Showing papers in "Marketing Letters in 1993"

The two-dimensional impact of color on shopping

Abstract: Prior research has typically grouped color effects into a single class of effects and has ignored situational aspects of consumer responses to color. In the present study, color effects are shown to exhibit different patterns depending on the type of response examined. Further, these effects are described as a function of color wavelength. Evaluative effects are most positive at the short wavelength (blue) end of the visible spectrum, while the activation response engendered by color exhibits a U-shaped pattern across wavelengths. Results of the study support the existence of these two distinct dimensions, and potential applications of the findings are discussed.

Using stated response choice data to enrich revealed preference discrete choice models

Abstract: There is growing interest in exploring the view that both revealed preference (RP) and stated preference (SP) data have useful information and that their integration will enrich the overall explanatory power of RP choice models. These two types of data have been independently used in the estimation of a wide variety of discrete choice applications in marketing. In order to combine the two data sources, each with independent choice outcomes, allowance must be made for their different scaling properties. The approach uses a full information maximum likelihood estimation procedure of the hierarchical logit form to obtain suitable scaling parameters to make one or more data sets comparable. We illustrate the advantages of the dual data strategy by comparing the results with those obtained from models estimated independently with RP and SP data. Data collected as part of a study of high speed rail is used to estimate a set of illustrative mode choice models.

Demarketing as a differentiation strategy

Abstract: Demarketing discourages consumers from buying. This paper shows that demarketing can be a profitable alternative when differentiation through product improvements is not cost effective. The impact of differentiating demarketing on profit, market share, consumers, and total welfare is investigated.

A cross validation test of four models for quantifying multiattribute preferences

Abstract: This paper examines the internal predictive validity of four multiattribute preference models: (a) a self-explicated model with equal importance weights; (b) a self-explicated model with unequal weights; (c) Sawtooth Software's Adaptive Conjoint Analysis (ACA); and (d) full profile conjoint analysis. We also discuss the problem of choosing criterion measures for comparing cross validations across models.

Principles involving marketing policies: an empirical assessment

Abstract: We examined nine marketing textbooks, published since 1927, to see if they contained useful marketing principles. Four doctoral students found 566 normative statements about pricing, product, place, or promotion in these texts. None of these statements were supported by empirical evidence. Four raters agreed on only twenty of these 566 statements as providing meaningful principles. Twenty marketing professors rated whether the twenty meaningful principles were correct, supported by empirical evidence, useful, or surprising. None met all the criteria. Nine were judged to be nearly as correct when their wording was reversed.

Cross-task validity comparisons of stated preference choice models

Abstract: This paper uses a statistical test developed by Horowitz and Louviere (1993) to compare the parameters of several logit models estimated from different preference measures. This test shows that all models produce estimates of attribute effects that are equivalent up to a rescaling. Furthermore, models based on stated next purchase, the outcome of a purchase experiment, and a binary analysis of consideration set data produce equivalent estimates of all parameters.

The impact of risk and competition on choice of innovations

Abstract: This exploratory study examines the roles of uncertainty and attitude toward risk in the adoption process of innovations under different competitive conditions. Hypotheses are tested across simulated competitive environments, utilizing a fractional factorial experimental design. The results demonstrate that the roles of the perceived value of the innovation and of uncertainty depend on the competitive environment facing the manager.

Does competitive clutter in television advertising “interfere” with the recall and recognition of brand names and ad claims?

Abstract: This paper contrasts the effects of competitive clutter on the recall and recognition of information from ads for familiar brands. An experiment was conducted utilizing ads for the type of relatively familiar brands typically advertised on network television; the dependent variables were recall and recognition of brand names and ad claims. Results showed that brand name recall scores were substantially reduced by competitive clutter. However, exposure to competitors' ads had little effect on ad claim recall. These data are consistent with the view that information about familiar brands will tend to be compartmentalized in memory, reducing interference effects in attribute recall. Exposure to competitive clutter had relatively little effect on recognition task performance. Suggestions for future advertising research considering competitive interference and brand familiarity issues are provided.

Game theoretic derivations of competitive strategies in conjoint analysis

Abstract: While conjoint analysis has been applied in a wide variety of different contexts in Marketing, most applications fail to explicitly consider retaliatory reactions from competitors. In this paper, a methodological extension is developed for conjoint analysis by explicitly modeling competition in a game theoretic context. The Nash equilibrium concept is employed to model competitive reactions to produce design, and its implications for reactive product strategies are discussed. The optimal product design problem for each firm is formulated as a nonlinear integer programming problem, which is solved via a specialized branch and bound method combined with a heuristic. In order to compute a Nash equilibrium, a sequential iterative procedure is proposed. The proposed procedure is illustrated under several scenarios of competition using previously published conjoint data.

