The effect of advertising on brand awareness and perceived quality: An empirical investigation using panel data

We use a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey to study the effect of advertising. Advertising is modeled as a dynamic investment in a brand’s stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We find that advertising has consistently a significant positive effect on brand awareness but no significant effect on perceived quality.

Image feedback effects of brand extensions: Evidence from a longitudinal field study

This paper examines the issue of image feedback effects and potential drivers of these effects by analyzing real-world extensions that have been introduced successfully in the market, using a longitudinal field study. Within the context of typical FMCG extensions, the authors find strong evidence that even for successful extensions, negative image feedback effects can occur, particularly when the perceived quality of the extension fails to meet the quality level of the parent brand. Strong brands tend to be more vulnerable to negative image feedback effects because consumers have a higher reference level for their extensions than for those of weaker brands. The likelihood of negative feedback effects decreases as the level of perceived fit and consumers’ perceptions of the general extendibility of the parent brand increases. But managers cannot, at least in the short run, mitigate negative image feedback effects through increased advertising support. Finally, the findings demonstrate that the feedback effects of a new extension product on parent brand image diminish over time.

Compromising the compromise effect: Brands matter

Consumer behavior research has a long history indicating that preferences are influenced by the relative positions of members of a choice set. The realism of this work, however, is somewhat limited because alternatives are typically labeled with letters rather than with real brand names. We investigate the boundaries of prior research by testing whether preferences for alternatives in compromise and superior positions generalize to a more realistic market scenario that includes choices between real brands. In particular, we conduct two studies that examine if preferences for brands in a choice set are moderated by the inclusion of more or less familiar brand names. We find that consumers prefer extreme brands when compromise brands are relatively less familiar and compromise brands when they are relatively more familiar. In this scenario brand familiarity and not the position of the alternatives determine choice. In situations where a choice alternative is superior, we find no moderation due to brand familiarity.

Entrepreneurship,economic development and institutions

This paper is an introduction to the special issue from the 3rd Global Entrepreneurship Monitor Research Conference held in Washington, D.C., in 2008. The paper has three objectives. First, to discuss the importance of the three stages of economic development, the factor-driven stage, the efficiency-driven stage and the innovation-driven stage. Second, to examine the empirical evidence on the relationship between stages of economic development and entrepreneurship. Third, to present a summary of the papers in the context of the theory.

Leveraging brand equity to attract human capital

We propose that brand equity can influence job seekers’ perceptions of job opportunities. Our results suggest that job seekers view working for a strong brand as a way to build the power of their résumé. The belief that strong brands build powerful résumés is, in part, the outcome of job seekers’ beliefs that working for a strong brand will allow them to advance to better positions internally, provide them job-related training and skills, and demonstrate their willingness to work hard. In turn, job seekers express a greater desire to work for strong brands as measured by salary requirements and perceptions of job appeal in experiment 1 and job choice in experiment 2.

Measurement of the Standard Proximity of Adapted Standard Business Software

In order to optimize the economical use of SAP software systems and to increase the cost effectiveness of the SAP investment, the available SAP standard system should be implemented in the best possible way. While standard functionality has no negative effects on maintenance and operating cost, modification of the standard has the potential to drive costs (Markus et al. 2000). An integrated methodology and an efficient instrument for the operational and strategic evaluation of this topic are crucial for an efficient application of SAP standard software. This article describes a new technical measurement methodology based on key performance indicators. This measurement methodology allows for measuring the standard proximity (i. e. proximity of used functionality to standard functionality) in SAP systems thereby creating transparency regarding the use of the available standard and non-standard functions. The methodology is evaluated in the context of a case study within the BMW Group. From the results of the measurement, actions are derived which foster the standard utilization and thus the efficiency of an SAP system.

