nep-mkt New Economics Papers
on Marketing
Issue of 2018‒04‒30
eight papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Beliefs and consumer search in a vertical industry By Maarten Janssen; Sandro Shelegia
  2. The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries By Peters, Frank
  3. Sky high economics By Grous, Alexander
  4. The concept of culinarity : an hedonic and holistic experience and its 4 dimensions (QCKS) : Quality, Creativity, Konw-how, Sharing By Virginie Brégeon Lalanne de Saint-Quentin
  5. Spatial Dispersion of Retail Margins: Evidence from Turkish Agricultural Prices By Hakan Yilmazkuday
  6. Excessive Search By Miao, Chun-Hui
  8. Presale pricing strategy and developer competitive intensity: A case of the residential market of Foshan, China By Yaoxuan Huang

  1. By: Maarten Janssen; Sandro Shelegia
    Abstract: This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers assign just a small probability to the event that the upstream manufacturer is responsible for the deviation, equilibrium predictions are qualitatively di erent. For the robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), non-monotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers.
    Keywords: Vertical relations, consumer search, double marginalization, product differentiation, price rigidities
    JEL: D40 D83 L13
    Date: 2018–03
  2. By: Peters, Frank
    Abstract: Resume "The business or video game is a multi-player game" investigates the economic impact of collaboration in a two-sided platform market in the cultural industries. The dissertation attempts to find explanations for success in the cultural industries and (in particular) the consequences of cooperation with the platform provider. This is done by means of a quantitative study of games from the time that distribution took place by means of DVDs: the period 2001-2010. This is the first time that an integrated model for success in the video game industry has been developed. Markets are increasingly becoming dominated by platforms: accommodation is booked via, music via Spotify, video via Netflix, information via Google and second-hand products via E-Bay. In the video game industry, it is the console that brings buyers and suppliers together. In such a market structure the behavior of the platform influences the results of the provider of video games and vice versa. The results of this research are therefore interesting not only for video game industry but also for other platform markets in the cultural industries. The cultural industry consists of the industries in which mass-production of cultural goods takes place. The film, music, TV and radio, fashion and game industry are examples. These industries have the following characteristics: - Extreme economies-of-scale: Production of the first copy is very expensive, reproduction is almost free; - An oversupply of creative work: production often takes place as a passion and leisure activity; - Presence of the "nobody knows" principle: Success cannot be predicted in advance, nor can it be explained retrospectively. Products are extremely divided into hits and misses so that only a small part of the offer is profitable. Conclusions: - The success of a game depends on the activities of different actors: the game development studio, the publisher, and the console manufacturer. In that sense, game business is a multi-player game; - Although the "nobody knows" principle is present, there are factors that increase the chances of success: building on success from the past and larger production budgets lead to better games, which in turn sell better. Pre-release marketing (finding market segments where competition is limited and timing of the release) also leads to more successful games. This is more important than post-release marketing. - There are cross-platform effects: games released for multiple platforms also score better on the individual platforms. - Production of games based on success from other sectors (e.g., a game in a movie) is not a successful strategy. - Platforms are often very dominant in the market. Cooperation with a platform operator (through the sale of the studio or the conclusion of exclusive contracts) has a positive result on the revenue of a game, cooperation with an independent publisher does not have this. Platforms are a necessary