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on Marketing |
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Issue of 2007‒03‒10
eight papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Babutsidze, Zakaria (UNU-MERIT) |
| Abstract: | In this paper I review the evidence from marketing and psychology literature about the purchase behavior of consumers. I concentrate on the characteristics of the choice process, choice of the external information source and nature of the information obtained from these sources. The impact of important systematic differences among consumers and products on choice behavior is also discussed. |
| Keywords: | Consumer Choice, Information, Decision-making, Marketing |
| JEL: | D91 D81 M31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2007005&r=mkt |
| By: | Jan Boone; Joel Shapiro |
| Abstract: | For many goods (such as experience goods or addictive goods), consumers’ preferences may change over time. In this paper, we examine a monopolist’s optimal pricing schedule when current consumption can affect a consumer’s valuation in the future and valuations are unobservable. We assume that consumers are anonymous, i.e. the monopolist can’t observe a consumer’s past consumption history. For myopic consumers, the optimal consumption schedule is distorted upwards, involving substantial discounts for low valuation types. This pushes low types into higher valuations, from which rents can be extracted. For forward looking consumers, there may be a further upward distortion of consumption due to a reversal of the adverse selection effect; low valuation consumers now have a strong interest in consumption in order to increase their valuations. Firms will find it profitable to educate consumers and encourage forward looking behavior. |
| Keywords: | Endogenous types, experience goods, addictive goods, price discrimination |
| JEL: | D42 D82 L12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:992&r=mkt |
| By: | Marco S. Giarratana; Anna Torres |
| Abstract: | This paper investigates the link between brand performance and cultural primes in high-risk, innovation-based sectors. In theory section, we propose that the level of cultural uncertainty avoidance embedded in a firm determine its marketing creativity by increasing the complexity and the broadness of a brand. It determines also the rate of firm product innovations. Marketing creativity and product innovation influence finally the firm marketing performance. Empirically, we study trademarked promotion in the Software Security Industry (SSI). Our sample consists of 87 firms that are active in SSI from 11 countries in the period 1993-2000. We use the data coming from SSI-related trademarks registered by these firms, ending up with 2,911 SSI-related trademarks and a panel of 18,213 observations. We estimate a two stage model in which first we predict the complexity and the broadness of a trademark as a measure of marketing creativity and the rate of product innovations. Among several control variables, our variable of theoretical interest is the Hofstede’s uncertainty avoidance cultural index. Then, we estimate the trademark duration with a hazard model using the predicted complexity and broadness as well as the rate of product innovations, along with the same control variables. Our evidence confirms that the cultural avoidance affects the duration of the trademarks through the firm marketing creativity and product innovation. |
| Keywords: | Trademark duration, creativity, uncertainty avoidance cultural index |
| JEL: | M31 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1015&r=mkt |
| By: | Anna Torres; Josep A. Tribó |
| Abstract: | In this paper we study the interaction between ownership structure and customer satisfaction, and their impact on a firm’s brand equity. We find that customer satisfaction has a positive direct effect on brand equity but an indirect negative one, through reductions in ownership concentration. This latter effect emerges when managers are focused mainly on satisfying customers. It gives out a warning signal that highlights the perverse effect of implementing policies focused excessively on satisfying customers at the expense of shareholders, on a firm’s brand equity. We demonstrate our theoretical contention, empirically, making use of an incomplete panel data comprising 69 firms from 11 different nations for the period 2002-2005. |
| Keywords: | Corporate social responsibility, Brand equity, Ownership structure and Customer |
| JEL: | M31 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1016&r=mkt |
| By: | Michael R. Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); John Morgan (Haas School of Business and Department of Economics, University of California, Berkeley); Patrick Scholten (Bentley College) |
| Abstract: | Using data from one of the Internet’s leading price comparison sites for consumer electronics products, we present evidence for the persistence of price dispersion for 36 homogeneous products. The markets for these products are “thick” with an average of over 20 firms selling each product. We show that prices do not converge to the “law of one price” even after an 18 month period. This finding is robust to controls for differences in shipping charges and inventories. Further, we show that product life cycle effects lead to changes in the number of competing firms and the range of price dispersion consistent with the theoretical predictions of the Varian (1980) model. The average number of competing firms declines from about 28 to 10 during the final five months of our dataset. Over this same period, the average range in prices decreases from about 75 percent to 30 percent. After accounting for firm heterogeneities in costs, branding, reputation, trust, product availability and shipping costs, 28 percent of the variation in prices charged for homogeneous products remains unexplained. This is also consistent with the Varian model. |
| Keywords: | Price dispersion, Internet, Law of One Price |
| JEL: | D4 D8 M3 L13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2006-12&r=mkt |
| By: | Nessara Sukpanich (Thammasat University); Alan M. Rugman (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: | This study examines the relationships between intra-regional sales, product diversity, and performance of 45 merchandising firms using data from 1997 - 2003. The interaction effects between product diversity and intra-regional sales on performance are explored, using a curvilinear relationship. The analysis integrates three main theories, namely the resource-based view, transaction costs, and organization learning theory. The models measuring a firm’s performance by return on assets (ROA) and return on sales (ROS) show that at high levels of intra-regional sales, small levels of product diversity can generate greater return to a firm but high levels of product diversity may hurt a firm’s performance. Higher levels of intra-regional sales tend to enhance the impact of product diversity on performance. The results are sensitive to the choice of performance measure. |
| Keywords: | intra-regional sales, multinationality and performance, product diversity, merchandising |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2007-09&r=mkt |
| By: | George S. Yip (London Business School); Alan M. Rugman (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Alina Kudina (University College London) |
