{"title":"Investigating the Relationship Between Advertising and Pricing in a Channel with Private Label Offering: A Theoretic Model","authors":"Salma Karray, G. Martín-Herrán","doi":"10.2202/1546-5616.1065","DOIUrl":"https://doi.org/10.2202/1546-5616.1065","url":null,"abstract":"We study the relationship between pricing and advertising decisions in a distribution channel where national brands are competing with a private label. We solve a three-stage game-theoretic model where the national brands compete on advertising and prices, and the retailer is investing in umbrella advertising for the store and is selling a private label. The obtained equilibrium strategies highlight the importance of determining the complementary or competitive roles of advertising to better understand the relationship between advertising and prices, and to better adjust strategies to varying competition levels in the marketplace. In particular, we find that advertising that expands the national brands' sales gives pricing power to manufacturers. However, persuasive advertising can create different effects on prices depending on the strength of the advertising effect and on the price competition level between the national and the store brands. For highly competitive advertising effects, the retailer should charge lower prices for the private label when it carries highly advertised national brands, increase the national brand's price that is being advertised and decrease the price of the competing national brand. The retailer's advertising leads to higher prices for the national and private labels. We consider several extensions of the base model (retail competition, asymmetric manufacturers and dynamic effects of advertising) and show that our results still hold in such settings. Marketing implications and comparative statistics are also discussed.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"6 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2008-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1065","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627573","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Internalization of Advertising Services: An Inter-Industry Analysis","authors":"Sharon Horsky, Steven C. Michael, A. Silk","doi":"10.2139/ssrn.1171022","DOIUrl":"https://doi.org/10.2139/ssrn.1171022","url":null,"abstract":"Abstract This study investigates the extent to which U.S. advertisers use in-house rather than independent advertising agencies and examines inter-industry variation in such internalization. Contrary to the widely-held impression that use of an in-house advertising agency is more the exception than the rule, we find that vertical integration of advertising services is much more widespread than has hitherto been appreciated. Drawing on concepts from research on scale economies and transaction costs, we develop a set of hypotheses about differences in the expected depth of internalization across industries. We test these hypotheses in cross sectional analyses of data covering 69 two digit SIC industries at two points in time, 1991 and 1999. In both years, approximately half of advertisers of all sizes operated an in-house agency. Across industries, we find that the likelihood of internalization of at least some advertising services decreases as the size of advertising outlays increase but increases as advertising intensity and technological intensity increase and is greater for “creative” industries.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2008-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.1171022","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68149656","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Effect of Variability in Price on Consumer Brand Choice","authors":"B. Murthi, E. Haruvy, Heci Zhang","doi":"10.2202/1546-5616.1071","DOIUrl":"https://doi.org/10.2202/1546-5616.1071","url":null,"abstract":"Grocery store managers change prices on a weekly basis either as part of price promotions or in response to changes on their supply side. Consumers experience this price variability and may respond to it. Even though behavioral literature suggests that price variability affects consumers' decisions, most brand choice models have not focused on the consumers' response to such variability. This study attempts to remedy this omission and examine the effect of price variability on consumer brand choice. We use scanner data to show that price variability affects consumer's price sensitivity. We also find that accounting for the effects of price variability in brand choice models improves the model fit over conventional benchmark models. Our finding has important managerial implications for the strategic use of price variability.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1071","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627583","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Designing Experimental Auctions for Marketing Research: The Effect of Values, Distributions, and Mechanisms on Incentives for Truthful Bidding","authors":"J. Lusk, C. Alexander, Matthew C. Rousu","doi":"10.2202/1546-5616.1059","DOIUrl":"https://doi.org/10.2202/1546-5616.1059","url":null,"abstract":"Accurately estimating consumer preferences for new products is an arduous task made difficult by the fact that individuals tend to exhibit a number of biases when answering hypothetical survey questions. Experimental auctions have advantages over conventional methods of estimating consumer preferences because they provide incentives for consumers to truthfully reveal their preferences. However, there is currently little information available to determine which mechanism to select among the class of incentive compatible mechanisms. In this paper, we provide insight into the theoretical properties of several incentive compatible value elicitation mechanisms including the Becker, DeGroot, Marschak (BDM) mechanism, Vickrey nth price auctions, and the random nth price auction. In particular, we draw attention to the shapes of the payoff functions and illustrate that the mechanisms differ with respect to the expected cost of deviating from truthful bidding. We show that incentives for truthful bidding depend on the distribution of competing bidders' values and/or prices and individuals' true values for a good. Our approach can be viewed as a diagnostic tool to aid in selecting between preference elicitation mechanisms.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1059","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627533","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Model of Promotion-Free Retail Pricing of Durable Products","authors":"S. Balachander","doi":"10.2202/1546-5616.1053","DOIUrl":"https://doi.org/10.2202/1546-5616.1053","url":null,"abstract":"An important decision facing retailers is the level of price promotions or \"sales\" to have in their retail prices. In this paper, we consider the use of promotion-free (PF) retail pricing by stores selling durable products, where PF pricing means that the retailer does not use or advertise price promotions. Interestingly, we find, contrary to the previous literature, that a store using a PF strategy does not advertise prices, and yet may charge below shoppers' reservation prices. Further, we show that a store can follow a PF pricing strategy in equilibrium, when competing with another store following a PF pricing or a promotional pricing strategy, and we characterize the conditions that support each type of equilibrium. The combination of PF pricing, the lack of advertisement of prices, and pricing below the reservation price may be similar to the pricing strategy followed by EDLP stores selling durable products. Our analysis yields insights on how a store may choose between a PF pricing strategy and a promotional pricing strategy in a competitive setting.