evil that can be better embraced: cooperation leads to more successful releases. The dissertation enriches management theory in the outlined context. It is concluded that: - Considerations for different forms of cooperation differ: for mergers transaction cost considerations, for exclusive contracts increasing opportunities for the future. - Platform operators have different motives for working with studios than independent publishers. In particular, platform operators mainly want to retain high-quality capabilities, independent publishers are looking for future differentiation options in particular. Samenvatting “The business of video game is a multi-player game” onderzoekt de economische effecten van sa-menwerking in een tweezijdige platformmarkt in de cultural industries. In het proefschrift wordt getracht verklaringen te vinden voor succes in de culturele industrie en (met name) de gevolgen van samenwerking met de platformaanbieder in kaart gebracht. Dit gebeurt door middel van een kwanti-tatief onderzoek van games uit de tijd dat distributie nog plaats vond door middel van DVD’s: de periode 2001-2010. Dit is de eerste keer dat er een integraal model voor succes in de videogame industrie is ontwikkeld. Het economisch verkeer verloopt in toenemende mate via platforms: accommodatie wordt geboekt via, muziek via Spotify, video via Netflix, informatie via Google en tweedehands pro-ducten via Marktplaats. In de videogame industrie is het de console die vragers en aanbieders van games bij elkaar brengt. In zo’n marktstructuur beïnvloedt het gedrag van het platform de resultaten van de aanbieder van video games en andersom. Uitkomsten van het onderzoek zijn daarom niet alleen voor video game industrie interessant, maar ook voor andere platformmarkten in de cultural industries. De culturele industrie bestaat uit de bedrijfstakken waarin culturele goederen in massa worden ge-produceerd. De film-, muziek-, TV en radio-, mode- en game industrie zijn voorbeelden. Deze be-drijfstakken hebben de volgende kenmerken: - Zeer sterke economies-of-scale: Productie van het eerste exemplaar is zeer kostbaar, reproductie is bijna gratis; - Een overaanbod van creatief werk: productie vindt vaak plaats als passie en vrijetijdsbesteding; - Aanwezigheid van het “nobody knows”-principe: Succes is niet vooraf te voorspellen, noch achteraf te verklaren. Producten zijn extreem verdeeld in hits en missers, waardoor slechts een klein deel van het aanbod rendabel is. Conclusies: - Het succes van een game is afhankelijk van de activiteiten van verschillende actoren: de game ont-wikkelstudio, de uitgever en de console fabrikant. In die zin is game business een multi-player ga-me; - Hoewel het “nobody knows” principe aanwezig is, zijn er factoren die de kans op succes vergroten: voortbouwen op succes uit het verleden en grotere productiebudgetten leiden tot betere games, die op hun beurt beter verkopen. Pre-release marketing (het opsporen van marktsegmenten waar de concurrentie beperkt is en timing van de release) leidt eveneens tot succesvollere games. Dit is be-langrijker dan post-release marketing. - Er zijn cross-platform effecten: games uitgebracht voor meerdere platforms scoren ook beter op de individuele platforms. - Productie van games gebaseerd op succes uit andere sectoren (bijvoorbeeld een game bij een film) is geen succesvolle strategie. - Platforms zijn vaak zeer dominant in de markt. Samenwerking met een platformexploitant (door verkoop van de studio of het afsluiten van exclusieve contracten) heeft een positief resultaat op de opbrengsten van een game, samenwerken met een onafhankelijke uitgever heeft dit niet. Platforms zijn een noodzakelijk kwaad dat beter omarmt kan worden: samenwerking leidt tot succesvollere releases. Het proefschrift verrijkt de managementtheorie in de geschetste context. Er wordt geconcludeerd dat: - Overwegingen voor verschillende vormen van samenwerking verschillen: voor overnames trans-actiekostenoverwegingen, voor exclusieve contracten het vergroten van mogelijkheden voor de toe-komst. - Platform exploitanten hebben andere motieven om samen te werken met studio’s dan onafhanke-lijke uitgeverijen. Platform exploitanten willen met name kwalitatief hoogwaardige capaciteit aan zich binden, onafhankelijke uitgevers zoeken met name toekomstige differentiatiemogelijkheden.
