Personal characteristics of salespeople and the attractiveness of alternative rewards

How do personal characteristics of salespeople affect their desire for the various rewards available to them? Do younger salespeople desire different types and levels of rewards than older salespeople? Are there differences due to job tenure, marital status, family size, and so forth? In this article, the authors attempt to answer these questions. Based on an extensive investigation of the industrial sales forces from two large companies, the authors examine the relationship between personal characteristics and the sales force's valence for various rewards. Although some of the findings are consistent with current sales management practices, some are not, suggesting that present day thinking with respect to the design and administration of rewards may need more careful scrutiny.     

The determination of corporate optimal capital structure under value maximization and informational asymmetry

In this article we examine the optimal capital structure of the firm under conditions of informational asymmetry, i.e., when the manager of the firm is viewed by the market as possessing inside information about the firm's future profitability. Unlike previous research on this topic, in this study we preserve the objective of value maximization when examining the signaling property of corporate capital structure. We also recognize explicitly the other consequences of debt financing on the value of the firm. An integrated analysis of the capital structure problem within the context of rational expectation is presented, and a signaling equilibrium is derived and discussed. The nature of the welfare costs that emerge from the existence of informational asymmetry is also analyzed.     

The use of incremental goodness of fit indices in structural equation models in marketing research

Indices of the incremental goodness fit of structural equation models can provide useful information beyond that provided by statistical significance tests. Two such indices are described, and their advantages are illustrated with several marketing research studies. Additional discussion focuses on the issue of appropriate null hypotheses against which to test proposed models.     

Price-Anderson act declared unconstitutional: The decision and its effects on nuclear power

In March 1977, the $560 million limit on liability in the Price-Anderson Act was declared unconstitutional. The Price-Anderson Act sets forth a combination private-public insurance and compensation system for handling risks associated with commercial nuclear operations. The limit was found to violate the due process and equal protection provisions of the Fifth Amendment of the U.S. Constitution. This paper examines the salient points of the decision which include: (a) the effects of nuclear plant operations on the plaintiffs; (b) the dependence of nuclear power development on the Price-Anderson Act; (c) the plaintiff's right to bring suit; and (d) the rationale for declaring the Act unconstitutional. The potential effects include the possibility that many utilities and suppliers of nuclear plant components will terminate their nuclear business, the availability of capital funds for nuclear plants will be reduced, and that cost of capital will be increased to reflect the greater risk of nuclear development.     

Comparison of alternative models for estimating the cost of equity capital for electric utilities

In this article five models used to estimate the cost of equity capital for electric utilities are systematically compared. We show the impact of model specification, data definitions, and estimation techniques on the estimates. Our search for the “best” model is based on reasonableness of estimates and the Pesaran-Deaton test for non-nested hypotheses. Conclusions emerging from the study are the following: 1) all models explain approximately the same proportion of the variation; 2) recognition of natural nonlinearities in the models does not lead to improvement; 3) no model can consistently reject the other models.     

The FTC's handling of puffery and other selling claims made “by implication”

The Federal Trade Commission's handling of alleged false advertising representations that are made by implication is examined. Alleged false advertising presentations are held to be implied to the public by the advertiser even though they are not literally stated in his advertisement. The FTC has extended its reach over this kind of misrepresentation in recent years. Cases for 1970–76 are identified, and a catalog is developed of ten types of implications that have been attacked as deceptive during this period. Some, such as the Expansion Implication, are types established as deceptive in earlier years; others, such as the Reasonable Basis Implication, were not attacked prior to the 1970s. Some types, such as the Uniqueness Implication, have been given considerable publicity; others, such as the Inconspicuous Context Implication, are newly categorized in this paper. The consequences of FTC's identification of these types of implications, and of its growing attention to the possibility of misrepresentation by implication, are discussed in detail. A prediction is offered that attention to implications will continue to increase for some time in the future. Puffery is discussed as a category which the FTC might recognize in the future as a type of implied misrepresentation; a rationale is offered for regulating such claims. The role of the researcher is examined, using the assumption that greater attention to misrepresentation that extends beyond a message's literal meaning will produce a greater need for research. The researcher will have attractive opportunities for such work, but will have to confront the problem that playing an advocacy role in legal proceedings may involve significant conflicts with the impartial role that is appropriate for the academic researcher.     

Dividend decisions and the structure of the life insurance industry

The behavior of life insurance company dividend decision-making is modeled for both stock and mutual companies. Insurer payout behavior, regardless of organizational form, follows a “savings” pattern which buffers the dividend stream from short-run variability. Thus total payouts to policyholders and/or stockholders reflect long-term results rather than annual experience. Variables important in explaining annual changes in dividend levels are related to the organizational structure of the insurer. Whereas mutual companies primarily relate the change in payout to volume, stock companies' payout differentials are primarily a function of earnings. The study also examines the relative importance of policy reserves, contingency reserves, and surplus in dividend decisions.     

Mismeasurement of market returns

Virtually all empirical tests of the Capital Asset Pricing Model have assumed (usually implicitly) that returns of some New York Stock Exchange index measure the returns of the “market factor” without error. However, recent theoretical developments suggest that this assumption may be inappropriate. In this effort, an obverse tack is adopted — the asset pricing model is assumed correct and attention is focused on the impacts of incorrect specification of market returns. A simple errors-in-variables econometric technique is used to reevaluate the oft-cited study of Black, Jensen, and Scholes. The conclusion is reached that incorrect measurement of the market is itself an onerous and unreconciled problem which adds marked bias to tests of asset pricing mechanisms.     

