Does Advertising Overcome Brand Loyalty? Evidence from the Breakfast‐Cereals Market

In differentiated product markets where consumer preferences are characterized by brand loyalty, an important role for advertising may be to overcome brand loyalty by encouraging consumers to switch to less familiar brands. Using a scanner panel dataset of breakfast-cereal purchases, I find evidence consistent with the hypothesis that advertising counteracts the tendencies of brand loyalty toward repeat purchasing. Equivalently, advertising reduces switching costs in this market. Furthermore, counterfactual experiments demonstrate that in markets with brand loyalty, advertising is an attractive and effective option—relative to alternative promotional activities, such as price discounts—of stimulating demand for a brand .     

Equilibrium pricing and advertising strategies for nondurable experience products in a dynamic duopoly

The quality of many consumer nondurable goods or services is sufficiently complex or obscure that consumers cannot completely verify the true quality in a single usage. For such ‘experience’ products or services, the accumulated consumer consumption experience of a brand is an important determinant of its sales or market share. The market share of a brand is in turn directly influenced by its own and the competitive price and advertising strategies, given the different levels of quality (among other factors). In this paper, we investigate the impact of the aggregate consumption experience on the firm's dynamic pricing and advertising strategies by developing a formal game-theoretic model of a dynamic duopoly. The model of competition does not yield explicit closed-form expressions for the dynamic price and advertising paths of the two firms. Hence, we simulate the equilibrium paths using a discrete-time algorithm. Our simulation results provide interesting insights into the dynamic equilibrium price and advertising paths, under a variety of realistic competitive scenarios.     

Advertising Media Planning,Optimal Pricing,and Welfare

This paper analyzes optimal media planning strategies in a pricing‐advertising competition model where firms can use mass and specialized advertising. We find that although targeted advertising avoids the wasting of ads, firms might find it optimal to mix specialized advertising with the mass media. We also show that the characteristics of the specialized media available crucially affect the outcome of price competition between firms, which can range from a full fragmentation of the market into local monopolies to lower average prices (compared to the case where firms had only mass advertising available). Regarding welfare, we prove that although the use of specialized advertising can lower consumer surplus and drive a fragment of consumers out of the market, this advertising technology is welfare‐improving, and can be Pareto superior.     

消费者品牌广告共鸣的内容、结构及其影响研究

品牌广告共鸣实质上体现了消费者与广告中品牌的一种紧密的心理联系,通过与品牌的情感互动,消费者会感觉到该品牌能够反映自己的情感并且可以通过该品牌为媒介与其他人进行交流,因此会增强消费者对品牌的认同和依赖,获得较高的品牌忠诚度.本研究发现消费者对广告中品牌的共鸣实际上体现为消费者对广告中的品牌理念、代言人、广告形式、广告场景的共鸣四方面,本文把这四方面命名为理念分享、形式欣赏、人物认同、场景相识,并且验证了消费者对这四方面的共鸣对品牌认知、品牌偏好产生显著正面作用,从而影响消费者对品牌的购买意愿.     

Learning quality through prices and word‐of‐mouth communication

This paper studies the effect of word‐of‐mouth communication on the optimal pricing strategy for new experience goods. I consider a dynamic monopoly model with asymmetric information about product quality, in which consumers learn in equilibrium from both prices and other consumers. The main result is that word‐of‐mouth communication is essential for the existence of separating equilibria, wherein the high‐quality monopolist signals high quality through a low introductory price (lower than the monopoly price), and the low‐quality one charges the monopoly price. The intuition is simple: low prices are costly, and will only be used by firms confident enough that increased experimentation (and therefore communication among consumers) will yield good news about quality and increased future profits. Additional results are the following: for the high‐quality seller, the expected price (quantity) is increasing (decreasing) over time; whereas for the low‐quality one, the opposite is true. Moreover, signaling becomes more difficult when consumers pay less attention to their peers' reports and more attention to past prices. Finally, word‐of‐mouth communication improves consumer welfare.     

品牌个性吸引力研究

大量文献研究表明,产品具有良好的品牌个性大有裨益,比如能强化消费者的品牌态度和购买意向,促成更高水平的消费者信任和忠诚。然而现有的研究尚未充分评估品牌个性对消费者产生的吸引力。而正是这种吸引力能够影响目标消费者的购买决策。本文为评估消费者对品牌个性吸引力感知进行了概念化,提出了品牌个性吸引力的三个维度。     

Revealing transactions data to third parties: Implications of privacy regimes for welfare in online markets

We examine the effects of privacy policies regarding transactions (e.g., price/quantity) data on online shopping platforms. Disclosure of transactions data induces consumer signaling behavior that affects merchant pricing decisions and the welfare of platform participants. A profit‐maximizing platform prefers the disclosure policy that maximizes total welfare. Although this policy benefits sophisticated consumers, it harms unsophisticated (myopic) consumers. Consequently, the welfare effects of alternative privacy policies, data breaches, deceptive privacy policies, and opt‐in/opt‐out requirements can differ sharply, depending on the level of consumer sophistication and on other factors such as the prevailing status quo.     