    Date: 2018
  3. By: Grous, Alexander
    Abstract: The global airline industry is on the cusp of a connectivity revolution. Currently 3.8 billion passengers fly annually, with only around 25% of planes in the air offering them some form of onboard broadband. This is often of variable quality, with patchy coverage, slow speeds and low data limits. By 2035, it is likely that inflight connectivity will be ubiquitous across the world. Non-broadband-enabled ‘traditional’ sources such as seat upgrades, onboard duty free and baggage fees are currently worth around $60 billion to airlines. For the first time, this research study bridges the gap between current market estimates of traditional revenues and the forecasting of incremental revenue from broadbandenabled cabins. Using IATA passenger traffic data and forecasts of growth, including a near doubling of passenger numbers to 7.2 billion annually, this research study forecasts that broadband-enabled ancillary revenue will reach an estimated $30 billion for airlines by 2035. Overall, a total market of $130 billion of additional revenues will be created. As well as airlines, this market will include content providers, retail goods suppliers, hotel and car suppliers, airlines and advertisers. The four primary areas of broadband enabled ancillary revenue have been defined in the research are: • Broadband access • Advertising, encompassing interruptive advertising and pay-per-click • E-commerce and destination shopping • Streaming, including premium content The research looks at six key regions: Asia Pacific, Europe, North America, Africa, Middle East and Latin America, analysed using both primary and secondary research, drawing on available data of passenger numbers and of forecasted aircraft growth globally. By 2035, broadband-access revenue is forecast to remain the highest single source of new ancillary revenues, accounting for 53% of the total market, followed by e-commerce and destination shopping at 40% of the market, with advertising revenue accounting for 8% of the market, and premium content at around 2.5% of the market. Per passenger, this means an increase of 1,129% in broadband enabled ancillary revenue from the current $0.23 per passenger in 2018, to $2.82 in 2028, reaching $4 per passenger by 2035. With current traditional ancillary revenue for airlines of around $17 per passenger, the research study projects that broadband connectivity will add around 24% to ancillary revenues for airlines in real terms by 2035. Growth in broadband-enabled ancillary revenue will be driven by the introduction of new generation satellites. These address the key requirements sought by passengers that have been lacking to date in many cases, most importantly high bandwidth and continuous connectivity. Passenger surveys continue to confirm that these are integral components of quality, which remains the primary driver of broadband take-up, and that passengers are willing to pay more for high quality onboard connectivity. When combined with a well-developed ecosystem of content, products and services, this can spur the development of related ancillary revenues from both leisure and business passengers on Low Cost Carriers and Full Service Carriers. Globally, Low Cost Carriers (LCCs) are forecast to account for around $11 billion of revenues, and Full Service Carriers (FSC) around $19 billion. The capitalisation of opportunities presented by a connected cabin with high quality continuous coverage will depend on the degree that airlines are willing to engage with third party suppliers, retailers, destination companies, content providers and others. The research study forecasts that by 2035, from the estimated $30 billion airline share of the total broadbandenabled revenue of $130 billion, Asia Pacific has the highest figure at $10.3 billion, followed by Europe with $8.2 billion, North America with $7.6 billion, Latin America with $1.9 billion, Middle East at $1.3 billion and Africa with $0.58 billion. The opportunity for revenue growth from broadband enabled services is dependent on airlines commercialising passenger data to a much greater degree than occurs currently. Today, only 11% of existing airline schemes offer personalised rewards based on purchase history or location data. More loyal customers can generate a 23% premium in profitability and revenue to airlines. Airlines today have failed to fully develop the potential opportunities offered by passenger data. Airlines are in the driver’s seat for realising a massive opportunity. By bringing together right technological, retail, advertising and content partners, airlines will be able to offer passengers the services they are asking for, whilst improving the bottom line. With the number of passengers currently flying every day forecast to almost double by 2035 this is a ‘sky high’ multibillion dollar opportunity for the global airline industry.