| Abstract: | This paper examines the international success of British companies in a matrix combining global market share and international revenues. We identify those industry segments in which British companies are most successful internationally, and also investigate whether these are attractive industries in terms of profitability and growth. We find that the industries with the largest global market shares for British companies are Mining, Casinos (and Gaming), Oil Companies (Major), Distillers & Brewers, and Water Utilities. Four of the top ten might be considered to be “sin” industries. The industries with the highest international revenues are Precious Metals, Pharmaceuticals, Industrial (Diversified), Oil Companies (Secondary), and Mining. We also find that virtually all of the largest British firms average over a 10% global market share, in the “British Winners” segment of our matrix. However, we find the second measure, the extent of internationalization, to be ambiguous. The manufacturing (product-based) firms tried to be highly internationalized, as they compete globally, but the largest British services firms (financials, retailers) tend to have low internationalization, and therefore appear to benefit from a still somewhat regulated home market. In addition, British companies have done a good job of building up global market shares in higher growth industries. We provide recommendations for managers as to how British companies with different combinations of global market share and extent of internationalisation can improve their positions. Our methodology can also be applied to analyzing companies from other nations. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2006-18&r=mkt |
| By: | Terhi Hakala; Olli Haltia; Raine Hermans; Martti Kulvik; Hanna Nikinmaa; Albert Porcar-Castell; Tiina Pursula |
| Abstract: | In this study we have collected information by interviewing all identified parties within the Finnish forest sector who might have a potential biotechnology connection : university research groups, research institutions, small and medium-sized biotechnology-companies and up to the largest forest companies. The ultimate goal was to assess how resources have been allocated and biotechnologies utilized within the value chain of the entire forest sector. This study aimed at providing answers to the following questions : • What are the current Finnish academic resources and projects related to forest industry biotechnology? • How much does the Finnish forest cluster invest in biotechnology R&D activity, and what are the key application areas in the value chain? • How well do the academic resources, company R&D investments and research needs converge to help secure the future competitiveness of the Finnish forest industries? In order to answer the questions above, the study approached the matter in consecutive steps. First, the existing forest industry related biotechnological knowledge base within the academia on one hand, and the resource base among firms on the other hand, were mapped. Following up on that, we evaluated the sales expectations of forestry related biotechnological applications within the domestic forestry cluster itself, other potential domestic industries and global export markets. The third step assessed whether the development of forestry related biotechnological applications is justifiable in the framework of comparative advantage. This was accomplished by comparing the relevant existing knowledge and other resource bases to their sales expectations. In order to evaluate the potential of biotechnology in the entire forest industry value chain, the study assessed four value chain modules. Module 1 represents the beginning of the value chain : forestry applications. Module 2 consists of the development of wood products, module 3 is related to the pulp and paper industry, and module 4 to utilization side streams for bioenergy, biochemicals and other food or pharmaceutical applications. The assessment of module 1 implies that there is a constant lack of resources. Basic research conducts some relatively long projects, which often seem too time-consuming in applied research and corporate R&D. There seems to be only few active links between the academic research projects and companies. Many new technologies already exist but since the individual forest owners hardly have incentives to invest in R&D due to e.g. the long breeding cycle, collaboration with companies seems as the only potential pathway to commercialization of forestry related biotechnologies. There were few biotechnology-based projects within the module 2. The research and product development seems to focus on physical modifications, and composite research is based on chemistry. Module 3, paper, pulp and board industry, seems to be the most active in research and product development activity. Their products generate positive cash flows, and research projects are abundantly funded. The companies are closely involved in the research projects as financiers and collaborators. This involvement impacts on the nature of the research, which seems highly applicable and linked closely to industrial applications. Consequently, biotechnology applications are already used in the pulp and paper industry. Some biotechnology applications are adopted rapidly. They, such as enzymes in reducing paper machine runnability problems, do not affect the quality of the fibers, intermediate or end products and are thus easier to take into use in production scale. We observed the research and product development within module 4 as a high priority for both the academia and industry. The research is anticipated to grow strongly and even more than in other modules. Biotechnologies are applied as substitutes to chemical and thermal technologies. However, all of these fields of technology are developed and applied by the industry. This provides some important implications for technology development and innovation policy. Due to the fuzziness between technology border-lines, it seems misleading to prioritize biotechnologies over some other technology; in contrast, the most efficient technology should be preferred. Accordingly, technology subsidies might be most efficient if the public technology programmes would be based on application segments instead of a specific technology. Our assessment of international patenting activity raised some interesting notions. Finland seemed to be comparatively most specialized in plant genetic engineering, food and food additive, and waste disposal and the environment applications. However, biotechnology based biofuels are not included as a source of comparative advantage, which also stresses the importance of parallel development of biotechnologies and other technology fields. A potential source of value creation could be the utilization of process side streams more efficiently, including refinement of by-products such as tall oil, to products with higher value added in other application areas.The paper and board making might also be strongly influenced by new packaging solutions, materials and methods; these utilize, however, only rarely or never biotechnologies as such. Finland has a good overall and mainly publicly maintained infrastructure. If the raw material’s high quality and some special features can compensate the relatively low growth rates, Finland should be able to attract the multinational pulp and paper industry also in the long term. We conclude that the development of biotechnologies should not contain any intrinsic value per se. The commercial value of the biotechnology could be benchmarked with the value of alternative technologies; and consequently, biotechnology could become part of the technology options for companies active in established and conventional industries. The Finnish forest cluster has financial resources to commercialize any new technology that can increase the process efficiency or provide other economic benefits in new application areas. This is a reason why we see this area exceptionally promising compared to any other high technology field without such a financial backbone. |
| JEL: | L69 O32 O34 |
| Date: | 2007–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1076&r=mkt |