The Role of Retail Competition,Demographics and Account Retail Strategy as Drivers of Promotional Sensitivity

We study the determinants of sensitivity to the promotional activities of temporary price reductions, displays, and feature advertisements. Both the theoretical and empirical literatures on price promotions suggest that retailer competition and the demographic composition of the shopping population should be linked to response to temporary price cuts. However, datasets that span different market areas have not been used to study the role of retail competition in determining price sensitivity. Moreover, little is known about the determinants of display and feature response. Very little attention has been focused on retailer strategic decisions such as price format (EDLP vs. Hi-Lo) or size of stores. We assemble a unique dataset with all U.S. markets and all major retail grocery chains represented in order to investigate the role of retail competition, account retail strategy, and demographics in determining promotional response. Previous work has not simultaneously modeled response to price, display, and feature promotions, which we do in a Bayesian Hierarchical model. We also allow for retailers in the same market to have correlated sales response equations through a variance component specification. Our results indicate that retail strategic variables such as price format are the most important determinants of promotional response, followed by demographic variables. Surprisingly, we find that variables measuring the extent of retail competition are not important in explaining promotional response.     

Reviewing the reviewers: The impact of individual film critics on box office performance

Critics and their opinions or critical reviews play a major role in many markets. Marketing research on how critics impact product performance has so far examined an aggregate critic effect. An obstacle in studies examining the relationship of aggregate critical opinion and product sales is the close association between the intrinsic quality of a product and the aggregate opinion regarding the product. Our analysis parses out these two effects, allowing us to distinguish individual critics who are simply good at identifying products with popular appeal from those who act as opinion leaders and engender early product sales. The role of critics is especially prominent in the film business, in which one finds multiple expert opinions about each movie and where critics’ endorsements are used in advertising. In the context of the motion picture industry, our research investigates the impact of individual film critics on the market performance of movies, where specific key critics and reviewers may serve as market gatekeepers, and where various critics may have different types of impacts on product performance.

Is silence golden? An inquiry into the meaning of silence in professional product evaluations

The world today is rife with product recommendations from professional critics and experts that are available from numerous sources—television, magazines, radio, internet, etc. Very often these recommendations shape our decisions and choices. In this study, we investigate two main issues regarding expert opinions. First, we present an approach that uses information available from every expert, including those who are silent about the product, to obtain a consensus measure of expert opinion. Our model also allows us to obtain a measure of how informative each expert is and how their information content may vary by type of review. More importantly, our overall measure of expert opinion weights the opinion of each expert based on how informative they are at the particular quality level of the product being evaluated. In other words, we provide consumers with a method that reconciles conflicting expert opinions into a summary measure. The second issue we investigate in this paper is the meaning of “silence” in expert opinions. Our model demonstrates that the fact that an expert is silent about a product may imply a positive or a negative review, depending on the expert. We use data from the motion pictures industry to illustrate our approach. JEL Classification M31     

Models of Multi-Category Choice Behavior

Given the advent of basket-level purchasing data of households, choice modelers are actively engaged in the development of statistical and econometric models of multi-category choice behavior of households. This paper reviews current developments in this area of research, discussing the modeling methodologies that have been used, the empirical findings that have emerged so far, and directions for future research. We also motivate the use of Bayesian methods to overcome the computational challenges involved in estimation.