nep-mkt New Economics Papers
on Marketing
Issue of 2016‒02‒29
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Effectiveness of Individual Targeting Through Smartphone Application in Retail: Evidence from Field Experiment By Mariia I. Okuneva; Dmitriy B. Potapov
  2. Trends and preferences in consumer payments: updates from the visa payment panel study By Herbst-Murphy, Susan
  3. Ecologically oriented model of consumer behavior in order to sustainable development By Kalashnikova, Svetlana
  4. The supply of personal information: A study on the determinants of information provision in e-commerce scenarios By Potoglou, Dimitris; Palacios, Juan; Feijoo, Claudio; Gómez Barroso, Jose-Luis
  5. The interprofessional organizations - from the need of establishment to the need of development and affirmation By Alecu, Ioan Niculae; Stroe, Ana-Maria Georgiana
  6. Cause Related Marketing - An Indian Overview By Kureshi, Sonal; Thomas, Sujo
  7. False Advertising By Rhodes, Andrew; Wilson, Chris
  8. From technological to symbolic innovation? Open source, Maker Movement and global demand for 3D printers By Fassio, Claudio; Grilli, Luca
  9. Exogenous Expenses in Industries with Vertical Product Differentiation and Quality Constraints By Georgi Burlakov
  10. Blue Oceans: Looking overseas for business success - How do New Zealand SMEs internationalise and manage branding in foreign markets? By Palazzetti, Daniele
  11. Measuring Consumer Responses to a Bottled Water Tax Policy By Villas-Boas, Sofia B; Berck, Peter; Stevens, Andrew; Moe-Lange, Jacob
  12. Advertising’s Elusive Economic Rationale: is there a case for limiting tax relief? By Driver, Ciaran
  13. Reference pricing with endogenous generic entry By Kurt R. Brekke; Chiara Canta; Odd Rune Straume

  1. By: Mariia I. Okuneva (National Research University Higher School of Economics); Dmitriy B. Potapov (National Research University Higher School of Economics)
    Abstract: Smartphone applications are becoming an important marketing channel that allows to build long-term relationship with customers. The main advantage of advertising through this kind of media is an opportunity to individually target users with different offers, taking into consideration their characteristics and purchase history. However, little is known about the effectiveness of such practice. We use a purely randomized natural field experiment with 11338 customers of large Russian retail chain to understand factors that influence the effectiveness of advertising through smartphone application. We find that the impact of conducted advertising campaign either on number of purchases or purchase amount is slightly negative on average. While most previous studies report positive effect of advertising through mobile devices, we can explain the average negative effect by influence of small discount (less than 20%) offers on consumers’ behavior. Holiday text of the message makes this effect even stronger. Consistent with the literature, the average effect of advertising depends on RFM characteristics of customers. However, the loyalty of consumers or different texts of an advertising message do not affect the effectiveness of advertising via mobile application. These results can help a retail chain to elaborate rules for individual targeting that assure more profits
    Keywords: mobile targeting, randomized field experiment, mobile application, advertising effectiveness.
    JEL: M31 M37 C93 L86
    Date: 2015
  2. By: Herbst-Murphy, Susan (Federal Reserve Bank of Philadelphia)
    Abstract: Michael Marx, senior director, Visa Research Insights, conducted a workshop in 2009 at the Payment Cards Center (PCC) as the economy was emerging from a recession. At that time, it appeared that the recession had affected consumer payment preferences, especially those related to cash and credit cards. To get an update on consumers’ use of the various payment methods, the PCC invited Marx to facilitate another workshop in 2014. More recent findings from the Visa Payment Panel Study reveal declines in cash use ― a return to the long-term trend ― and increases in credit card use, perhaps signaling some return of confidence among consumers. Check use continued its unbroken long-term decline, and debit card growth has slowed. Private label cards have also registered a steady decline in their share of spending volume for a number of years. Their revolving credit utility, however, remains consequential in financing consumer purchases.
    Keywords: Consumer payments; Electronic payments; Private label credit
    JEL: D1
    Date: 2015–07–03
  3. By: Kalashnikova, Svetlana (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The article deals with environmental performance as a factor in the competitiveness of companies under market conditions. The trend in the ecologically oriented business increasingly manifested in the consumer market, the production of consumer goods. The incentives are need to be identified for users to make their behavior more environmentally oriented. The following components are important: waste reduction, reuse, recycling. The article highlights the benefits to producers and consumers of organic products.
