What the customer wants
Anticipation of Future Variety Reduces Satiation From Current Experiences
Julio Sevilla, Jiao Zhang & Barbara Kahn
Journal of Marketing Research, forthcoming
Abstract:
Satiation frequently occurs from repeated consumption of the same items over time. However, results from five experiments show that when people anticipate consuming something different in the future, they satiate at a slower rate in the present. We find the effect in both food and non-food consumption settings using different approaches to measure satiation. This effect is cognitive, specifically, anticipating variety in future consumption generates positive thoughts about that future experience. We find two boundary conditions: the future consumption outcome must (1) be in a related product category and (2) be at least as attractive as the present one. Potential alternative explanations including mere exposure to variety, the future experience being more attractive (rather than just different) than the current one, and perceptions of scarcity associated with the item consumed in the present are ruled out.
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An Empirical Examination of the Development and Impact of Star Power in Major League Baseball
Michael Lewis & Yeujun Yoon
Journal of Sports Economics, forthcoming
Abstract:
We examine the processes by which star power (SP) develops and the impact of SP on both consumer demand and team performance using data from Major League Baseball. First, we examine the dynamics of stardom using data based on player salaries, performance, and award recognition. We find that SP explains additional variance in salaries beyond performance measures. Also, we examine the impact of SP on consumer demand and team success. We find that a team's stock of SP positively influences consumer demand, even after controlling for various factors ranging from team success to ticket prices.
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Halo (Spillover) Effects in Social Media: Do Product Recalls of One Brand Hurt or Help Rival Brands?
Abhishek Borah & Gerard Tellis
Journal of Marketing Research, April 2016, Pages 143-160
Abstract:
Online chatter is important because it is spontaneous, passionate, information rich, granular, and live. Thus, it can forewarn and be diagnostic about potential problems with automobile models, known as nameplates. The authors define "perverse halo" (or negative spillover) as the phenomenon whereby negative chatter about one nameplate increases negative chatter for another nameplate. The authors test the existence of such a perverse halo for 48 nameplates from four different brands during a series of automobile recalls. The analysis is by individual and panel vector autoregressive models. The study finds that perverse halo is extensive. It occurs for nameplates within the same brand across segments and across brands within segments. It is strongest between brands of the same country. Perverse halo is asymmetric, being stronger from a dominant brand to a less dominant brand than vice versa. Apology advertising about recalls has harmful effects on both the recalled brand and its rivals. Furthermore, these halo effects affect downstream performance metrics such as sales and stock market performance. Online chatter amplifies the negative effect of recalls on downstream sales by about 4.5 times.
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Fare Prediction Websites and Transaction Prices: Empirical Evidence from the Airline Industry
Benny Mantin & Eran Rubin
Marketing Science, forthcoming
Abstract:
The marketing and operations disciplines have increasingly accounted for the presence of strategic consumer behavior. Theory suggests that such behavior exists when consumers are able to consider future distribution of prices, and that this behavior exposes firms to intertemporal competition that results with a downward pressure on prices. However, deriving future distribution of prices is not a trivial task. Online decision support tools that provide consumers with information about future distributions of prices can facilitate strategic consumer behavior. This paper studies whether the availability of such information affects transacted prices by conducting an empirical analysis in the context of the airline industry. Studying the effect at the route level, we find significant price reduction effects as such information becomes available for a route, both in fixed-effects and difference-in-differences estimation models. This effect is consistent across the different fare percentiles and amounts to a reduction of approximately 4%-6% in transactions' prices. Our results lend ample support to the notion that price prediction decision tools make a statistically significant economic impact. Presumably, consumers are able to exploit the information available online and exhibit strategic behavior.
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Sterling Bone et al.
Journal of Marketing Research, forthcoming
Abstract:
In two studies (a longitudinal field experiment with an established B2C national chain, and a field experiment with a B2B software manufacturer), we demonstrate that starting a survey with an open-ended positive solicitation increases customer purchase behavior. Study 1, a longitudinal field experiment, showed that one-year following the completion of a survey that began by asking customers what went well during their purchase experience, customers spent 8.25% more than customers who completed a survey that did not include the positive solicitation. In Study 2, we utilized multiple treatment groups to assess the step-wise gains of solicitation, measurement, and solicitation frame. The results demonstrated (a) a mere solicitation effect, (b) a traditional mere measurement effect, and (c) an additional "mere measurement plus" effect of an open-ended positive solicitation; all effects increased customer spending. Specifically, starting a survey with an open-ended positive solicitation resulted in a 32.88% increase in customer spending relative to a survey with no open-ended positive solicitation. The findings suggest that firms can proactively influence the feedback process. Soliciting open-ended positive feedback can create positively biased memories of an experience; the subsequent expression of those memories in an open-ended feedback format further reinforces them, making them more salient and accessible in guiding future purchase behavior.