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2007-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1053","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627464","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"An Empirical Real-Time Test for Takeoff with Applications to Cellular Telephony","authors":"J. Wiorkowski, V. Gylys","doi":"10.2202/1546-5616.1036","DOIUrl":"https://doi.org/10.2202/1546-5616.1036","url":null,"abstract":"No methodology exists to aid the manager in empirically identifying a takeoff event in a real-time. This paper addresses this problem by developing generally applicable, simple and empirical tests for the determination of the takeoff point of a growth curve. The tests are applied to the adoption of wireless cellular telephony across 40 countries. The tests are shown to provide useful insight into the temporal development and dissemination of this technology.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1036","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627374","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Store Brand Strength","authors":"R. Tyagi","doi":"10.2202/1546-5616.1037","DOIUrl":"https://doi.org/10.2202/1546-5616.1037","url":null,"abstract":"Store brands play many beneficial roles for retailers. While some roles such as creating a quality image for the retailer require relatively strong store brands, other roles such as segmentation of customers by income require lesser strong store brands. This paper shows another role of store brand that requires a relatively less strong store brand. Specifically, in a setting in which national brand manufacturers selling to a retailer attempt to engage in non-cooperative tacit pricing collusion among one another, we show that having a very strong store brand can hurt the retailer by increasing the likelihood of national brand manufacturers sustaining tacit collusion.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1037","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627440","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Magazines and their Companion Websites: Competing Outlet Channels?","authors":"Ulrich Kaiser","doi":"10.2202/1546-5616.1046","DOIUrl":"https://doi.org/10.2202/1546-5616.1046","url":null,"abstract":"This paper provides empirical evidence for the widespread belief that a magazine's companion website induces channel competition on its print version. The analysis is based on aggregated quarterly magazine-specific data on circulation, a broad variety of magazine characteristics, consumer characteristics and information on a magazine's website presence.The data spans the period I/1996 to IV/2004. Nested logit-type models of demand for differentiated products are used in the empirical analysis. A main result of this paper is that magazines that run an online companion on average lose 4.2 percent of their potential consumers. This effect varies substantially across different consumer age groups and across time.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1046","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Modeling Selectivity in Households' Purchase Quantity Outcomes: A Count Data Approach","authors":"Qin Zhang, P. Seetharaman, C. Narasimhan","doi":"10.2202/1546-5616.1035","DOIUrl":"https://doi.org/10.2202/1546-5616.1035","url":null,"abstract":"We present an econometric technique for modeling endogenous selectivity in households quantity outcomes as observed in scanner panel data. Simultaneous models of incidence, brand choice and quantity, that treat quantity outcomes as count data, ignore such self-selectivity considerations in quantity outcomes. Previously proposed approaches to modeling selectivity in continuous quantity outcomes do not apply to count data. Therefore, we adopt a recently proposed econometric technique to deal with selectivity in count data, and then appropriately extend it to handle correlations of quantity outcomes not only with incidence outcomes but also with brand choice outcomes. Our proposed methodology will be useful to researchers who want to estimate simultaneous models of whether, what and how much to buy decisions of households, treating quantity data as counts.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2005-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1035","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627191","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Measurement Context Effects in Telephone-Survey-Based Tests of Causal Models","authors":"Sanjeev Agarwal, R. K. Teas","doi":"10.2202/1546-5616.1019","DOIUrl":"https://doi.org/10.2202/1546-5616.1019","url":null,"abstract":"The purpose of this research is to examine the issue of measurement context effects in survey-based tests of attitudinal and related models. The specific issue examined concerns the degree to which the measurement process affects the objects of measurement (i.e., various attitudinal and related concepts). Based upon the memory accessibility-diagnosticity theory specified by Feldman and Lynch (1988) and the concept of spreading activation (Tourangeau and Rasinski 1988; Anderson 1978, 1983; Collins and Loftus 1975), the effects of context questionnaire items on answers to, and estimated relationships among, target questionnaire items in a study involving measures of antecedents and consequences of attitudes are examined. The findings indicate some measurement context effects in an equation predicting blood donation intentions. First, the findings suggest that measuring expectations prior to measuring intentions, when compared to measuring expectations after measuring intentions, caused the intentions scores to be higher. Since the respondents had generally favorable attitudes toward blood donation, this supports the Feldman and Lynch (1988) argument that context survey questions can result in activated beliefs that are diagnostic for answers to subsequent questions. Second, the findings suggest that measuring expectations prior to (after) measuring intentions resulted in a statistically significant increase (decrease) in the association between expectations and intentions. Third, the findings produced evidence that buffer questions that separate expectations (i.e., context) measures from other target measures reduced the context effects associated with the expectations measurement. An implication of this finding is that the use of intervening questionnaire items to separate questions that are likely to be influenced by measurement context effects may reduce context effects.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":"3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2005-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1019","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626316","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}