasing (e.g., promotion codes, online payment, delivery options). Why are some franchisor websites more “search oriented”? What are the factors that influence the provision of informational tools and/or transactional tools? This empirical study is based on a detailed observation of 130 e-commerce websites of franchisors operating their chains in the French market. Results of the three-stage least square regression models (3SLS) show that the percentage of company-owned stores within a chain has a significant and positive impact on the range of “purchase online” functionality and a neutral effect on the range of “search online” functionality. Moreover, the two types of functionality appear to be complementary on franchisor websites. Finally, in more mature franchise chains, franchisors who own a large proportion of stores are less able to exert their decision power and expand the range of online purchase functionality.
    Keywords: Franchising, e-commerce, encroachment, synergies, search online, purchase online
    Date: 2015–11
  3. By: Carlos Ruiz Mora; Francisco J. Nogales Martín; Francisco Javier Prieto Fernández
    Abstract: The ongoing transformations of power systems worldwide pose important challenges,both economic and technical, for their appropriate planning and operation. A key approach to improve the efficiency of these systems is through demand-side management, i.e., to promote the active involvement of consumers in the system. In particular, the current trend it to conceive systems where electricity consumers can vary their load according to real-time price incentives, offered by retailing companies.Under this setting, retail competition plays an important role as inadequate prices orservices may entail consumers switching to a rival retailer. In this work we consider a game theoretical model where asymmetric retailers compete in prices to increase their profits by accounting for the utility function of consumers. Consumer preferences for retailers are uncertain and distributed within a Hotelling line. We analytically characterize the equilibrium of a retailer duopoly, establishing its existence and uniqueness conditions. Furthermore, sensitivities of the equilibrium prices with respect to relevant model parameters are also provided. The duopoly model is extended to a multiple retailer case for which we perform an empirical analysis via numerical simulations. Results indicate that, depending on the retailer costs, loyalty rewards and initial market shares, the resulting equilibrium can range from complete competition to one in which a retailer have a leading or even a dominant position in the market, decreasing the consumers' utility significantly. Moreover, the retailer network configuration also plays an important role in the competitiveness of the system.
    Keywords: Elastic consumers , Electricity market , Hotelling line , Market equilibrium , Retail competition , Switching consumers
    Date: 2015–11
  4. By: Nobuhiko Terui; Shohei Hasegawa; Greg M. Allenby
    Abstract: We develop a structural model of horizontal and temporal variety seeking using an dynamic factor model that relates attribute satiation to brand preferences. The factor model employs a threshold specification that triggers preference changes when customer satiation exceeds an admissible level but does not change otherwise. The factor model can be applied to high dimensional switching data often encountered when multiple brands are purchased across multiple time periods. The model is applied to two panel datasets, an experimental field study and a traditional scanner panel dataset, where we find large improvements in model fit that reflect distinct shifts in consumer preferences over time. The model can identify the product attributes responsible for satiation, and can be used to produce a dynamic joint space map that displays brand positions and temporal changes in consumer preferences over time.
    Date: 2015–10
  5. By: Jeff Thurk (University of Notre Dame)
    Abstract: We study the implications to consumers of simple one size fits all regulation when consumer tastes are heterogeneous. In particular we focus on spirit sales in the state of Pennsylvania where the Pennsylvania Liquor Control Board administers the sales of spirits and is mandated to charge a uniform 30% markup on all products. We show that consumer tastes vary systematically with demographics and use an estimated discrete choice model of demand for spirits to assess the implications of this simple regulatory policy on different consumer groups. We find the current regulation results in the implicit taxation of high-income and educated households by raising the prices of spirits they prefer (vodka and whiskey) while lowering the price of products favored by low-income and minority households (gin and rum). We identify more sophisticated pricing regulations which increase total welfare, though the resulting transfer of surplus across demographic groups makes them politically infeasible.
    Date: 2015
  6. By: Daniel Ray (ESC Grenoble - Ecole Supérieure de Commerce de Grenoble - Grenoble École de Management (GEM)); William Sabadie (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon); David Gotteland (ESC Grenoble - Ecole Supérieure de Commerce de Grenoble - Grenoble École de Management (GEM))
    Abstract: This communication addresses how customer orientation can prevent defensive organizational behaviors towards complaints. We argue that prospect theory offers a relevant theoretical framework to address that question. When managers and employees view complaints nega-tively, they are likely to exhibit defensive behaviors towards complaints, which results in an ineffective complaint management. A study conducted with 137 complaint managers show that investments into complaint management do not yield returns if customer orientation does not result in a firm’s orientation toward complaints. Senior management as a critical to play in implementing a complaint orientation of corporate culture.
    Abstract: Nous avons recours à la théorie des perspectives pour expliquer comment l’orientation client peut éviter les comportements organisationnels défensifs vis-à-vis des réclamations. Lorsque les managers et les employés ont une conception négative des réclamations, ils développent des comportements défensifs, et cela se traduit par un management inefficace des réclama-tions. Les résultats d’une étude menée auprès de 137 responsables marketing montrent que des efforts en termes de gestion des réclamations sont efficaces si l’orientation client se traduit par une orientation envers les réclamations. Le rôle des managers est important pour favoriser une orientation réclamation dans la culture organisationnelle.
    Keywords: customer orientation,complaint,orientation client, réclamation, orientation réclamation
    Date: 2015–05–13
  7. By: Marysia Ogrodnik (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: The aim of this research is to build a model of addictive consumption by taking into account consumers' growing loss of self-control, as well as their lack of empathy for their future selves. Such model reveals that individuals follow a given consumption pattern composed of five stages, and thereby, that stable addictive consumption level does not exist outside of abstention. It permits to explain how consumers modify their environment in order to get rid of their addiction and why some of them find it difficult to successfully abstain. The analysis of the model shows that they do not uniformly react to public policies according to the stage in which they are placed. I argue that an optimal policy should increase consumers' perceived losses of consuming without cutting too much their budget (as repeated price increases do). Moreover, it should be accompanied by more credible propositions of quitting strategies in order to prevent denial phenomenon and foster the decision to abstain. Furthermore, prices of such strategies should be low enough in order to favor a longer use of them and a quitting success.
    Keywords: addiction,cognitive biases,consumption choice,stages of change
    Date: 2015–10

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