    JEL: J1
    Date: 2017
  4. By: Virginie Brégeon Lalanne de Saint-Quentin (Ecole Française de Gastronomie Ferrandi, ARENES - Centre de Recherches sur l'Action Politique en Europe - UR1 - Université de Rennes 1 - Institut d'Études Politiques [IEP] - Rennes - EHESP - École des Hautes Études en Santé Publique [EHESP] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The culinary is in everybody’s mouth without having been defined neither in marketing or in the field of consumer’s behavior. In order to fix this lack of concept, we aimed at exploring the ideas behind the culinary in order to conceptualise it and to eventually suggest a culinary marketing. Exploratory interviews revealed key concepts. The PhD work in which it is enclosed enables to consolidate those results. Thus, based on the analysis that culinary is both hedonistic (pleasure being one of its determinants) and holistic (since it is projected in a consumption situation and in commensality (food and time sharing)), we suggest these two final definitions : - « Culinarity » = Projection of the consumer in the perspective of a hedonic a holistic consumption thanks to its determinant « pleasure » and its 4 dimensions : QCKS Q-quality, C-creativity, K-Know-how, S-Sharing. Culinarity implies added value. - Culinary marketing = marketing applied to culinarity, groups marketing of the culinary, marketing for the culinary, marketing by culinarity. It is naturally based on food and culinary specificities as well as on experiential design in order to project the consumer in a holistic experience of consumption.
    Abstract: La notion de culinarité est « dans toutes les bouches » sans avoir été l'objet d'une définition en marketing et comportement du consommateur. Pour combler cette lacune, nous nous sommes attachés à explorer les contours de la culinarité, à en proposer une conceptualisation puis et à suggérer un marketing culinaire. Des entretiens exploratoires semi-directifs ont permis de comprendre les concept clefs. La recherche doctorale dans laquelle ils s’inscrivent a permis de consolider ces résultats. Ainsi, partant de l’analyse que la culinarité est par essence hédonique (faisant du « plaisir » un déterminant) et holistique (car projetée dans la situation de consommation et la commensalité), nous proposons ces deux définitions finales : - Culinarité = Projection du consommateur dans la perspective d’une consommation hédonique et holistique grâce à son déterminant « plaisir » et à ses quatre dimensions : QCSP Q-qualité, C-créativité, S-savoir-faire, P-partage. La culinarité est porteuse de valeur ajoutée. - Marketing culinaire = marketing qui a trait au culinaire, englobe le marketing du culinaire, le marketing pour le culinaire et le marketing par la culinarité. Il mobilise naturellement les notions de culinarité et de design expérientiel pour proposer une expérience holistique à vivre ou fantasmée.
    Keywords: aliment,représentations,expérience,marketing expérientiel,marketing alimentaire,marketing culinaire,esthétique,sensoriel
    Date: 2017–09–22
  5. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: The farmer share of retail prices is shown to be about 16 percent, corresponding to about 84 percent of a distribution share, on average across agricultural products and regions within Turkey. The share of transportation costs in retail prices is only about 7 percent, while the share of retail margins is about 77 percent of retail prices. The dispersion of retail prices across regions is shown to be mostly due to local wages and variable markups, while the contribution of traded-input prices is relatively small. Accordingly, the high dispersion of farmer prices across locations is not reflected in the dispersion of retail prices due to the high contribution of retail margins. These retail margins are also shown to account for about one third of the consumer welfare dispersion across regions and more than half of the consumer welfare dispersion across products.
    Keywords: Agricultural Prices, Farmer Share, Distribution Share, Retail Margins, Consumer Welfare Dispersion
    JEL: L81 Q11 R12
    Date: 2018–04
  6. By: Miao, Chun-Hui
    Abstract: This paper nests "the contractors's game" in a simple consumer search model to study the impact of search cost in these markets. Under the assumption that the number of searches is private information, we find that, with a small search cost, there will be multiple search equilibria. Between the two price dispersion equilibria, only the Pareto-dominated one is stable. Moreover, in the stable equilibrium, (1) the expected equilibrium price decreases with the search cost of consumers; (2) consumers engage in excessive search that is detrimental to their own welfare, and (3) a decline in the search cost can leave consumers worse o¤, due to their lack of commitment. The model suggests the use of intermediaries as a commitment/coordination mechanism in such markets.
