nep-mkt New Economics Papers
on Marketing
Issue of 2017‒04‒16
eleven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Nudges as Conversion Funnel Enhancers in Digital Business Models By Koch, Oliver Francis
  2. Salience in Retailing: Vertical Restraints on Internet Sales By Helfrich, Magdalena; Herweg, Fabian
  3. Consumer Market Characteristics of Emerging Cities in China and its Implications By Jin, Furong; Lee , Hyong-Kun; Pak , Jinhee; Kim, Hongwon; Choi, Jiwon
  4. Multi-product and Multi-region Marketing By Widodo, Tri
  5. Organic food retailing and the conventionalization debate By Desquilbet, Marion; Maigné, Elise; Monier-Dilhan, Sylvette
  6. Маркетинговые преимущества продвижения товаров при помощи технологии «гивэвей» By Koshcheeva, Angelina
  7. Competition Issues in India's Online Economy. By Parsheera, Smriti; Shah, Ajay; Bose, Avirup
  8. Theravada Buddhism and Thai Luxury Fashion Consumption By Ning, M.; McAleer, M.J.
  9. End of 9-Endings, Price Recall, and Price Perceptions By Snir, Avichai; Levy, Daniel; Chen, Haipeng (Allan)
  10. To stay or go? Consumer bank switching behaviour after government interventions By Maaike Diepstraten; Carin van der Cruijsen
  11. Comment expliquer le succès du drive ? La logistique et le marketing comme premiers éléments de réponse By Bruno Durand; Magali Jara

  1. By: Koch, Oliver Francis
    Abstract: By leveraging the technological advancements in information, communication, and connectivity technologies, specifically the internet, firms continue to innovate and create value through new digital business models which are disrupting entire industries. More recent success stories include Spotify, a music streaming service which has transformed the way music is consumed and has disrupted the entire music retail industry as well as Dropbox, which has been attributed a similar disruptive role in regards to consumer file storage. However, competition and distraction in the online space are fierce and consumers often expect products and services on the internet to be free, urging firms to rethink the design of their conversion funnel to win new customers and thus capture the value they create. The conversion funnel describes the transformation users undergo when sequentially proceeding through four stages to ultimately complete an online transaction with the firm: from being a non-visitor to becoming a visitor (also called acquisition), to becoming a registered user (also called activation) and lastly a converted customer (also called customer conversion). While Information Systems (IS) research on the conversion funnel of digital business models has dealt quite extensively with the antecedents of consumer decision making in all parts of the funnel, big questions remain as to how firms may actively shape desired outcomes in regards to acquisitions and customer conversions. Research on acquisitions has emphasized that traditional advertising is becoming less effective due to media saturation and consumers wanting to rely on more credible sources when seeking information on new products and services. This has lead mechanisms such as referrals, which relate to passing along messages received by the marketer to one’s peers, to become a critical component of marketing strategy. However, extant contributions have focused on the antecedents of consumer referral decisions, leaving a big gap as to how firms may actually enhance referrals and thus improve acquisition outcomes. Similarly, research on customer conversions has mainly focused on identifying the antecedents of consumer decision making at the neglect of shedding light on how one may actually shape conversion outcomes. On the other hand, IS research on activations is quite mature and has paid attention to both the antecedents of consumer decision making as well as how firms may drive better activation outcomes. Digital nudging, which refers to the practice of using visual user interface elements to influence consumer behavior in digital choice environments, has shown promising results in driving activation outcomes in this regard. For example, the usage of pull vs. push mechanisms in requesting information to consumers may influence their privacy concerns and thus activation outcomes. However, digital nudges have so far been widely ignored in the context of acquisition and customer conversions. Against this backdrop, three studies were conducted. The first study, by drawing on a randomized field experiment in the context of an online fashion service named StyleCrowd, investigates the effect of scarcity and personalization nudges in enhancing consumer referrals and thus improving acquisition outcomes. Building on this, the second study is focused on examining the potential of scarcity and social proof nudges as referral enhancers in the context of a randomized online experiment with the German startup Blinkist. Lastly, the third study examines how free trial order nudges may be used to enhance customer conversions within freemium business models by drawing on a contest-based online experiment. Overall, this thesis expands our understanding of how digital nudges may be used to enhance acquisition and conversion outcomes within the conversion funnel of digital business models. On the acquisition end, we provide evidence of how scarcity, social proof as well as personalization nudges may increase consumers’ propensity to engage in referrals and explicate the drivers that mediate these effects. Furthermore, we also shed light on the positive interaction effects between scarcity and social proof as well as the negative interaction effects between scarcity and personalization, and provide explanations for these phenomena. On the customer conversion end, we demonstrate how free trial order nudges may be used to enhance premium conversion within freemium business models. Besides unveiling the drivers that mediate this positive effect, we also explicate external factors that act as moderators. In sum, the contributions of this thesis are not limited to digital business models and digital nudges, but also extend into IS and marketing research on electronic word of mouth as well as research on cognitive biases. From a practical perspective, firms may leverage our findings for the design of their conversion funnel by carefully employing digital nudges to enhance acquisition and conversion outcomes.
