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on Marketing |
| By: | Andre Bonfrer; Ernst R. Berndt; Alvin Silk |
| Abstract: | We investigate the theoretical possibility and empirical regularity of two troublesome anomalies that frequently arise when cross-price elasticities are estimated for a set of brands expected to be substitutes. These anomalies are the occurrence of: (a) negatively signed cross-elasticities; and (b) sign asymmetries in pairs of cross price elasticities. Drawing upon the Slutsky equation from neoclassical demand theory, we show how and why these anomalies may occur when cross elasticities are estimated for pairs of brands that are substitutes. We empirically examine these issues in the context of the widely used Multiplicative Competitive Interaction (MCI) and Multinomial Logit (MNL) specifications of the fully extended attraction models (Cooper and Nakanishi 1988). Utilizing a database of store-level scanner data for 25 categories and 127 brands of frequently purchased branded consumer goods, we find that about 18% of a total of 732 cross elasticity estimates are negative and approximately 40% of the 366 pairs of cross elasticities are sign asymmetric. Finally, we find that the occurrence of negatively signed cross elasticities can be partially explained by a set of hypothesized relationships between cross-price elasticities and brand share and elasticities of income and category demand. |
| JEL: | D12 M30 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12756&r=mkt |
| By: | Andrus Kotri |
| Abstract: | The fulfillment of customers’ wishes in a profitable way requires that companies understand which aspects of their product and service are most valued by the customer. Conjoint analysis is considered to be one of the best methods for achieving this purpose. Conjoint analysis consists of generating and conducting specific experiments among customers with the purpose of modeling their purchasing decision. This article will give an overview of the method and apply it to an Estonian packaging company. As a result of the empirical study the author is able to estimate the value creation models of 34 respondents (customers) both on a group and individual basis. |
| Keywords: | customer value, conjoint analysis, market research methods |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:46&r=mkt |
| By: | Bonnet, Celine; Dubois, Pierre; Simioni, Michel |
| Abstract: | We present a methodology allowing to introduce manufacturers and retailers vertical contracting in their pricing strategies on a differentiated product market. We consider in particular two types of non linear pricing relationships, one where resale price maintenance is used with two part tariffs contracts and one where no resale price maintenance is allowed in two part tariffs contracts. Our contribution allows to recover price-cost margins from estimates of demand parameters both under linear pricing models and two part tariffs. The methodology allows then to test between different hypothesis on the contracting and pricing relationships between manufacturers and retailers in the supermarket industry using exogenous variables supposed to shift the marginal costs of production and distribution. We apply empirically this method to study the market for retailing bottled water in France. Our empirical evidence shows that manufacturers and retailers use non linear pricing contracts and in particular two part tariffs contracts with resale price maintenance. At last, thanks to the estimation of the our structural model, we present some simulations of counterfactual policy experiments like the change of ownership of some products between manufacturers. |
| Keywords: | collusion; competition; differentiated products; double marginalization; manufacturers; non nested tests.; retailers; two part tariffs; vertical contracts; water |
| JEL: | C12 C33 L13 L81 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6016&r=mkt |
| By: | Tobias Kretschmer; Katrin Muehlfeld |
| Abstract: | Firms faced with the decision of whether to standardize or not prior to introducing a newnetwork technology face a tradeoff: Compatibility improves the technology's chances ofconsumer acceptance, but it also means having to share the resulting profits with othersponsors of the standard. In this paper, we show that even prior to market introduction of anew technology, the timing of decisions is important and that firms have to weigh up thecooperative and competitive elements of pre-market choices. We also show that the option toprecommit to a technology before it is fully developed (as has been the case with theCompact Disc) can be profitable for network technologies. |
| Keywords: | Standardization, compact disc, preemption, war-of- attrition |
| JEL: | L63 O32 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0742&r=mkt |