Share,price and category expenditure—geographic market effects and private labels

Focusing on the interaction between national brands and private labels, this paper has two main empirical contributions: (i) a simultaneous system of demand (share), price and expenditure equations is estimated, and (ii) differences in the structure of the local geographic market are incorporated into the analysis. The former represents an important step in understanding the complete nature of private label and national brand interaction, while the latter is important for understanding the impact of the local retail environment on market behaviour. IRI scanner data from 1991 and 1992 are used to estimate a five‐equation system across 135 food product categories and 59 geographic markets. The results suggest that concentration at both the manufacturer and retailer level can significantly affect private label and national brand price. However, while increased retailer concentration is associated with higher national brand and private label prices, higher manufacturer concentration is associated with higher national brand but lower private label prices. Increases in national brand advertising has the effect of raising national brand price and share, but lowering private label price and share. This is consistent with previous research and suggests that advertising and local market conditions play a significant role in the ability of national brands to price at a premium over private labels. Finally, marketing decision variables, such as display activity and private label distribution, can have an important impact on total category expenditure. Copyright © 1999 John Wiley & Sons, Ltd.     

Ethical consumers in search of markets

Research in ethical consumerism has concentrated on attempts to either categorize ethical consumers or to uncover their decision‐making processes, but to‐date there have been few investigations into the key ethical drivers behind the decision‐making process. This study attempts to identify these ethical drivers within their particular product groups by means of a survey of self‐proclaimed ethical consumers distributed via a questionnaire placed in the Ethical Consumer Magazine. The findings indicate that environmental issues are ranked above human rights and animal rights/welfare issues and that the ethical consumer considers the product groups to have differential importance ranging from the food products goods group, being the most strongly associated with ethical issues, to the ‘brown goods’ group (electric goods such as stereos and TVs), which proved to be least associated with these issues. An examination of the ethical drivers within each group suggests that ethical consumers consider each product group on the basis of its bundle of ethical attributes, with differing levels of importance placed on each ethical issue within the purchase decision. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

Research continuum on consumer education and brand knowledge: A critical analysis

Consumer education and brand knowledge have emerged as the dynamic tool in the complex marketplace today that actively stimulate the cognitive behavior of consumers toward developing purchase intentions and buying decisions. The general objective of this study is to critically review the previous studies on the role of brand literacy, transfer and perceptions of knowledge, purchase intention, shopping ambiance and customer satisfaction, and illustrate the consumer decision making process induced by the above factors. The literature review reveals that brand education plays significant role as a driver of decision making among consumers, which not only empowers consumers in developing perceptions on the brand but also helps the companies on brand co-designing and knowledge dissemination process. Consumer literacy and brand knowledge helps the consumers in assessing the brand value, competitive advantage, and operational efficiency of the brand toward building purchase intentions. The effects of the increasing levels of customer expertise in the marketplace today is seen as the outcome of consumer education and perceived brand knowledge.     

Understanding consumers' purchase intentions toward natural‐claimed products: A qualitative research in personal care products

In recent years there is a trend of consuming natural products for a sustainable and healthier life. Therefore, firms began aligning their strategy with sustainability by communication strategies that they produce natural products, which are better for health as well as the environmental sustainability. However, sometimes these claims may be deceptive. The purpose of this paper is to understand the consumers' purchasing intentions toward products claiming naturalness in their advertising and packaging strategies. This research also examined greenwashing perceptions and their potential roles in purchasing intentions. In‐depth face‐to‐face interviews carried out with 20 Turkish women regarding personal care products (local brand and international brand). The findings of the interviews revealed eight themes (perceived greenwashing, perceived green image, price perception, environmental concern, green trust, skepticism, perceived risk, and purchase intention). This study contributes to predict a framework from consumer viewpoint for identifying the themes related to greenwashing.     

Spatial Cournot competition and economic welfare: a note

We investigated welfare implications in location-quantity models in a symmetric linear city. We found that when firms are not agglomerated in equilibrium, increasing the distance between firms raises (reduces) producer surplus and social welfare (consumer surplus). Moreover, central agglomeration is always optimal for consumers among symmetric locations, but not necessarily for producers. Central agglomeration can be inefficient even if it is the unique equilibrium outcome. In short, the firms are more likely to agglomerate or locate closer than what welfare maximizers would dictate, whereas they locate farther apart than what consumer surplus maximizers would recommend.     