Choosing among diffusion models: Some empirical evidence

Abstract: Is there a ‘best’ diffusion model? How many and which parameters will adequately represent the long-run diffusion process? Two studies using first purchase data for nineteen durable goods are used to systematically compare twenty-four alternative diffusion models: a meta-analytic study, which pools across categories, and an economic approach, which determines the best fitting model for each category individually. A number of guidelines are produced, which stand to improve the choice of diffusion models in forecasting, theory testing, and normative studies.

Offensive and Defensive Marketing: Closed-Loop Duopoly Strategies

Abstract: Offensive and Defensive Marketing: Closed-Loop Duopoly Strategies A modified Lanchester game is used to develop closed-loop strategies for offensive and defensive marketing expenditures of duopolistic competitors in a market share rivalry. Analysis of the model reveals that The last result would appear to have particularly important implications for both practice and research.

Integrating the Dirichlet-multinomial and multinomial logit models of brand choice

Abstract: This paper discusses the interpretative benefits that arise from merging the Dirichlet-multinomial (DM) model as a loyalty variable in the multinomial logit (MNL) model of brand choice. The estimated parameters of this hybrid model compare favorably to those of a “pure” DM model (with no marketing mix variables) as well as those of a standard MNL model with an exponentially smoothed loyalty measure. The hybrid model offers an index of consumer heterogeneity and estimates of each brand's “preference share,” adjusted for the effects of price and promotional activities. We illustrate the unique interpretations offered by these parameters across four different product categories, showing how changes in heterogeneity (across categories or model specifications) are closely related to changes in the overall impact of marketing mix variables.

Positive Versus Negative Comparative Advertising

Abstract: Two studies examined cognitive responses to comparative advertising that was valenced, i.e., was either negative or positive. Negative comparative advertising featured the advertised brand derogating the comparison brand (I'm OK, you're not OK). Positive comparative advertising claimed superiority over the comparison brand in a nonderogatory manner (You're OK, I'm more OK). Subjects were exposed to either a negative comparative ad or a positive comparative ad. In study 1, the ad featured either a high or low share advertised brand and either a high or low share comparison brand while in study 2, the ad featured advertised and comparison brands with either a strong or a weak reputation. Across both studies, it was found that negative comparative advertising evoked significantly higher counterargumentation and lower claim acceptance than its positive counterpart. Also, when the advertised brand had a high share relative to the comparison brand, counterargumentation was lower and claim acceptance was higher vis-a-vis when the advertised brand had a low share relative to the comparison brand. Findings pertaining to brand reputation were mixed. Managerial and future research implications of the findings are discussed.

Procedural learning, consumer decision making, and marketing communication

Abstract: We examine the applicability of Anderson's (1982) procedural learning framework to consumer decision making within the context of how marketing communications influence people's procedural knowledge about selecting decision criteria for a buying decision. In particular, we explore the importance of explicit, conditional “if-then” statements (e.g., “if you are choosing amongst ..., then you should ...”) in which the recommended decision-making operation is compatible with prior procedural knowledge. We test this framework in an exploratory study on advertising effects on women's decision criteria for fitness centers.

Identifying multiple preference segments from own- and cross-price elasticities

Abstract: The authors develop an approach to decompose a market-level matrix of own- and cross-price elasticities to reveal potentially overlapping preference segments. The approach is grounded on the premise that markets may be represented by a parsimonious number of relatively homogeneous segments. Market-level elasticities are expressed as functions of segment weights and within-segment market shares. These relationships permit segment weights and within-segment market shares to be estimated from the market-level elasticity matrix and patterns of brand substitutability to be analyzed. The approach is illustrated with data on the grocery coffee category.

Brand Inequalities in the Loyalty-Effects of Purchases

Abstract: Choice models in marketing have generally included the effects of loyalty on individual choice behavior.Loyalty has been typically measured as proportion of purchases or as an exponentially smoothed index of past purchases. An underlying assumption of both measures is that all brands gain the same increase in loyalty with a purchase. However, such an assumption may not hold when the competing brands are not comparable. We propose a new exponential smoothing measure which incorporates brand-specific parameters for the loyalty effects of purchases. A choice model, calibrated on individual level data for the detergent category, is used to compare the proposed measure with its traditional version. This comparison reveals that the new approach improves both the fit and predictive performance of the choice model. The results also suggest that the loyalty effects of purchases are likely to be lower for brands which are purchased on price promotions and higher for expensive brands.