    Date: 2017
  2. By: Helfrich, Magdalena; Herweg, Fabian
    Abstract: We provide an explanation for a frequently observed vertical restraint in e-commerce, namely that brand manufacturers partially or completely prohibit that retailers distribute their high-quality products over the internet. Our analysis is based on the assumption that a consumer's purchasing decision is distorted by salient thinking, i.e. by the fact that he overvalues a product attribute -- quality or price -- that stands out in a particular choice situation. In a highly competitive low-price environment like on an online platform, consumers focus more on price rather than quality. Especially if the market power of local (physical) retailers is low, price tends to be salient also in the local store, which is unfavorable for the high-quality product and limits the wholesale price a brand manufacturer can charge. If, however, the branded product is not available online, a retailer can charge a significant markup on the high-quality good. As the markup is higher if quality rather than price is salient in the store, this aligns the retailer's incentives with the brand manufacturer's interest to make quality the salient attribute and allows the manufacturer to charge a higher wholesale price. We also show that, the weaker are consumers' preferences for purchasing in the physical store and the stronger their salience bias, the more likely it is that a brand manufacturer wants to restrict online sales. Moreover, we find that a ban on distribution systems that prohibit internet sales increases consumer welfare and total welfare, because it leads to lower prices for final consumers and prevents inefficient online sales.
    Keywords: Internet competition; Relative thinking; Retailing; salience; Selective distribution; Vertical restraints
    JEL: D43 K21 L42
    Date: 2017–03
  3. By: Jin, Furong (Korea Institute for International Economic Policy); Lee , Hyong-Kun (Korea Institute for International Economic Policy); Pak , Jinhee (Korea Institute for International Economic Policy); Kim, Hongwon (Korea Institute for International Economic Policy); Choi, Jiwon (Korea Institute for International Economic Policy)
    Abstract: This study is aimed at analyzing the characteristics of the consumer market in the new emerging cities in China and coming up with recommendations with regard to strategies for entering them. This study contains two important differentiating factors: 1. The first point of the study that differentiates it from the rest is that it analyzed the consumer market with its research focus on the specific, 'micro' consumer attributes limited to 10 target cities in China, instead of reviewing all major metropolitan areas; 2. This study performs a one-on-one survey and case study in terms of its research methodology, while also applying key management theories such as consumer behavior model, 4P and STP strategy.