Estimating the distribution of welfare effects using quantiles

This paper proposes a framework to model welfare effects that are associated with a price change in a population of heterogeneous consumers. The framework is similar to that of Hausman and Newey (Econometrica, 1995, 63, 1445–1476), but allows for more general forms of heterogeneity. Individual demands are characterized by a general model that is nonparametric in the regressors, as well as monotonic in unobserved heterogeneity, allowing us to identify the distribution of welfare effects. We first argue why a decision maker should care about this distribution. Then we establish constructive identification, propose a sample counterparts estimator, and analyze its large‐sample properties. Finally, we apply all concepts to measuring the heterogeneous effect of a change of gasoline price using US consumer data and find very substantial differences in individual effects across quantiles.     

Bait and ditch: Consumer naïveté and salesforce incentives

We analyze a model of price competition between a transparent retailer and a deceptive one in a market where a fraction of consumers is naïve. The transparent retailer is an independent shop managed by its owner. The deceptive retailer belongs to a chain and is operated by a manager. The two retailers sell an identical base product, but the deceptive one also offers an add‐on. Rational consumers never consider buying the add‐on while naïve ones can be “talked” into buying it. By offering the manager a contract that pushes him to never sell the base good without the add‐on, the chain can induce an equilibrium in which both retailers obtain more‐than‐competitive profits. The equilibrium features price dispersion and market segmentation, with the deceptive retailer targeting only naïve consumers whereas the transparent retailer serves only rational ones.     

A model of antecedents of consumers' post brand attitude upon exposure to a cause–brand alliance

• A cause–brand alliance is a type of cause‐related marketing campaign in which the brand supports a cause in response to a consumer purchasing a product associated with the brand. Using the meaning transfer, attribution, and schema theories, the researchers developed a model and hypotheses addressing structural relationships among key antecedents of brand attitude change upon encountering a cause–brand alliance. The model and the hypotheses were tested in the context of hypothetical cause–brand alliance scenarios. Findings indicate cause–brand alliance attitude as a strong direct predictor of post brand attitude, whereas cause involvement, perceived brand motivations, and prior brand attitude indirectly predict post brand attitude through their effects on cause–brand alliance attitude. Cause–brand fit also indirectly predicts cause–brand alliance attitude via perceived brand motivations. Managerial and theoretical implications are discussed.

Copyright © 2012 John Wiley & Sons, Ltd.     

Monopoly pricing with dual-capacity constraints

This paper studies the price-setting behavior of a monopoly facing two capacity constraints: one on the number of its consumers, and the other on the amount of products it can sell. The characterization of the firm's optimal pricing and optimal customer mix as a function of its two capacities reveals a rich structure. In contrast to the results under one-dimensional capacity constraints with constant marginal cost of production, a firm may optimally respond to an exogenous reduction in one of its capacities by decreasing one of its prices. Moreover, neglecting the existence of the second capacity constraint can reverse some policy interventions' effects on consumer welfare. In particular, easing a regulatory restriction on one of the constraints may harm the average consumer.     

Internet of things (IoT) platform competition: Consumer switching versus provider multihoming

Internet of things (IoT) brings new opportunities and represents a new source of welfare and efficiency. However, the emerging consumer IoT platform competition creates the risk of monopoly power due to network effects. Overall, it is likely that both competition (incentivized through lowering consumer switching costs) and cooperation (achieved through interoperability, which enables data portability and service provider multihoming) are needed to maximize social welfare. This article aims to address how consumer switching costs and provider multihoming affect competition of emerging consumer IoT data platforms under different market conditions and regulatory schemes. It utilizes agent-based modelling that is especially suitable when decision making is distributed at a micro level while some rules are applied in a centralized fashion. The obtained findings emphasize the role of the regulator in guiding the market. It seems that when switching costs diminish at all sides of the platforms, consumers and service providers will favour the platform with a higher number of users. Further, service provider multihoming mitigates market concentration on both sides of a platform when switching costs are low. Thus, there seems to be a minimum level of interoperability needed to promote market competition. Further, although data portability gives more freedom to consumers in choosing a platform provider, it may result in a winner-takes-all situation due to strong indirect network effects.     

品牌决策过程中消费者自信的形成机制研究——基于理性行为理论

本文基于理性行为理论的基本逻辑思路,分析了品牌决策过程中消费者自信的形成机制,提出独特性需求、控制源与角色规范影响敏感性是影响消费者自信的内外部基本因素。研究者基于上述概念构建了基本理论模型,采用实证研究方法对该模型进行了验证。研究结果表明,独特性需求中的创造性选择有助于提高消费者自信,而非流行性选择对消费者自信的影响则不显著,控制源对消费者的个体结果自信会产生显著的负面影响,对社会结果自信的影响则不显著,角色规范影响敏感性对个体结果自信具有显著负面影响,对社会结果自信则具有显著积极影响。