Double couponing: Pricing and consumer perspectives

Abstract: Many supermarkets double manufacturer coupens. Are consumers' grocery bills lowered as a result? Our study of two double coupon supermarkets shows that for every ten cents of double-coupon value redeemed, the corresponding shelf price at a double coupon supermarket is higher by an estimated 3.5 cents compared to the price at other supermarkets. Given the higher shelf prices, the data also suggest that the majority of customers do not save money at double coupon stores, and adjust their shopping to account for the retail promotion.

Gratitudes and Latitudes in M.B.A. Attitudes: Customer Orientation and the Business Week Poll

Abstract: A re-examination of the data on customer satisfaction with business schools reported byBusiness Week addresses questions concerning the manner in which student evaluations and recruiter assessment are weighted to determine results for the graduate and corporate polls, as well as how the latter two scores are combined to obtain the overall ranking. Further, as a measure of student satisfaction, the graduate poll holds considerable interest in its own right. Accordingly, an explanatory model based on various objective and quasi-objective measures is developed to account for the student evaluations. It is argued that — after taking account of the available predictors — the errors in this model (unexplained variance or residual terms) represent graduate gratitudes bestowed upon the various schools. It appears that these measures of student appreciation vary with certain geographical characteristics. In other words, the gratitudes expressed in MBA attitudes depend in part on variations in geographic populations, longitudes, and latitudes.

Preference Aggregation and Repeat Buying in Households

Abstract: Marketing researchers have long used brand switching analyses and Markov transition matrices to gain insights into managerial problems. Almost without exception, this work makes (inappropriate) inferences about individual consumers by analyzing household-level data. This paper presents a procedure based on the distribution of run lengths in household level panel data that allows more insights into the choice behavior of the individuals in the household. We test these procednres in a large simulation study by attempting to recover the underlying (known) structure of the process generating a string of panel data. Finally, we use the procedure to classify the purchase behavior, with respect to powdered soft drinks, of a set of households in a panel. Our results show that marketing scientists have the potential to iearn and test more hypotheses about the individuais in a household by examining the distribution of run lengths.

A Marginal-Predictive Approach to Identifying Household Parameters

Abstract: Estimation of household parameters in scanner panel data requires the introduction of prior information. Traditionally, prior information is incorporated by restricting parameters to be constant across households or by specifying a random coefficient distribution. An alternative solution is to incorporate stochastic prior information in a formal Bayesian approach. In standard Bayesian analysis, a prior distribution over the model parameters is specified and combined with the household likelihood to obtain the Bayes estimates. The construction of the prior distribution over model parameters may be difficult, especially when working with new models whose parameters are difficult to interpret. In this paper, we propose a solution which specifies prior information through the marginal distribution of the data, i.e., the outcomes. We evaluate this marginal-predictive approach, using both actual and simulated panel data, and show it to be highly accurate relative to other available alternatives.

Do standard scales work in older samples

Abstract: In a study of 185 adults ranging in age from 21 to 80 years, it was found that the older subjects' (ages 50 and above) responses on Zaichkowsky's ten-item, bipolar adjective, semantic differential, Personal Involvement Inventory were less internally consistent than the younger participants' responses. In addition to lower reliability, the older adults were more likely to omit multiple items in the scale. This was not the case for Likert-style items included in the study. Similar findings have been reported in a small number of other studies using other semantic differential scales. The semantic differential scaling technique needs a thorough examination for its generalizability to older populations.

Effectiveness of some simple pricing strategies under varying expectations of competitor behavior

Abstract: A firm needs to tailor its pricing strategy to the particular competitive setting it faces. We show how a firm can select a pricing strategy that yields higher expected profit than other simple pricing strategies for the competitive conditions encountered. We show that no one strategy yields the highest expected profit for all competitive settings. In particular, we find that a more aggressive pricing strategy is needed for those markets that are either very cooperative or very competitive, while a more cooperative pricing strategy is preferred for markets which have a moderate degree of competition. We also find that a more aggressive pricing strategy is needed as the number of competitors increases. Our results suggest how to choose the pricing strategy that yields the highest expected profit given the likely behavior of a firm's competitors.

