nep-mkt New Economics Papers
on Marketing
Issue of 2018‒03‒26
six papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. THE EXPERIENCE?PROFIT CHAIN Customer Experience Role in Marketing Strategy By Zvi M. Ganor
  2. Competitive Personalized Pricing By Zhijun Chen; Chongwoo Choe; Noriaki Matsushima
  3. Measuring the Demand Effects of Formal and Informal Communication : Evidence from Online Markets for Illicit Drugs By Luis Armona
  4. Social justice, the food product consumer and non-communicable diseases: Implications of consumer protection legislation for the food industry in South Africa By Karunanidhi Reddy
  5. Preventives Versus Treatments Redux: Tighter Bounds on Distortions in Innovation Incentives with an Application to the Global Demand for HIV Pharmaceuticals By Kremer, Michael; Snyder, Christopher
  6. Pricing in Multiple Currencies in Domestic Markets By Andres Drenik

  1. By: Zvi M. Ganor (West Galilee Academic College School of Management)
    Abstract: In the last 15 years 'customer experience' has raised the attention of researchers in the fields of 'marketing strategy', 'consumer behavior' and 'retail management'. The issues of 'experience', the 'game' and the 'search for pleasure and excitement' are not new . Theoretical Framework - "the experience- profit chain"The cause-to-effect link: Customer evaluation of lived experience ),hedonistic and utilitarian) , creates a highest 'customer value judgement' that breeds a remarquable 'Customer Loyalty' , and 'customer life-time value' & equity that breeds profit. This model was widely discussed by Pine & Gilmore- (The Experience Economy 1999). Pine & Gillmore argue about improving Customer Value to raise loyalty, competitiveness & profitability , businesses must orchestrate memorable events for their customers. In order to contributes to a competitive added-value edge.This value chain was previously introduced by the pioneering study of Heskett, Sasser & Schlesinger (1997) and later approved by James L. Heskett, Earl Sasser? Joe Wheeler research (The Service Profit Chain 2008) We also referred to the Holbrook M. model of customer experience framework :"Hedonistic & Utilitarian values mix (Customer Value,Framework for Analysis & Research).Previous researches like Reichheld, (The Loyalty Effect 2001), provide us with an excellent study guidance to link loyalty and profit. Research objectivesOur research was conducted on a sampling of 1650 young users aged 18 to 24 years in Israel during 2014-16.Our study was performed on three levels of field research:Level A ( quantitative )Examined the relationship between the shopping experience mix which is critical to create the highest satisfaction level among young customers , and their future purchase intention & habits.Level B (quantitative)Examines the relationship between customers satisfaction level , their Brand loyalty intentions , and 'Customer life time value' .Level C ( qualitative )Was conducted on 35 stores located in 4 malls where the quantitative research was performed.Outcome & RecommendationsCombining the five factors of customer experience in the marketing strategy (security, enjoyment, value, convenience, and evaluation)of the business can significantly improve:- The attractiveness of the purchase store.- The extension of customers' in store time spending The customer loyalty & 'life-time-value' breed the increase of income and profit phase, This 1 year, Level C' research is conducted on 35 stores. It started in January 2015. Our primary exploratory qualitative research confirm our assumptions of clear experience profit linkage.
    Date: 2017–10
  2. By: Zhijun Chen; Chongwoo Choe; Noriaki Matsushima
    Abstract: We study a duopoly model where each firm chooses personalized prices for its targeted consumers, who can be active or passive in identity management. Active consumers can bypass price discrimination and have access to the price offered to non-targeted consumers, which passive consumers cannot. When all consumers are passive, personalized pricing leads to intense competition and total industry profit lower than that under the Hotelling equilibrium. But market is always fully covered. Active consumers raise the firm's cost of serving non-targeted consumers, which softens competition. When firms have sufficiently large and non-overlapping target segments, active consumers enable firms to extract full surplus from their targeted consumers through perfect price discrimination. With active consumers, firms also choose not to serve the entire market when the commonly non-targeted market segment is small. Thus active identity management can lead to lower consumer surplus and lower social welfare. We also discuss the regulatory implications for the use of consumer information by firms as well as the implications for management.
