nep-mkt New Economics Papers
on Marketing
Issue of 2019‒06‒17
four papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Injunctions against false advertising By Baumann, Florian; Rasch, Alexander
  2. If You Think 9-Ending Prices Are Low, Think Again By Avichai Snir; Daniel Levy
  3. Who will buy fishy lettuce? Australia and Israel as case studies on the potential consumers of aquaponic produce By Greenfeld, Asael; Becker, Nir; Bornman, Janet F.; Jose dos Santos, Maria; Angel, Dror L.
  4. Nudging responses to marketing emails: Evidence from London Fireworks Campaign By Alice Gimblett; Daryna Grechyna

  1. By: Baumann, Florian; Rasch, Alexander
    Abstract: Rules of consumer protection or fair competition can be publicly or privately enforced. We consider the possibility of false advertising by a firm in duopolistic competition where consumers can be distinguished according to whether or not they form rational beliefs about the trustworthiness of advertising claims. We compare private and public law enforcement in the form of the demand for injunctions against false advertising. From a welfare perspective, we show that it can be optimal either to have the private entity (the competitor/a consumer protection agency) or the government agency as plaintiff, where the optimal regime depends on the share of naive consumers and the level of trial costs in a non-trivial way.
    Keywords: injunction suits,false advertising,law enforcement,naive consumers,product differentiation
    JEL: K41 K42 L13 L15
    Date: 2019
  2. By: Avichai Snir (Department of Banking and Finance, Netanya Academic College, Israel); Daniel Levy (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; Rimini Centre for Economic Analysis)
    Abstract: 9-ending prices are a dominant feature of many retail settings, which according to the existing literature, is because consumers perceive them as being relatively low. Are 9-ending prices really lower than comparable non 9-ending prices? Surprisingly, the empirical evidence on this question is scarce. We use 8 years of weekly scanner price data with over 98 million price observations to document four findings. First, at the category level, 9-ending prices are usually higher, on average, than non 9-ending prices. Second, at the product level, in most cases, 9-ending prices are, on average, higher than prices with other endings. Third, sale prices are more likely to be non-9 ending than the corresponding regular prices. Fourth, among sale prices, 9-ending prices are often lower, on average, than comparable non 9-ending prices. The first three findings imply that although consumers may associate 9-ending prices with low prices, the data indicates otherwise. The fourth finding offers a possible explanation for this misperception. Retailers may be using 9-ending prices to draw consumers' attention to particularly large price cuts during sales, which perhaps conditions the shoppers to associate 9-ending prices with low prices.
    Keywords: Behavioral Pricing, Psychological Prices, Price Perception, Image Effect, 9-Ending Prices, Price Points, Regular Prices, Sale Prices
    JEL: M30 M31 L11 L16 L81 D12 D22 D40 D90 D91 E31
    Date: 2019–06
  3. By: Greenfeld, Asael; Becker, Nir; Bornman, Janet F.; Jose dos Santos, Maria; Angel, Dror L.
    Abstract: Aquaponics, the combined rearing of fish and hydroponic horticulture, has great potential for sustainable food production. Despite increasing research and investments in commercial scale systems, aquaponics is not yet a successful industry and most businesses report negative returns. Aquaponic produce is thought to contain added value to the consumer, and the environment. As most consumers are unaware of aquaponics and their benefits, little is known of its potential market. The present study addressed this gap by analysing willingness to consume aquaponic produce at different price levels in Israel and Australia. We used econometric tools to study the effects of pricing and other factors on revenues in each country. Cluster analysis was used to define groups of potential consumers. The results indicate that 17-30% of the population would prefer to consume aquaponic produce once informed of their added value. Revenues at given premiums would be higher in Israel than in Australia, and higher for a leafy green, than for fish. Different segments of the population differed in their willingness to consume aquaponic produce, as well as in their stated motivations when purchasing food. Conclusions highlight the importance of case-specific research on consumer preferences and economic considerations preceding commercial investment in aquaponics.
    Keywords: Consumer/Household Economics, Livestock Production/Industries, Marketing
    Date: 2019–04–15
  4. By: Alice Gimblett (Middlesex University London.); Daryna Grechyna (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This study evaluates the efficiency of ‘nudging’ in a natural experiment conducted around London New Year’s Eve Fireworks campaign. We measure the click through rates in response to various versions of the email sent on behalf of the Mayor of London. The results demonstrate that crafting marketing messages using the behavioural concepts specificity, social proof and reciprocity can bring about an uplift in response rates to email communications compared to control groups which receive a standard message. Our results contribute to the empirical evidence on the validity of nudge theory.
    Keywords: natural experiment; nudges.
    JEL: C90 C93
    Date: 2019–06–11

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