A Stochastic Programming Model to Analyze Ordinal Preference Data

Abstract: Many marketing situations require analysis of ordinal preference data. Existing analysis methods include OLS, variations of the logit model and methods such as LINMAP. An alternative method is proposed that has the following features: 1) Tie rankings are allowed; 2) all rank order information is incorporated into the estimation — not just first preferences; 3) the procedure is formulated as a L.P. model, which is easily implemented with existing software; 4) statistical inference is supported by the underlying stochastic model; and 5) it supports estimation of individual and group preferences.

Reactions of clients to referral requests

Abstract: Referrals from existing clients are frequently used by organizations to obtain fresh prospects. The approach is commonly believed to be beneficial because the referred prospects are considered to be superior candidates relative to contacts gained from cold calling. However, the effect of the referral on the client is frequently ignored. Predictions of the Information Availability Explanation were used to develop a hypothesis concerning attitudinal effects among individuals who were asked for referrals. Clients who failed to provide a solicited referral developed a significantly less positive attitude than clients who were not asked for a referral. The results suggest that when considering the use of the referral method, the potential benefits of gaining superior prospects must be balanced against the potential undermining of clients' attitudes. Implications are discussed concerning referral technique implementation and suggestions for future research.

The Effects of Memory Set Accessibility and Relevance on the Use of Memory Information During Product Choice

Abstract: The Accessibility-Relevance framework provides a useful perspective to consider the retrieval and use of memory information during product decision making (Alba, Lynch, and Hutchinson, 1990; Lynch, Marmorstein, and Weigold, 1989). However, it considers accessibility on an individual brand basis, while actual product choice often includes information across multiple alternatives. Thus, memory set accessibility (MSA), the relative accessibility across memory brands, is introduced as a potentially important but unexplored issue within the Accessibility-Relevance research stream. This study 1) provides an explanation for how MSA may produce results which significantly expand the current Accessibility-Relevance conceptualization and 2) considers the effects of MSA and relevance on both brand processing and choice.

The decision processes of innovative communicators and other adopters

Abstract: Based on the nature of their involvement with the target product category three market segments of consumers of fashion innovations are identified. It is hypothesised that each segment of consumers should use a different decision process when adopting an innovation. The major findings of this study are that the more innovative consumers used a less extensive pattern of decision making activity than consumers who were either less involved with the product category or were concerned about how the purchase would effect their perceived social status. These findings suggest that involvement with the category is different to involvement in the decision making process, and that the latter is somewhat contingent on situational factors.

Differences in Consumer Perceptions of Similarity and Dissimilarity

Abstract: Researchers have usually treated similarity ratings as the simple inverse of dissimilarity ratings. Tversky's theory of perception of similarity and dissimilarity (1977), however, explicitly recognizes that the attributes used in the perception of similarity and the attributes used in the perception of dissimilarity are decidedly different. In fact, the weights assigned to common and distinctive features changes according to the task at hand (i.e., when similarity is to be rated the common features are weighted more, and when dissimilarity is to be rated the distinctive features are weighted more). This study demonstrates these differences in a judgment task of rating similarity and dissimilarity on the basis of data that is external to the subjects.

Partial carryover of advertising

Abstract: A model that combines advertising carryover with purchase reinforcement is presented. It accommodates the possibility that certain members of the consumer population rely only on their experience with the product, while others are also affected by past advertising. Empirical results with two product categories indicate that for bimonthly data advertising retention does not exist at all.

Measuring the Reach and Frequency Elasticities of Advertising Media

Abstract: This study describes a general approach for measuring the elasticities and cross-elasticities of reach and frequency of advertising media schedules The approach involves the approximation of a complex model, which combines logit choice behavior and stochastic model components, by means of a surface response methodology method Using single-source UPC scanner data for an actual market situation, the paper highlights the steps for implementing the approach within a market environment that is characterized by asymmetric competitive advertising media effects

An Alternative Approach to Discriminating Multivariate Populations and Its Applications to Marketing Research

Abstract: A new method for discriminating among multivariate populations, called the Hausdorff procedure, is introduced to the marketing literature. Rules for classification are defined and a limited simulation study is conducted. For the simulation, both the level of collinearity among the discriminating variables and the level of overlap among the populations are varied. The results indicate that this new procedure is particularly suitable when there is either a high degree of collinearity among the predictor variables or considerable overlap of the populations being investigated. The Hausdorff procedure is also applied to two sets of consumer data. In each instance, it is found to be superior to linear discriminant analysis with respect to the percentage of correct classifications.