Sales
Yang Yang, Yangjie Gu & Jeff Galak
Journal of Consumer Research, forthcoming
Abstract:
Thankfully, most product consumption experiences are positive. Unfortunately, however, those positive experiences are not always guaranteed to occur, and defects creep into the consumer experience. Though its assertion runs counter to most prescriptions, the current research proposes that exposing consumers to the mere possibility of these negative experiences, occurring in a consumption sequence increases consumers' happiness with those experiences overtime. Six studies demonstrate this effect and further show that this effect is driven by hedonic responses as a result of favorable uncertainty resolution. That is, with the mere possibility of a negative experience, a consumer, who actually experiences a positive outcome, is likely to feel relief or pleasantness from not having to experience the negative experience. This research enriches existing literature on hedonic adaptation and uncertainty and has significant implications for consumer behavior.
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Intellectual Property Strategy and the Long Tail: Evidence from the Recorded Music Industry
Laurina Zhang
Management Science, forthcoming
Abstract:
Digitization has impacted firm profitability in many media industries by lowering the cost of copying and sharing creative works. I examine the impact of digital rights management (DRM), a prevalent strategy used by firms in media industries to address piracy concerns, on music sales. I exploit a natural experiment, where different labels remove DRM from their entire catalogue of music at different times, to examine whether relaxing an album's sharing restrictions increases sales. Using a large sample of albums from all four major record labels, I find that removing DRM increases digital music sales by 10%, but relaxing sharing restrictions does not impact all albums equally. It increases the sales of lower-selling albums (i.e., the "long tail") significantly (40%) but does not benefit top-selling albums. These results suggest that reducing search costs facilitates the discovery of niche products.
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Mushegh Harutyunyan & Baojun Jiang
Washington University in Saint Louis Working Paper, October 2016
Abstract:
Conventional wisdom suggests that more intense competition will lower firms' profits and that a firm will prefer no competition in the market if possible. We consider a market with two quality-differentiated manufacturers selling through independent exclusive retailers. Our analysis shows that a manufacturer and its retailer can actually both become worse off if their competing manufacturer and retailer exit the market. Put differently, more intense competition in the market can be all-win for the manufacturers, the retailers, and the consumers. Interestingly, the high-quality manufacturer can benefit from an increase in its competitor's quality, even if that increase is costless; in other words, a firm may prefer a strong rather than weak enemy. These results suggest that a manufacturer's profit may increase when the perceived quality of its competitor's product increases, e.g., due to favorable product reviews from consumers or third-party rating agencies, and that the manufacturer may have an incentive to help its competitor to improve product quality or to remain in the market.
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Beyond Skepticism: Can Accessing Persuasion Knowledge Bolster Credibility?
Mathew Isaac & Kent Grayson
Journal of Consumer Research, forthcoming
Abstract:
As defined by Friestad and Wright (1994), persuasion knowledge is personal knowledge about persuasion attempts that consumers develop and use whenever they believe they are targets of persuasion. A significant majority of research on persuasion knowledge has suggested that persuasion knowledge and skepticism invariably go hand in hand, and that accessing persuasion knowledge therefore leads consumers to evaluate the agent and its offering less favorably. Across four studies, the authors demonstrate the novel effect that persuasion knowledge access can lead to greater credibility (rather than greater skepticism), a finding that they argue is theoretically consistent with Friestad and Wright's (1994) Persuasion Knowledge Model. Further, the authors demonstrate that when a persuasive agent uses a credible tactic, persuasion knowledge access can lead consumers to evaluate the agent and its offering more (rather than less) favorably. They also develop and test a new approach for increasing persuasion knowledge access in lab experiments, which can facilitate the investigation of other occasions where persuasion knowledge access increases trust and belief in a persuasive message.
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Can offline stores drive online sales?
Kitty Wang & Avi Goldfarb
Journal of Marketing Research, forthcoming
Abstract:
We use evidence from store openings by a bricks-and-clicks retailer to examine the drivers of substitution and complementarity between online and offline retail channels. Our evidence supports the coexistence of substitution across channels and complementarity in demand. In places where the retailer has a strong presence, the opening of an offline store is associated with a decrease in online sales and search; however, in places where the retailer does not have a strong presence, the opening of an offline store is associated with an increase in online sales and search. Our evidence suggests that while online and offline may be substitutes in distribution, they are complements in marketing communications. Specifically, the type of marketing communication driving complementarity seems to be information about the existence of the brand. For example, we see a large increase in new customer acquisition and sales, and little difference between fit and feel products and other products. Thus, it is the presence of the store, rather than information about the attributes of the particular products in the store, that drives complementarity.
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Social Learning and Social Spillovers: Evidence from Movie Sales
Ryan Lampe
California State University Working Paper, September 2016
Abstract:
This paper uses data on exit polling during a movie's opening weekend to test for the presence of both social spillovers and social learning in movie consumption. In the presence of social spillovers, agents will see a movie if a sufficient number of their peers have seen the movie since agents derive utility from sharing the same experiences. In the presence of social learning, agents will see a movie if good word-of-mouth convinces them it is of high-enough quality. Data on 1,875 wide-release movies between 1995 and 2014 reveal evidence of social spillovers for consumers of movies appealing to younger and more mature audiences. However, these data only reveal evidence of social learning for consumers of movies aimed at mature audiences. These findings help to explain the weak relationship between movie quality and advertising expenditures, particularly for movies aimed at younger audiences.
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Phonetic Symbolism and Memory for Advertisements
Marilyn Boltz, Grace Mangigian & Molly Allen
Applied Cognitive Psychology, forthcoming
Abstract:
This study investigated whether phonetic symbolism within brand names influences the memory of advertisements. Participants both saw and heard brand names with front vs. back vowels paired with small vs. large products in a congruent vs. incongruent fashion. When later given several unexpected memory tasks, it was found that congruent (vs. incongruent) pairings led to enhanced brand name and product recall as well as the efficiency of both brand name and paired recognition. These findings are consistent with a theory of cross-modal processing involving perceptual unification.