Pass-through timing

Trade promotions are the most important promotional tool available to a manufacturer. However trade promotions can achieve their objective of increasing short-term sales only if the retailer passes through these promotions. Empirical research has documented that there is a wide variation in retail pass-through across products. However little is known about the variations in pass-through over time. This is particularly important for products with distinct seasonal patterns. We argue that extant methods of measuring pass-through are inadequate for seasonal products. We therefore introduce a measurement approach and illustrate it using two product categories. We find interesting differences in pass-through for loss-leader products versus regular products during high demand and regular demand periods. We find that retailers use a deep and narrow pass-through strategy (high pass-through on loss-leader products, but small pass-through on regular products) during periods of regular demand and broad and shallow pass-through strategy (smaller, but similar pass-through on both loss-leader and regular products) during periods of high demand. Loss leader products continue to obtain higher pass-through in high demand periods, if the category's high demand period is also a high demand period for other product categories as well.

Cultural differences in imagery generation: The influence of abstract versus concrete thinking

Past research suggests that concrete ad stimuli generate more imagery than abstract stimuli. However, this finding may not be culturally universal. Our research suggests that East Asians tend to generate more imagery than Westerners when exposed to abstract advertising messages, but these differences in imagery generation tend to subside when both cultural groups are exposed to concrete stimuli. Exposure to abstract stimuli while limiting mental resources results in narrowing the differences in number of images generated by Westerners and East Asians as does providing subjects with instructions to imagine.     

Recent Advances in Structural Econometric Modeling: Dynamics, Product Positioning and Entry

In the empirical analysis of consumer markets, recent literature has begun to explore the dynamics in both consumer decisions as well as in firms' marketing policies. Other research has begun to explore the strategic aspects of product line design in a competitive environment. In both cases, structural models have given us new insights into consumer and firm behavior. For example, incorporating consumer and firm dynamics may help explain patterns in our data that are not well-captured by static models. Similarly, the strategic aspects of firm entry and product-positioning may be intrinsically linked to firm conduct and the intensity of competition in a market. Structural analysis of these consumer and firm decisions raise a number of substantial computational challenges. We discuss the computational challenges as well as specific empirical applications. The discussions are based on the session “Structural Models of Strategic Choice” from the 2004 Choice Symposium.     

Structural Applications of the Discrete Choice Model

A growing body of empirical literature uses structurally-derived economic models to study the nature of competition and to measure explicitly the economic impact of strategic policies. While several approaches have been proposed, the discrete choice demand system has experienced wide usage. The heterogeneous, or mixed, logit in particular has been widely applied due to its parsimonious structure and its ability to capture flexibly substitution patterns for a large number of differentiated products.We outline the derivation of the heterogeneous logit demand system. We then present a number of applications of such models to various data sources. Finally, we conclude with a discussion of directions for future research in this area.     

Performance of Enhanced Index and Quantitative Equity Funds

We examine the performance of enhanced index and quantitative equity funds. Both types of funds use quantitative models in investment selection. Enhanced index funds set an explicit objective to outperform a benchmark index. Proponents of quantitative funds argue that their management style takes human emotions out of the investment decision‐making process and leads to more objective stock selection. We find evidence of outperformance by quantitatively managed growth funds, especially those investing in small cap stocks.     

Do private labels increase retailer bargaining power?

Like any new product, private label entry increases competition within a category leading to downward pressure on both wholesale and retail prices. But, given the higher margins for private labels and potential bargaining benefits for retailers, they have incentives to help private labels gain market share. The paper addresses two questions: First, do private labels enhance a retailer’s bargaining power with respect to manufacturers? Second, given the higher profitability and potential increase in bargaining power, does the retailer strategically set retail prices to favor and strengthen the private label? We find support for the “bargaining power” hypothesis, but qualified support for the “strategic retailer pricing” hypothesis. Retailers gain bargaining power through lower wholesale prices on imitated national brands. But the gain is greater in niche categories than in mass categories, suggesting that niche national brands with limited “pull” power lose greater bargaining power. In terms of strategic pricing, the retailer, on initially introducing the private label, strategically sets prices to help private labels gain market share in high volume mass market categories. But retail prices revert to the category profit maximizing price after a year when the private label gains a stable market share.     

Influence of subcontracting on innovation and economic performance of SMEs in Indian automobile industry

Trans-national corporations (TNCs) expanding their production bases to developing countries having better conditions of manufacturing and domestic markets provide increasing opportunities for local small and medium enterprises (SMEs) to have subcontracting relationships with these TNCs. Even though some theoretical and a few empirical studies throw light on the nature of assistance provided by TNCs to local SMEs through subcontracting relationships, none of the studies so far quantitatively analysed the role of this assistance on the innovative performance of SMEs leading to better economic performance. This paper probes the extent and diversity of assistance received by SMEs from a TNC through subcontracting and its influence on technological innovations and economic performance of SMEs, in the Indian automobile industry. Indian SMEs were able to receive mainly product related and purchase process assistance, thereby implying that subcontracting is largely confined to purchase–supply relationships. However, assistance received through subcontracting is beneficial as it promoted technological innovations of SMEs: the higher the degree of assistance, the higher the level of innovations carried out by these SMEs, which, in turn facilitated their economic performance. Thus, this paper substantiates in the Indian context that subcontracting relationship with a TNC can be an important source of technological innovations and enhanced economic performance for SMEs.     

Linear models for minimizing misclassification costs in bankruptcy prediction

This paper illustrates how a misclassification cost matrix can be incorporated into an evolutionary classification system for bankruptcy prediction. Most classification systems for predicting bankruptcy have attempted to minimize misclassifications. The minimizing misclassification approach assumes that Type I and Type II error costs for misclassifications are equal. There is evidence that these costs are not equal and incorporating costs into the classification systems can lead to better and more desirable results. In this paper, we use the principles of evolution to develop and test a genetic algorithm (GA) based approach that incorporates the asymmetric Type I and Type II error costs. Using simulated and real-life bankruptcy data, we compare the results of our proposed approach with three linear approaches: statistical linear discriminant analysis (LDA), a goal programming approach, and a GA-based classification approach that does not incorporate the asymmetric misclassification costs. Our results indicate that the proposed approach, incorporating Type I and Type II error costs, results in lower misclassification costs when compared to LDA and GA approaches that do not incorporate misclassification costs. Copyright © 2001 John Wiley & Sons, Ltd.     

Nested balancedN-ary designs

Nested balancedn-ary designs are introduced. Some methods of construction of such designs are presented with some series of designs.     

A robust approach to measure latent, time-varying equity in hierarchical branding structures

The literature suggests that brand equity can be split into two parts - an attribute-based equity and a non-attribute based one that captures consumer preferences beyond the utility offered by individual attributes. In addition to measuring attribute-based equity, firms deploying portfolios of products within complex branding structures often seek to measure the presence, distribution and evolution of these potentially heterogeneous non-attribute based unique branding associations - which we label ‘intangible equity’ – at each distinct layer of a product’s brand hierarchy. We develop and operationalize a robust and flexible Bayesian semiparametric model to first separate the attribute-based equity from intangible equity, to jointly estimate this multi-level intangible equity and to allow it to exhibit state-dependence using a random-walk prior. The model is empirically illustrated on syndicated US national beer sales data. We find significant, heterogeneous and temporally stable intangible equity presence across the brand hierarchy and highlight some substantive implications arising therein.