    Keywords: China; Emerging Cities; Consumer Market
    Date: 2015–07–17
  4. By: Widodo, Tri
    Abstract: Firms could position themselves to compete within the same industry in different ways. They try to get their competitive advantage, which is defined as the ability to earn a higher rate of economic profit than the average of economic profit of other firms competing within the same markets (Besanko et al, 2013). Michael Porter (1980) coined generic strategies for firms to compete in the markets they serve, i.e. cost leadership, benefit leadership, and focus. Besanko et al (2014) noted three possible how it could happen in three different ways: (1) the cost leader can get the benefit parity by producing products with the same benefit (B) but at lower cost (C); (2) the cost leader can get benefit proximity, which involves offering a benefit (B) that is not much less than those of competitors; (3) the cost leader might offer a product that is qualitatively different from that its competitors. Benefit and Cost leadership closely relates to the crucial issue of how the firm will create the higher competitive advantage or economic value created compared to its rivals. The other important issue is where to create higher economic value. More specifically, will the firm seek to create economic value across broad of regional markets segments (broad coverage strategy), or will it focus only on narrow set of segments (focus strategy)? Yet, Porter (1980) had not given any mathematical formula to analyze the performance of sales which is related to the strategic positioning. Therefore, firstly this paper is addressed to derive a mathematical formula for analyzing the performance of sales in the cases of multi-product and multi-markets. In the real all markets, now a firm could produce more than one product (multi-product) and sell the products in more than one markets (multi-markets). It is very useful for the firms to know the determinants of the changes of their sales. Are they affected by the products or the markets? The mathematical formula derived in this paper offers the answer. Every firm needs this information to formulate the suitable markets policies or strategies. For sure, the mathematical formula requires detail information on sales by products, markets and competitors. Secondly, due to the unavailability of empirical data, the formula is simulated by using hypothetical data.
    Keywords: Constant Market Share, Marketing, Multi-region
    JEL: M21 M31
    Date: 2017–03–11
  5. By: Desquilbet, Marion; Maigné, Elise; Monier-Dilhan, Sylvette
    Abstract: In terms of sustainability, the effects of the development of organic farming are subject to debate, particularly regarding the methods used to compare organic and conventional food systems and the consequences of the conventionalization of organic farming. We propose an empirical study centered on the stage of food retailing and based on two sales databases in France in 2012, one involving conventional food retailing and the other involving specialized organic stores. We examine sustainability from the plant, animal or combined origin of food products and from their degree of processing. The results suggest that sales of organic food products are more plant-based and less processed than sales of conventional products, two criteria for better sustainability. They also show that organic sales in specialized organic stores are more sustainable than those in conventional retail stores according to the same criteria. In addition, the sales structure of organic products in conventional retail stores is very specific. Finally, the average structure of purchases in specialized organic stores is more plant-based and less processed than total food purchases of large buyers of organic products in conventional retail stores, themselves more plant-based and less processed than those of small buyers.
    Keywords: sustainable diets; organic farming; retail channel; conventionalization; food environment
    JEL: C81 D12
    Date: 2017–03
  6. By: Koshcheeva, Angelina
    Abstract: Статья о преимуществах продвижения товаров и услуг в социальных сетях при помощи технологии «гивэвей». Автор рассматривает различные стороны маркетинговых преимуществ технологии в сети-интернет. Особое внимание уделено ключевым моментам использования технологии «гивэвей» в области интернет-маркетинга.
    Keywords: Социальные сети, гивэвей, интернет-маркетинг.
    JEL: M21 M31 M37
    Date: 2017
  7. By: Parsheera, Smriti (National Institute of Public Finance and Policy); Shah, Ajay (National Institute of Public Finance and Policy); Bose, Avirup (Jindal Global Law School)
    Abstract: The world of high technology companies is seen as a dynamic area with a rapid pace of creative destruction. There is, however, a class of industries where there are strong network effects, where the market tends to collapse into a narrow set of players. After one burst of innovation where a new online business is born, there is the possibility of entrenched market power with the extraction of consumer surplus.Many firms, global and Indian, have resorted to the strategy of making large losses by subsidising users, as a way to obtain those network effects. This has created a new class of concerns about predatory pricing, with unprecedented negative profit margins on a sustained basis, being supported by equity capital infusions. In the short run,discounts are popular, but recoupment is inevitable and market power will adversely affect consumers in the future. We argue that the existing competition law regime in India needs to be fine tuned, for technology-enabled markets with significant network effects, to address the possibility of new kinds of abusive conduct. We offer a series of tangible proposals through which the Competition Commission of India can better handle these emerging situations. We also look into the role and responsibilities of the investors who back these online businesses and the impact of their conduct on competition in the underlying markets.