    Date: 2018–03
  3. By: Luis Armona
    Abstract: I present evidence that communication between marketplace participants is an important influence on market demand. I find that consumer demand is approximately equally influenced by communication on both formal and informal networks- namely, product reviews and community forums. In addition, I find empirical evidence of a vendor's ability to commit to disclosure dampening the effect of communication on demand. I also find that product demand is more responsive to average customer sentiment as the number of messages grows, as may be expected in a Bayesian updating framework.
    Date: 2018–02
  4. By: Karunanidhi Reddy (Durban University of Technology, South Africa)
    Abstract: Many health problems are related to food and diet patterns. Socio-economic development in South Africa has meant a change in diet patterns, with poorer communities moving away from traditional foods to convenience and processed foods. These foods have been associated with obesity and could greatly increase the risk of developing food-related non-communicable diseases, including diabetes, high blood pressure and heart disease. In addition, apartheid resulted in inequality among consumers in terms of education levels, literacy and understanding of the language used in labelling and product information, as well as in terms of access to good quality commodities that are arguably healthier. It also resulted in inequality in terms of knowledge of consumer rights and the ability to enforce them, and a lack of information and knowledge as to food related health challenges. Particular sectors in the food industry have been less concerned about the consumer health risks associated with their products or communicating such information to their consumers. Hence, recently there have been initiatives by government to protect consumers against food related non communicable diseases by proposing legislation to curb consumption of specific food products. The proposed ?sugar tax? on sugar sweetened beverages is one example. The Consumer Protection Act (CPA), passed in 2008, aims at protection of consumers by prohibiting or regulating a range of marketing and business practices and affording the consumer a range of legal rights and remedies. This paper investigates the implications of the CPA and related legislation, for the food industry and consumers of food products. The approach adopted for this paper is a descriptive critique engaging in a review of related literature, and pertinent legislation, particularly the CPA. It is envisaged that this paper will highlight the implications of the CPA in terms of the rights of consumers and the concomitant obligations of suppliers of food products, to re-examine the health risks related to their products, food labelling, disclosure of information particularly about associated health risks, and consumer education about products, in plain and understandable language. It will also identify possible gaps in the law requiring specific regulation.
    Keywords: Consumer; consumer protection; non-communicable diseases; food products; food industry ; social justice; South Africa
    JEL: K29 L66
    Date: 2017–10
  5. By: Kremer, Michael; Snyder, Christopher
    Abstract: Kremer and Snyder (2015) show that demand curves for a preventive and treatment may have different shapes though they target the same disease, biasing the pharmaceutical manufacturer toward developing the lucrative rather than the socially desirable product. This paper tightens the theoretical bounds on the potential deadweight loss from such biases. Using a calibration of the global demand for HIV pharmaceuticals, we demonstrate the dramatically sharper analysis achievable with the new bounds, allowing us to pinpoint potential deadweight loss at 62% of the global gain from curing HIV.We use the calibration to perform policy counterfactuals, assessing welfare effects of government policies such as a subsidy, reference pricing, and price-discrimination ban. The fit of our calibration is good: we find that a hypothetical drug monopolist would price an HIV drug so high that only 4% of the infected population worldwide would purchase, matching actual drug prices and quantities in the early 2000s before subsidies in low-income countries ramped up.
    Keywords: deadweight loss; pharmaceuticals; product development
    JEL: F23 I14 L65 O31
    Date: 2018–02
  6. By: Andres Drenik (Columbia University)
    Abstract: We document that in emerging economies a significant fraction of prices in do- mestic markets are set in dollars. The currency of prices is not homogeneous across goods. More expensive goods are more likely to be set in dollars and also take longer time to sell. We rationalize these facts using a model of price setting in multiple currencies with search frictions. Pricing in dollars prevents erosion of real prices caused by inflation at the expense of a lower willingness to pay from buyers. When goods take longer to sell the relative value of preventing price erosion is higher. Consistent with empirical evidence, our model predicts that the share of prices in foreign currency increases when domestic inflation is high.
    Date: 2017

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