    Keywords: environmental marketing, eco-friendly product, the perception of the goods by the consumer
    Date: 2015
  4. By: Potoglou, Dimitris; Palacios, Juan; Feijoo, Claudio; Gómez Barroso, Jose-Luis
    Abstract: Disjoint research efforts have so far considered latent constructs (e.g. privacy concerns) either as an independent variable to explore consumers' actual or stated intentions or - to a less extent - as dependent variable explained through a number of antecedents (e.g. privacy awareness, demographic differences). However, there has not been a formal link across antecedents, latent constructs and behavioural (or stated) intentions in the context of ecommerce or information disclosure. This paper aims to fill this gap in the literature in order to establish a better understanding of the role of attitudes in respondents' willingness to engage in online purchases. We employ a stated preference discrete choice experiment to collect respondents' choices across online retailers, conventional store and opt-out options under different levels of personal-information requirements. Personal information in the experiment is presented across three dimensions (attributes): amount/type of information collected, duration of storage and the likelihood of this information being shared with third parties. These dimensions are introduced in order to be able to capture risks involved in online transactions according to consumer perceptions. Using the Privacy Calculus as a guiding conceptual framework, the experiment also offers respondents trade-offs between benefits such as faster check-out, detailed reviews and priority shipping of the purchased product. The choice data are complemented with a set of attitudinal indicators (psychometric scales) describing individuals’ attitudes toward information privacy protection. The data comes from 502 participants representing the online-user population in the UK. We report results from Integrated Latent Variable models, which test the influence of these latent constructs in the consumers' decision to purchase a product online and their sensitivity upon attributes describing online retailers. Preliminary model estimation results show that the higher an individual's concern, general caution and technical protection the less likely a consumer is to purchase a product online. In a joint model, the influence of privacy concern is found to outweigh the influence of general caution and technical protection. Also, consumers with increased general caution are less sensitive in the case an online retailer shares their personal data with third parties.
    Date: 2015
  5. By: Alecu, Ioan Niculae; Stroe, Ana-Maria Georgiana
    Abstract: Through the present study it aims to represent the actual image of the interprofessional organizations on product chain in Romania, reflecting briefly the establishment and development issues. In the context of the reorganization of entire agrifood production system, in dealing with future crises, whatever is their nature, it’s needed to seriously manage the organizational issues and to present them as a useful tool for increasing the access to new markets for producers and to offer local products quality to consumers in Romania both. Using the documentation method it was obtained an overview of the relationship between the need of affirmation and the real need to convert the interprofessional organizations in Romania in functional structures. The Ministry of Agriculture and Rural Development recognized till now only five IPO but the analysis and the directly involved interprofessional organizations opinions exchanges, it was emerged some primordial issues in order to improve the legislation of interprofessional organizations on product chain. The interprofessional organizations on product chain are meant, almost in ingrate way, to be interposed between the pressing help need in the development of intra-community trade relationships and the stiffness required by the legislation.
    Keywords: Interprofessional organisations, agrifood sector, legislation, need, development
    JEL: D83 L22 Q10 Q13 Q18
    Date: 2015–11–20
  6. By: Kureshi, Sonal; Thomas, Sujo
    Abstract: The Indian market has witnessed all types of organizations ranging from national to multinational to regional as well as local adopting cause related marketing (CRM) practice since the late nineties. They started partnering with non-profit organizations linking brands to social cause. The main focus of this study was to provide insights about the extent and nature of CRM prevalent in the Indian market. This study was motivated by the fact that very little data pertaining to CRM practices in India was available in the academic as well as non-academic sources. This study examined various CRM initiatives that were announced during 1999 to 2012. These were identified by conducting an internet search using key word as well as visiting company and partnering organizations websites. One newspaper and one business magazine for those years were scanned. Only those CRM activities were included which satisfied definitions provided by Varadarajan and Menon (1988) or Kotler and Lee (2005) These initiatives were analyzed by classifying them on a variety of parameters like type of company, type of partnering organization, nature of cause, type of brand etc. 142 initiatives were recorded over 14 years. Very few regional and local organizations seem to have adopted using CRM as a marketing practice. Non-durable essential brand like salt and tea were found to be using CRM more than other categories. More work in this area which investigates consumer insights about CRM would be enhance effectiveness of such programs.
  7. By: Rhodes, Andrew; Wilson, Chris
    Abstract: There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a model in which a policymaker is able to punish such false claims, we characterize a natural equilibrium in which false advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further analysis considers some wider issues including the implications for product investment and industry self-regulation.
    Keywords: Misleading Advertising; Product Quality; Pass-through; Self-Regulation
    JEL: D83 L15 M37
    Date: 2015–12
  8. By: Fassio, Claudio (CIRCLE, Lund University; BRICK, Collegio Carlo Alberto); Grilli, Luca (Politecnico di Milano, Department of Management, Economics and Industrial Engineering)
    Abstract: The recent turbulent evolution of the 3D printing industry is strictly related with two important phenomena: the widespread adoption of Open Source (OS) business models by new companies on the one hand, and the increasing importance of communities of users, such as the so-called Maker Movement, on the other. This study is the first to analyze the factors that drive the adoption of different types of 3D printers and argues that, in line with the classification introduced by Hirschman (1982), 3D printers should be considered as both technological and symbolic innovations in order to understand their adoption patterns. While technological innovations are adopted for their technical utility, the adoption of symbolic product innovations serves mainly to communicate a novel social meaning to a specific pre-existing product. The recent growth of communities of interest that strongly endorse the OS philosophy, like the Maker Movement, has led 3D OS printers to gain many of the features of symbolic innovations. Taking advantage of an international sample of 3D printer users from 39 different countries, our study shows that while the high-quality 3D printers of established producers (3D proprietary printers) are mainly adopted for technologically-driven reasons, the adherence to the Maker Movement and to its ethical values is an important driver behind the adoption of 3D OS printers. Moreover this is especially true for the users that started to use 3D printers after 2011, when the Maker philosophy started gaining great momentum. The findings show that the global demand for 3D printer is increasingly fragmented between users driven by different motivations in their adoption choices. In this respect, the study advances our understanding about the interplay between OS business models, communities of interest and innovation adoption and inform managers on the importance of recognizing and exploiting the novel symbolic nature of 3D OS printers.