    Date: 2017–04
  8. By: Ning, M.; McAleer, M.J.
    Abstract: This paper reviews the Thai national character according to Hofstede’s cultural dimension theory and Komin’s nine values cluster (Psychology of the Thai people), analyses the social hierarchy of Thai consumers according to the Luxury 4P Taxonomy (Han et al., 2010), integrates the Theory of Cultural Capital (Bourdieu, 1984), and expounds the features of social class. The global luxury fashion industry has grown significantly in recent years, but much of the research has been limited to conspicuous consumption and social identity. This paper involves religious beliefs that are argued to influence luxury purchasing motives. The purpose of the paper is to develop an analytical framework to aid in understanding luxury fashion consumption in a Buddhist country such as Thailand in order to inform luxury products vendors on how to improve their marketing strategies.
    Keywords: Luxury fashion consumption, Purchasing motives, Buddhist beliefs, Marketing strategies, Thailand.
    JEL: N35 Z12
    Date: 2016–12–01
  9. By: Snir, Avichai; Levy, Daniel; Chen, Haipeng (Allan)
    Abstract: Prices that end with 9, also known as psychological price points, are common, comprising about 70% of the retail prices. They are also more rigid than other prices. We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli government passed a new regulation prohibiting the use of non 0-ending prices, bringing an end to 9-ending prices. We find that seven months after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending prices had before the new regulation was adopted. Thus, 90-ending prices became the new psychological price points, partially eliminating the regulation’s intended effect.
    Keywords: 9-ending prices; psychological price points; price recall/perception; sticky/rigid prices; level/left-digit effect; image/right-digit effect; integer constraint; price control; price regulation
    JEL: D40 D83 E31 K20 L16 L81 M21 M31
    Date: 2017–04–02
  10. By: Maaike Diepstraten; Carin van der Cruijsen
    Abstract: We analyse whether and how individual savings and current accounts holders respond to government interventions at banks. We are the first to employ a difference-in-difference analysis, distinguish between a nationalisation and a capital injection, and separate between the two banking products. We find that the aggregate switching behaviour of consumers at intervened banks is similar before and after the troubles and intervention. This holds for both type of interventions, both type of products, and for switching from and to the intervened bank. However, we show heterogeneity in consumer responses to government interventions, depending on the type of intervention and banking product. For example, compared to consumers who trust the government, consumers with no or little trust are more likely to switch away from a bank after a nationalisation, relative to customers of the control bank. This holds for switching with the savings and current account. This highlights that trust in the government is an important prerequisite for a successful nationalisation. Second, responses depend on consumers' level of risk aversion. Risk averse current account holders at a nationalised bank are more likely to switch away than customers of the control bank. This result indicates that interventions can make consumers more aware of the troubles the intervened bank faces, and result in an outflow of consumers if a large share is risk averse.
    Keywords: consumer bank switching; bail-outs; capital injection; nationalisation; trust in the government; risk aversion
    JEL: D14 G21 G28
    Date: 2017–03
  11. By: Bruno Durand (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes); Magali Jara (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)
    Abstract: Cette recherche exploratoire s’intéresse au développement du drive, une formule qui répond aux impératifs sociétaux de consommateurs pressés et qui s’inscrit dans la logique du développement multi-canal des réseaux de distribution. Notre communication souhaite, donc, étudier les fondements théoriques du drive, ce qui revient à questionner des dimensions, à la fois, d’ordre logistique et d’ordre marketing. Les contributions logistiques soulignent une mutation progressive des organisations existantes, qui semble se traduire par une hybridation des modèles de base de la cyber-épicerie. Quant aux apports marketing, ils tendent à montrer que la construction d’une image forte du drive repose sur le transfert des associations d’image du capital-enseigne.
    Keywords: personnalité de l’enseigne,marketing,drive,logistique,cyber-épicerie
    Date: 2017–02–07

This nep-mkt issue is ©2017 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.