The Market Has Spoken
How Concrete Language Shapes Customer Satisfaction
Grant Packard & Jonah Berger
Journal of Consumer Research, forthcoming
Abstract:
Consumers are often frustrated by customer service. But could a simple linguistic cue help improve customer satisfaction? We suggest that linguistic concreteness – the specificity of words employees use when speaking to customers – can shape consumer attitudes and behaviors. Five studies, including text analysis of over 1,000 real consumer-employee interactions in two different field contexts, demonstrate that customers are more satisfied, willing to purchase, and purchase more when employees speak to them concretely. This occurs because customers infer that employees who use more concrete language are listening (i.e., attending to and understanding their needs). These findings deepen understanding of how language shapes consumer behavior, reveal a psychological mechanism by which concreteness impacts person perception, and provide a straightforward way that managers could help enhance customer satisfaction.
Fractional Equity, Blockchain, and the Future of Creative Work
Amy Whitaker & Roman Kräussl
Management Science, forthcoming
Abstract:
A core challenge in studying the real return on artist' work is the extreme difficulty accessing private records from when an artwork was first sold and thus relying on public auction data. In addition, artists do not typically receive proceeds after the initial sale. This paper, for the first time, uses archivally sourced primary market records to model returns on art and introduces a novel fractional equity structure for artists. We first model what would happen if the American artists Jasper Johns and Robert Rauschenberg had retained 10% equity in their work when it was first sold. Second, we model a portfolio return using data from the Betty Parsons Gallery and the Green Gallery. To add a portfolio analysis to the performance of “star” artists, we model the galleries as a fund invested in all of artworks sold, using auction sales as the realization event. We find that the individual Johns and Rauschenberg works would have vastly outperformed equities markets. The gallery portfolio still substantially outperforms the S&P, even including 20% transaction costs. Beyond the art market, our larger conceptual framework for retained fractional equity has broad implications for compensation of early-stage creative work in any field and for potential applications of blockchain technology.
Customization in Luxury Brands: Can Valentino Get Personal?
Page Moreau et al.
Journal of Marketing Research, forthcoming
Abstract:
Luxury brands have started to offer consumers the opportunity to customize their exclusive products by making certain aesthetic decisions, such as the color, fabric, or cut of their products. A robust finding in the marketing literature is that consumers place a greater value on customized than on standard products because these unique products better fit and communicate their tastes, preferences, and identity. However, the majority of focal products in these studies fall outside the luxury segment. The authors demonstrate that consumers’ customization preferences differ between mainstream and luxury brands. In the luxury segment, consumers pay a premium for the designer’s expertise and the status that it can convey. As such, the consumers’ desire for self-expression can potentially erode the product’s signaling value. Through a series of four experiments, the authors demonstrate that luxury brands can benefit from customization but they can also take customization too far. Their findings suggest that brand managers should allow consumers to make fewer design decisions for luxury versus mainstream brands to preserve the signal value created by the designer.
Latent Estimation of Piracy Quality and its Effect on Revenues and Distribution: The Case of Motion Pictures
Anthony Koschmann & Yi Qian
NBER Working Paper, August 2020
Abstract:
Conventional wisdom holds that illegal copies cannibalize legitimate sales, even though previous research has found mixed effects, with illegal copies acting as both a substitute and complement. Yet, a relatively unexamined aspect to date is the quality of illegal copies. Building on product uncertainty and production quality, we propose that higher quality copies can benefit sales when product uncertainty is high, such as during the launch period. Using motion picture and online piracy data, we estimate piracy quality using a latent item response theory (IRT) model based on keyword signals in the copies. An interdependent system jointly estimates movie screens, revenues, downloads, and available illegal copies with piracy quality in both the launch and post-launch periods. We find that at launch, when rather little is known about the movie, higher quality illegal copies demonstrate a positive effect on revenues (sampling). In the post-launch period, however, higher quality illegal copies exhibit a negative effect on revenues (substitution). The findings suggest producers can alleviate product uncertainty through higher quality samples at product launch while diluting piracy quality post-launch.
Digital Paywall Design: Implications for Content Demand and Subscriptions
Sinan Aral & Paramveer Dhillon
Management Science, forthcoming
Abstract:
Most online content publishers have moved to subscription-based business models regulated by digital paywalls. But the managerial implications of such freemium content offerings are not well understood. We, therefore, utilized microlevel user activity data from the New York Times to conduct a large-scale study of the implications of digital paywall design for publishers. Specifically, we use a quasi-experiment that varied the (1) quantity (the number of free articles) and (2) exclusivity (the number of available sections) of free content available through the paywall to investigate the effects of paywall design on content demand, subscriptions, and total revenue. The paywall policy changes we studied suppressed total content demand by about 9.9%, reducing total advertising revenue. However, this decrease was more than offset by increased subscription revenue as the policy change led to a 31% increase in total subscriptions during our seven-month study, yielding net positive revenues of over $230,000. The results confirm an economically significant impact of the newspaper’s paywall design on content demand, subscriptions, and net revenue. Our findings can help structure the scientific discussion about digital paywall design and help managers optimize digital paywalls to maximize readership, revenue, and profit.