Sales Numbers
Feeling Lonely Increases Interest in Previously Owned Products
Feifei Huang & Ayelet Fishbach
Journal of Marketing Research, forthcoming
Abstract:
Consumption of used products has the potential to symbolically connect present and previous users of these products, something that would be appealing to lonely consumers. Accordingly, across seven studies, feeling lonely increased the preference for previously owned products. Specifically, the proportion of lone shoppers was higher in a used versus a regular bookstore, lone individuals (vs. those sitting in pairs) were more likely to select a used over new product, on Valentine's Day, people without (vs. with) a date expressed stronger preference for used products and individual differences in loneliness during the COVID-19 pandemic predicted interest in used products. Other studies documented that the desire to symbolically connect underlies the effect of loneliness on consumption. At a time when loneliness is on the rise, the authors discuss implications for the marketing of used products and how feeling lonely might motivate reducing waste.
Firm Unionization and Disruptions in Customer Relationships
Gary Chen, Scott Judd & Shail Pandit
Contemporary Accounting Research, forthcoming
Abstract:
Relationships with major customers may be advantageous to suppliers due to economies of scale and reputational benefits. In this study, we investigate whether unionization leads to disruptions in a firm's relationships with its customers. Our goal is to provide insights regarding the impact unionization has on a firm's sales relationships with its major customers. We predict that major customers will shift purchases away from suppliers that unionize to avoid potential disruptions. Using a difference-in-differences research design, our results show a negative association between supplier unionization and sales to major customers. Our findings are robust to addressing endogeneity concerns through a propensity score matched analysis and regression discontinuity research design. Additionally, we find that supplier firm performance declines subsequent to unionization. We also find that suppliers experience significant increases in their cost of goods sold and the number of employees after supplier unionization, suggestive of higher input prices driving the disruption with major customers. Finally, we provide evidence that higher switching costs mitigate the decline in sales to major customers. Overall, our findings suggest that employee unionization can adversely affect a firm's relationships with their major customers.
Despite Efficiencies, M&As Reduce Firm Value by Hurting Customer Satisfaction
Nita Umashankar, Cem Bahadir & Sundar Bharadwaj
Journal of Marketing, forthcoming
Abstract:
Most researchers focus on the effect of mergers and acquisitions (M&As) on investor returns and overlook customer reactions, despite the fact that customers are directly impacted by these corporate transformations. Others suggest that in M&A contexts, a dual emphasis of customer satisfaction and firm efficiency is both likely and beneficial. In contrast, the authors demonstrate that M&As not only do not yield a dual emphasis but also cause a decline in customer satisfaction to the extent that it eclipses any gain in firm value from an increase in firm efficiency. A quasi-experimental difference-in-differences analysis and an instrumental variable panel regression provide robust evidence for the dark side of M&As for customers. The authors use the attention-based view of the firm to demonstrate that post-M&A customer dissatisfaction occurs because of a shift in executive attention away from customers and toward financial issues. In line with the related upper echelons theory, they find that marketing representation on firms' board of directors helps maintain executive attention on customers, which mitigates the dysfunctional effect of M&As on customer satisfaction. This research identifies a negative M&A-customer satisfaction relationship and highlights executive attention to customer issues and marketing leadership as factors that mitigate this negative relationship.
The Curse of the Original: How and When Heritage Branding Reduces Consumer Evaluations of Enhanced Products
Minju Han et al.
Journal of Consumer Research, forthcoming
Abstract:
Heritage branding is a common marketing strategy that has been shown to increase product appeal. Here, we find that certain forms of heritage branding can also have potentially negative consequences by leading consumers to react negatively to changes made to the brand's original, flagship product - even if those changes objectively improve it. We demonstrate that when firms engage in heritage branding that emphasizes a brand's longevity, consumers evaluate enhanced products less favorably than the original versions of those same products due to decreased perceptions of continuity authenticity. We demonstrate this effect across a variety of product domains (e.g., cosmetics, cookware, and food products), using online experiments as well as in-person product trials. Moreover, we provide a framework that distinguishes between types of heritage branding cues that lead to negative evaluations of enhanced products versus those that do not. Finally, beyond identifying an important boundary condition based on specific aspects of heritage branding, we further show how the negative evaluations of enhanced products can be attenuated if brands reframe product changes as continuous with the brand's origins. Together, these studies contribute to existing theory regarding heritage branding and authenticity, while also providing a number of practical recommendations for heritage brands.
Building Brands for the Emerging Bicultural Market: The Appeal of Paradox Brands
Maria Rodas, Deborah Roedder John & Carlos Torelli
Journal of Consumer Research, forthcoming
Abstract:
Bicultural consumers now represent a third of the U.S. population and are the fastest growing demographic group in the U.S. This shift in consumer markets presents a challenge for marketers as they try to design brand strategies to serve this important group. In this article, the authors show that certain types of brands, specifically paradox brands that incorporate contradictory brand meanings, are particularly appealing to bicultural consumers. Results from seven studies reveal that bicultural consumers evaluate paradox brands more favorably, and choose paradox brands more, than traditional brands without contradictions. Further, bicultural consumers exhibit more favorable evaluations and greater choice of paradox brands than do monocultural consumers. These cultural differences are attributable to greater cognitive flexibility found among biculturals, particularly those who adopt an acculturation strategy of integrating their different cultural identities. Greater cognitive flexibility, in turn, prompts stronger engagement with a paradox brand, which contributes to more favorable brand evaluations and choice. Contributions of this research for understanding bicultural consumers, marketing to bicultural consumers, and directions for future research are discussed.
Do Activity-Based Incentive Plans Work? Evidence from a Large-Scale Field Intervention
Raghunath Singh Rao et al.
Journal of Marketing Research, August 2021, Pages 686-704
Abstract:
Many firms incorporate activity-based incentive (ABI) compensation into their pay plans. These ABIs are based on salespeople's activity measures derived from their call reports. Despite their prevalence and theory-based expectations, there is a distinct lack of empirical work studying the sales productivity effects of ABI pay. With the cooperation of a large pharmaceutical firm, the authors conducted a three-year-long intervention based on a "treatment-removal" design. Their first intervention added modest ABI pay for frontline salespeople and their supervisors across 305 sales territories; the second intervention removed ABI pay from the salespeople; and the third intervention removed ABI pay from the supervisors as well, returning to the status quo. Using detailed territory-level data from the intervention in conjunction with syndicated market-level data and employing synthetic control procedures, the authors find sales gains of around 6%-9% from each of the two ABI interventions relative to the no-ABI baseline. These effects are moderated by the number of salespeople in a territory, with territories with more salespeople showing larger effects. Analyses of activity effects show that when supervisors are paid ABIs, they exert behavior control downward on salespeople. Managerially, both ABI schemes improve performance over an output-only pay plan. Between the two, a rudimentary gross profit impact calculation shows that ABIs targeted at supervisors alone are more efficient than ABIs targeted at both salespeople and their supervisors. The results support tying compensation to call reports despite the potential for self-serving biases in these measures because supervisors are able to exercise more behavior control with ABIs.