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Miguel Godinho de Matos et al.
Management Science, forthcoming
Abstract:
Peer ratings have become increasingly important sources of product information, particularly in markets for information goods. However, in spite of the increasing prevalence of this information, there are relatively few academic studies that analyze the impact of peer ratings on consumers transacting in "real-world" marketplaces. In this paper, we partner with a major telecommunications company to analyze the impact of peer ratings in a real-world video-on-demand market where consumer participation is organic and where movies are costly and well known to consumers. After experimentally changing the initial conditions of product information displayed to consumers, we find that, consistent with the prior literature, peer ratings influence consumer behavior independently from underlying product quality. However, we also find that, in contrast to the prior literature, there is little evidence of long-term bias as a result of herding effects, at least in our setting. Specifically, when movies are artificially promoted or demoted in peer rating lists, subsequent reviews cause them to return to their true quality position relatively quickly. One explanation for this difference is that consumers in our empirical setting likely had more outside information about the true quality of the products they were evaluating than did consumers in the studies reported in prior literature. Although tentative, this explanation suggests that in real-world marketplaces where consumers have sufficient access to outside information about true product quality, peer ratings may be more robust to herding effects and thus provide more reliable signals of true product quality than previously thought.
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Rajesh Bhargave, Antonia Mantonakis & Katherine White
Journal of Marketing Research, forthcoming
Abstract:
In offline purchasing settings (e.g., retail stores), consumers often encounter reminders that product information can be found on the Internet. The authors refer to a reminder of the availability of online information as a 'cue-of-the-cloud' and explore its unique consequences on offline consumer behavior. This research finds that when consumers are presented with relatively large amounts of information in offline purchasing situations, a cue-of-the-cloud can enhance purchase intentions and choice behaviors. This occurs because the cue increases consumers' confidence in being able to retain and access the information seen in-store, which engenders positive feelings about the decision to purchase. Four studies, including two experiments in real brick-and-mortar field settings, demonstrate the consequence of a cue-of-the-cloud, along with some novel moderators of these effects.
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Copyright Enforcement: Evidence from Two Field Experiments
Hong Luo & Julie Mortimer
Harvard Working Paper, February 2016
Abstract:
Effective dispute resolution is important for reducing private and social costs. We study how resolution responds to changes in price and communication using a new, extensive dataset of copyright infringement incidences by firms. The data cover two field experiments run by a large stock-photography agency. We find that substantially reducing the requested amount generates a small increase in the settlement rate. However, for the same reduced request, a message informing infringers of the price reduction and acknowledging possible unintentionality generates a large increase in settlement; including a deadline further increases the response. The small price effect, compared to the large message effect, can be explained by two countervailing effects of a lower price: an inducement to settle early, but a lower threat of escalation. Furthermore, acknowledging possible unintentionality may encourage settlement due to the typically inadvertent nature of these incidences. The resulting higher settlement rate prevents additional legal action and reduces social costs.
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Mining Brand Perceptions from Twitter Social Networks
Aron Culotta & Jennifer Cutler
Marketing Science, forthcoming
Abstract:
Consumer perceptions are important components of brand equity and therefore marketing strategy. Segmenting these perceptions into attributes such as eco-friendliness, nutrition, and luxury enable a fine-grained understanding of the brand's strengths and weaknesses. Traditional approaches towards monitoring such perceptions (e.g., surveys) are costly and time consuming, and their results may quickly become outdated. Extant data mining methods are unsuitable for this goal, and generally require extensive hand-annotated data or context customization, which leads to many of the same limitations as direct elicitation. Here, we investigate a novel, general, and fully automated method for inferring attribute-specific brand perception ratings by mining the brand's social connections on Twitter. Using a set of over 200 brands and three perceptual attributes, we compare the method's automatic ratings estimates with directly-elicited survey data, finding a consistently strong correlation. The approach provides a reliable, flexible, and scalable method for monitoring brand perceptions, and offers a foundation for future advances in understanding brand-consumer social media relationships.