    Keywords: Bertrand competition, Contractors' game, Entry cost, Multiple equilibria, Search cost
    JEL: D40 L0
    Date: 2018–04–09
  7. By: Caroline Ardelet (CEROS - Centre d'Etudes et de Recherches sur les Organisations et la Stratégie - UPN - Université Paris Nanterre); Barbara Slavich (LEM - Lille - Economie et Management - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Gwarlann De Kerviler (LEM - Lille - Economie et Management - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The objective of this study is to examine what determines women’s ethical judgments of advertisements portraying feminine erotic images. The findings demonstrate that women ethical judgment is negatively correlated to perception of male dominance in the advertisement. The role of perceived male dominance on ad ethic judgments depend on self-identified archetypal representations of femininity about women social identities (e.g. Lover, Hero or Explorer social identities) and on women’s social image (e.g. intense vs neutral make-up). Our hypotheses find support in a survey of 84 women evaluating a fashion advertisement portraying a feminine erotic image.
    Abstract: The objective of this study is to examine what determines women's ethical judgments of advertisements portraying feminine erotic images. The findings demonstrate that women ethical judgment is negatively correlated to perception of male dominance in the advertisement. The role of perceived male dominance on ad ethic judgments depend on self-identified archetypal representations of femininity about women social identities (e.g. Lover, Hero or Explorer social identities) and on women's social image (e.g. intense vs neutral make-up). Our hypotheses find support in a survey of 84 women evaluating a fashion advertisement portraying a feminine erotic image. Abstract: L'objectif de cette étude est d'examiner les facteurs déterminants la perception de l'éthique des publicités mettant en scène des images érotiques féminines. Les résultats montrent que plus les femmes perçoivent une domination masculine dans la publicité, moins elles jugent la publicité éthique. L'impact de la perception de domination masculine sur l'éthique de la publicité dépend de la représentation archétypale de la féminité à laquelle les femmes s'identifient : l'identité sociale féminine (Amoureuse, Dirigeante ou Exploratrice) et l'image sociale féminine (maquillage intense ou naturel). Notre étude s'appuie sur une étude quantitative en ligne auprès d'un panel de 84 femmes françaises évaluant une publicité de mode mettant en scène une image érotique féminine.
    Keywords: Advertising,Ethics,Femininity,Archetypes
    Date: 2018–05–16
  8. By: Yaoxuan Huang
    Abstract: In recent years, more and more attentions are paid to the second-tier cities especially the satellite towns around the first-tier metropolis. Foshan is a city located in the Pearl River Delta, with its city center only 18 kilometers away from the center of Guangzhou (the third biggest city within China). As the booming of the population in Guangzhou and thus the residential needs, more people choose to live in the city of Foshan and commute to Guangzhou through the Guang-Fo express. Therefore, the residential market of Foshan becomes not only attractive to the local developers but also a potential market to open up for the others. It leads us to wonder the status and strategies of different developers entering such a growing residential market. Previous research going over the residential market mainly reveals from the demand side, or say, the aspect of the individual buyers and sellers within the second-hand market. However, limited studies tell stories from the supply side of the residential properties. To better understand the housing supply, it is important to look at the first hand transactions between the developers and the buyers, especially the presale process. Presale is adopted as a prevailing practice in real estate markets of China including the city of Foshan. This process can be seen as the only market in the developers’ domain since the developers unilaterally price their properties before the spot-sale. Therefore, the pricing mechanism to a great extent reflects the strategies of the developers when they enter into a market and compete with others. This study classifies different developers and investigates their decision-making mechanism during presale. In addition to the pricing mechanism, the traditional project features would also be considered in the study. Presale prices of more than a thousand of residential projects in recent years are disclosed by the Foshan real estate bureau and used in this study, in which tens of various developers are involved. Making use of the Geographically Weighted Regressions (GWR), this study incorporates the spatial connections and dependence among real estate projects and generates an evaluation of the impacts for each of the projects. It is of particular interest and significance to the field of housing studies and urban planning as it provides valuable implications about competitive development strategies for developers, policymakers and urban planners in the near future.
    Keywords: Competitive intensity; GWR; Presale; Real estate developer; Residential markets
    JEL: R3
    Date: 2017–07–01

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