Competitive reasons for the Name-Your-Own-Price channel

This paper shows that the Name-Your-Own-Price (NYOP) business model can help soften competition. When consumers differ in their frictional costs (i.e., the shopping hassle) they experience when bidding at an NYOP retailer, the NYOP format can be a mechanism for differentiating a retailer from a posted-price rival. Beyond providing a motivation for using an NYOP mechanism, competition also has important implications for the optimal structure of the NYOP format. For example, this paper shows that prohibiting rebidding may benefit an NYOP firm by reducing price rivalry.

The shipping strategies of internet retailers: Evidence from internet book retailing

Managing the shipment of goods to consumers is one of the central aspects of retail competition on the internet. In this article, we analyze internet retailers’ shipping strategies using data from the internet book retailing industry. We find that, controlling for a variety of observable firm characteristics, firms with lower product prices offer lower shipping fees and higher quality shipping in terms of average delivery time, compared to firms with higher product prices. These patterns cannot be readily reconciled with a large class of models of competition under perfect consumer information. Theories based on imperfect consumer information can explain the findings better.

Brand competition in CPG industries: Sustaining large local advantages with little product differentiation

In direct competition between national brands of consumer packaged goods (CPG), one brand often has a large local share advantage over the other despite the similarity of the branded products. I present an explanation for these large and persistent advantages in the context of local competition on perceived quality or brand image. The main result of the analysis is a relation between varying degrees of product similarity and equilibrium outcomes of local share advantages. Namely, I find that asymmetric quality positioning and associated local share advantages emerge especially when competing brands are objectively similar. Conversely, local share asymmetries based on brand positioning occur less when brands are dissimilar. This paper provides two reinforcing intuitions for this result. First, if brands are objectively similar, different levels of investment in local quality perceptions co-exist in equilibrium in the same market, because this investment is often borne as fixed cost. Also, early movers will invest in high perceived quality, whereas late movers have less incentive to invest because of demand sharing and increased price competition. Second, if the local advantages are shared by competitors across markets, the persistence of these advantages is reinforced by multimarket contact. Even when local brand building is free, firms may not want to improve perceived quality in their “weak” markets if it initiates retaliation by the competition in their “strong” markets. The increase in multimarket profits from collusion is large when the products are similar, because price competition looms large.

Consumer boycotts: The impact of the Iraq war on French wine sales in the U.S.

The French opposition to the war in Iraq in early 2003 prompted calls for a boycott of French wine in the US. We measure the magnitude of consumers’ participation in the boycott, and look at basic evidence of who participates. Conservative estimates indicate that the boycott resulted in 26% lower weekly sales at its peak, and 13% lower sales over the 6 months period that we estimate the boycott lasted. Although theory suggests consumers would not participate in boycotts due to a free-rider problem, these findings indicate that businesses should be concerned that consumers may boycott their products. We also find that neither political preferences nor media attention are important determinants of boycott participation.

Quality of past performance: Impact on consumers’ responses to service failure

The conceptual model developed in this paper for the airline industry examines the relationship between quality of past service performance and consumers’ responses to service failures (causal attributions, emotions and satisfaction). The empirical results obtained indicate that for those consumers with higher perceptions of quality the causes underlying service failures are seen as less stable and less controllable by the firm than the causes identified by consumers with lower perceptions of quality. Attributions about the failure not only influence satisfaction directly but also moderate the effect of quality on satisfaction. We also analyse the mediating effect of negative emotions on the relationship between service failure attributions and consumer satisfaction.

Entry for supermarket feature me-too brands: An empirical explanation of incidence and timing

Anticipating the speed of market entry can help the feature pioneer and me-too brands develop more informed product launch strategies. This paper explains imitation speed, broken down into the incidence and timing of imitation, across 144 imitators and 847 nonimitators in 22 consumer packaged goods subcategories. On average, it takes 85 weeks for a me-too brand to introduce its feature imitation. Increasing category market share increases the incidence of imitation and, conditional on their occurrence, decreases the time to market of feature imitators. Faster entry arises for store brands as they are more likely to imitate and tend to take shorter times to market. Price premium does not have a significant effect on the incidence or timing of a me-too brand as it tends to dissipate after the first year. Brands imitate innovative features more often than noninnovative features. Some evidence indicates these imitators can take a longer time to enter the market. New product managers may benefit from the direction as well as the magnitude of these results.