Experience seeking: A subjectivist perspective of consumption

The present research examines consumer behavior from a subjectivist perspective. In a phenomenological sense consumption consists of the generation of internal thoughts and|or sensations, which constitute the content of experience. The sociopsychological characteristics of consumers who primarily seek cognitive stimulation (cognition seekers), sensory stimulation (sensation seekers), novel stimulation (noveltry seekers), or are seekers of all three forms of experience (experience seekers) are delineated. Preliminary causal rationales for each type of consumption are put forward based on these findings.     

Concept testing

This paper is a review of concept testing based on the published literature and a series of personal interviews with leading practitioners. While there is considerable agreement on the usefulness of concept testing, practitioners disagree on the best way to perform them. In addition to highlighting these disagreements, the paper covers general suggestions for improving concept testing.     

Behavior of default-risk premiums for corporate bonds and commercial paper

The question addressed in this paper is whether default-risk premiums for short-term and for long-term securities behave differently over time. The question is important because it affects decisions by corporations and state and local governments as to the maturity structure of their debt. It also affects decisions by investors as to the maturity and the type and grade of security in which they invest. Several hypotheses have been advanced about the behavior of default-risk premiums for different maturities. The purpose of this paper is to test these hypotheses empirically with a set of data heretofore unused. In so doing, new insights are gained into the behavior of default-risk premiums for different maturities.     

Product life cycle research: A literature review

The purposes of this paper are threefold: to review the scope of product life cycle (PLC) research; to pinpoint areas requiring further investigation; and to provide guidelines for future researchers. Because of the paucity of empirical evidence, only tentative conclusions are advanced. For example, the most common PLC pattern is the classical, bell-shaped curve, but it is not the sole shape. The application of various forecasting techniques across the PLC have met with merely moderate success. Very little research has been conducted either on how different characteristics of the firm influence the PLC or on the actual use of various PLC-strategy theories by business planners. Finally, investigators have focused almost exclusively on validating the existence of the PLC concept among nondurable consumer goods. Industrial items, as well as major product changes, have been nearly ignored. The main conclusion is that additional research-more diversified and extensive in nature-is needed on many PLC topics.     

Information processing analysis of a stochastic model of brand choice

A formal and detailed comparison between Morrison's brand loyal model and its information processing counterpart reveals serious internal inconsistencies and other shortcomings of this stochastic model.     

Electric utility returns and the market model

Use of estimates of the single factor market model has been criticized on a number of fronts including the allegedly poor empirical “fit” of the characterization for regulated firms. Countervailing evidence is presented here that indicates the market model is a better characterization of electric utilities than of unregulated companies     

Perceived importance of selected product information sources in two time periods by United States and West German consumers

Perceived use of different types of information sources in the purchase of a major durable good is investigated in two countries (West Germany and the U.S.), two age groups (under 35, 35 and over), and two time periods (1970 and 1976). A logit model is constructed to allow probabilistic conclusions about the relationships among time, country, and age as explanatory variables and information source types as response variables. Product testing is found to increase in importance between time periods in both countries and to have the highest probability of use in combination with peer group as a source. Advertising has twice the probability of perceived use in the U.S. as in West Germany, and probability of use has not changed between years. Age is found not to be significant in perceived importance of sources.     

Stationarity test for the beta binomial model

The beta binomial model has been successfully applied to describe brand switching, television viewing, and magazine readership behavior. However, long-term projections from this model tend to have systematic biases. These biases can be explained by violations of the stationarity assumption of the model. A statistical test for stationarity is presented. A transition matrix upon which the test is based provides a useful diagnostic tool for detecting shifts in preference structures versus equilibrium switching behavior.     

Estimating temporal trends in preferences measured by graded paired comparisons

A sizable marketing research literature on preference measurement, prediction, and explanation has thus far been more concerned with point estimates of preference than with consistent changes over time. Such temporal trends can be estimated using data collected from graded paired comparisons. An appropriate technique for deriving individual and group trend parameters is first described and then illustrated using data from an experiment dealing with aesthetic preferences. Suggestions are offered concerning its advantages and limitations for applications in marketing.     

Exponents of multiattribute models

The effect of different exponents on the predictive ability of multiattribute models is examined. Survey data on 1202 individuals concerning their preferences for television shows is analyzed. The results indicate that the optimal power is not 1, and that consequently it may be somewhat more advantageous to improve on an already strong attribute than on relatively weak ones.     

Market similarity and market selection: Implications for international marketing strategy

International market selection patterns for a sample of 954 new products suggest that firms exhibit a significant preference for markets similar to the home market. Preferences for similar markets decline as firms gain experience in a variety of markets, however. This pattern suggests the importance of uncertainty and information in global market selection and marketing mix management. Alternative means of gathering information about foreign markets permit and support very different approaches to global marketing activity. More fundamentally, a global perspective on the relationship between market conditions, marketing policies and programs, and consumer response can be developed systematically to improve global marketing performance.