    Keywords: 3D printing; symbolic product innovations; communities of users
    JEL: L17 O32
    Date: 2016–02–15
  9. By: Georgi Burlakov
    Abstract: In this paper we study how an exogenous expense of owning a market good affects the equilibrium outcome in a market with vertical product differentiation i.e. consumers differ by income but have identical preferences for the good’s quality. We identify three possible subgame-perfect equilibrium outcomes dependent on the amount of the exogenous expense. First, at a small exogenous expense tending to zero, quality choice is characterized by maximal product differentiation and all consumers buy one of the two qualities in the market. Second, at a medium exogenous expense, some low-income consumers refrain from buying which incentivizes the producer of the low-quality good to minimize its difference from the high-quality good. In turn, it chooses the best quality from its individually constrained set of quality choices. Third, at a large exogenous expense at which the consumers of the low-quality good cannot afford it, the market is monopolized by the high-quality firm.
    Keywords: vertical product differentiation; commodity taxation; market participation;
    JEL: L11 L13 L15
    Date: 2015–02
  10. By: Palazzetti, Daniele
    Abstract: The purpose of this study and its underlying research questions is to understand how New Zealand SMEs, that fall within knowledge intensive service industries, internationalise and manage branding in foreign markets. The research is important because it aims to provide insight into cost effective means for SME’’s to directly deliver service solutions to international markets. Consequently, this will allow companies to further build and develop their resources, assets and markets. New Zealand is a small market economy with limited growth potential and domestic market opportunities. Therefore, companies are considering extending their sales activities and customer reach to foreign markets and develop international networks. In the literature review, a strong link between internationalisation and FSA has been established and Dunning (1997) suggested that firms develop a competitive advantage in their home market and transfer this advantage to international markets with CSA. Other literature pointed out that FSA and company capabilities can also be acquired and augmented abroad. Therefore, these can act as a driver and motivator for firms to internationalise. This is a phenomenological research and data was collected through semi-structured interviews. The findings of this research suggest that business have to focus on global niche markets and provide quality outputs in order to effectively compete internationally. The primary method for internationalisation is through personal and direct relationships with international key clients which facilitate foreign market entry. The organisational structure and corporate culture are key competencies that must be managed or they can turn into a barrier.
    Keywords: Internationalise, Branding, SME, Small and medium enterprise,
    Date: 2015
  11. By: Villas-Boas, Sofia B; Berck, Peter; Stevens, Andrew; Moe-Lange, Jacob
    Keywords: Social and Behavioral Sciences
    Date: 2016–01–01
  12. By: Driver, Ciaran
    Abstract: Advertising and its effects have been debated for well over a century. In the last few decades a generally sceptical view of the benefits of advertising has been overturned by a series of academic advances in economics that detail a variety of ways in which advertising may affect the economy and society. This academic work has however been paralleled by a growing popular and political opposition to advertising and its social effects. In this article, the positive economic case for advertising is challenged by an assessment of the main channels of its influence and by a review of the associated empirical findings on its economic and wider impact. A policy response of limiting the tax deductibility of business advertising is explored.
    Keywords: Advertising; Policy; Economic Theory; Industrial Organization; Business Ethics
    JEL: H2 H25 K2 L4 L5 M0
    Date: 2015–01–01
  13. By: Kurt R. Brekke (Department of Economics, Norwegian School of Economics); Chiara Canta (Department of Economics, Norwegian School of Economics); Odd Rune Straume (Universidade do Minho - NIPE)
    Abstract: In this paper we study the effect of reference pricing on pharmaceutical prices and ex-penditures when generic entry is endogenously determined. We develop a Salop-type model where a brand-name producer competes with generic producers in terms of prices. In the market there are two types of consumers: (i) brand biased consumers who choose between brand-name and generic drugs, and (ii) brand neutral consumers who choose between the different generic drugs. We find that, for a given number of firms, reference pricing leads to lower prices of all products and higher brand-name market shares compared with a reimbursement scheme based on simple coinsurance. Thus, in a free entry equilibrium, the number of generics is lower under reference pricing than under coinsurance, implying that the net effects of reference pricing on prices and expenditures are ambiguous. Allowing for price cap regulation, we show that the negative effect on generic entry can be reversed, and that reference pricing is more likely to result in cost savings than under free pricing. Our results shed light on the mixed empirical evidence on the effects of reference pricing on generic entry.
    Keywords: Pharmaceuticals; Reimbursement schemes; Generic entry
    JEL: I11 I18 L13 L51
    Date: 2015

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