Business-to-Business Markets – Status Quo and Future Trends

As a phenomenon of modified value-chain structures the economic importance of business-to-business markets has been growing immensely during the past decades. This paper delivers a quantified overview of the market dimensions in terms of transactional volume. In addition, it explains the causes for this market development such as an increased service orientation in business transactions, higher degrees of customization, and influential factors on a macro level. In this context, future trends in this sector will be outlined as well.

Nonverbal cues-based first impressions: Impression formation through exposure to static images

Consumers often make judgments about service providers based solely on their photograph (e.g., on a billboard, on the Internet) before interacting with them face-to-face. This first impression is important for marketers to understand because it influences service provider selection and evaluation. This research explores the nature and subsequent influence of initial judgments made from static images. The results of two studies indicate that (1) judgments based on nonverbal cues can be surprisingly accurate, particularly of personality traits relevant to the domain in which the target is being judged, and (2) initial nonverbal cues-based judgments influence subsequent judgments of a target’s actions.

Internationalisation of technology-oriented firms in Germany and the UK

Based on longitudinal data, this article examines empirically the long-term export behaviour of German and British technology-oriented firms founded between 1987 and 1996. Applying logit models, the results show that firms can overcome high entry costs by acquiring firm-specific assets. Similarly, firm-specific resources prevent high-tech companies from exiting the international market. The strategic role of investment in R&D is stressed in particular by the data.

Delegation Commitment in Oligopoly

Dealing with managerial incentive in an oligopolistic competition market where the relevant strategic variables are not directly quantities but incentive schemes. It is found that, in the sequential delegation model, the leader output will not be affected by changing the number of the follower firms when there is only one leader. In addition, more equal distribution of the number of leaders and followers will result in higher industry output, lower price, lower industry profit, higher consumer surplus and higher economic welfare; moreover, economic welfare in the sequential delegation model is always higher than in a simultaneous delegation model.

The Appropriateness of the Key Account Management Organization

Key account management programs often lack efficiency and effectiveness, as most key account management organizations are inadequately designed for specific customer-supplier relationships. In this paper, a decision model based on transaction cost economics is developed that allows for individualized decision-making on the most appropriate key account management organization: By defining the transaction cost economics determinants uncertainty and frequency more in-depth companies will become able to refine their decision on the key account management organization alternatives with respect to the characteristics of their individual customer-supplier relationship.

Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey

The influence of risk aversion on the decision to become self-employed is a much discussed topic in the entrepreneurial literature. Conventional wisdom asserts that being an entrepreneur means making risky decisions; hence more risk-averse individuals are less likely to become entrepreneurs. In contrast to previous research, we are able to examine empirically whether the decision of starting a business is influenced by objectively measurable risk attitudes at the time when this decision is made. Our results show that in general, individuals with lower risk aversion are more likely to become self-employed. Sensitivity analysis reveals, however, that this is true only for people coming out of regular employment, whereas for individuals coming out of unemployment or inactivity, risk attitudes do not seem to play a role in the decision process.

Global Software Piracy: Searching for Further Explanations

This paper identifies that Information and Communication Technology (ICT) has a negative effect on software piracy rates in addition to consolidating prior research that economic development and the cultural dimension of individualism also negatively affect piracy rates. Using data for 59 countries from 2000 to 2005, the findings show that economic well-being, individualism and technology development as measured by ICT expenditures explain between 70% and 82% of the variation in software piracy rates during this period. The research results provide important implications for policy makers and business practitioners to help reduce software piracy.

Business Ethics Training: Insights from Learning Theory

This paper explores research in educational psychology and learning theory in a search for insights to enhance business ethics training Useful educational principles uncovered are then applied to the development of an ethics training initiative for sales professionals. The paper concludes with suggestions for future research to help enrich business ethics training.