Multichannel customer purchase behavior and long tail effects in the fashion goods market

The fast-paced growth of e-commerce is impacting the type and variety of products consumers purchase across channels. A commonly held theory, known as long tail theory, posits that online sales are less concentrated at the top of the sales distribution than offline sales, and that more variety is bought online, making the tails of the overall sales distribution denser with the growth of e-commerce. Most of the literature testing the long tail theory has focused on examining entertainment goods markets that do not require much physical examination, and has predominantly found results consistent with the theory. However, the magnitude and antecedents of the observed long tail effects might be different for product categories containing products that require more physical examination before purchase, such as fashion goods. In this study, using detailed individual and transaction level panel data from two multichannel fashion goods retail brands, we show that while the shift to the online channel results in a decrease in the concentration of overall sales for both brands, this change mostly results from consumers buying different products online rather than consumers buying a greater variety online compared to offline. We show that the flattening of the overall sales distribution with the growth of e-commerce in our data is driven by consumers sorting their purchases into channels based on product characteristics. In contrast to the recommendations from the previous long tail literature, our results show that fashion apparel retailers do not need to offer broader assortments online compared to offline, but they may find it profitable to carry or emphasize a different product mix online compared to offline. Our results also provide guidance to fashion goods retailers in curating their online and offline assortments and setting inventory management strategies across the channels.     

Reciprocal Effects Between Multichannel Retailers’ Offline and Online Brand Images

Two experiments were conducted to disentangle reciprocal relationships between multichannel retailers’ offline and online brand images. Results support the cross-channel effect of prior offline brand image on online brand beliefs (biased assimilation) and that of online performance on offline brand beliefs (impact). Consumers’ online and offline brand attitudes were influenced by not only brand beliefs from the respective channel but also by beliefs from the other channel. But, strong prior offline brand image was found to mitigate the impact of online performance on offline brand beliefs in the presence of negative online performance (impact minimization) as a way to eliminate cognitive dissonance.     

Cross-channel effects of omnichannel retail marketing strategies: A review of extant data-driven research

The authors review 50 empirical retailing research papers that have appeared over the last 20 years to take stock of what we know, need to know better, and do not know yet about within-retailer cross-channel effects of omnichannel retail marketing strategies on (a) consumer responses over their purchase journeys, i.e., online and/or offline search, purchase intention, frequency, amount, returns, loyalty, and (b) the retail firm's aggregate outcomes (e.g., sales, costs, profits, product returns) by channel and overall. Specifically, the authors focus on five strategies: (1) the addition of online channel by an offline retailer; (2) the addition (or subtraction) of offline channels by an online retailer; (3) addition of mobile shopping channel (website and/or app) by offline and/or online retailer; (4) cross-channel integration strategies; and (5) retail marketing mix strategies. The author/s integrate findings from empirical research on these strategies into a number of ‘insights’ about ‘what we know’. Prominent among these are the following: Adding a transactional online channel to an offline channel improves the retailer's overall sales even though offline channel sales can be cannibalized to some degree. Adding an offline channel by an online retailer, however, boosts online channel sales as well as overall sales of the retailer. Similarly, adding a mobile shopping channel usually increases customer purchase frequency and amount and overall sales of the retailer in the long-term. Strategies for greater cross-channel integration generally have a positive effect on a retailer's overall performance while online advertising has positive effects on offline channel consideration and sales as well as overall sales of a multichannel retailer. Other insights or findings that need further study or open questions are also identified. The paper closes with managerial implications of the derived empirical insights, and suggestions for future research.     

Assessing Brand Origin Recognition Accuracy and its Antecedents in a Developing Country

The aim of the present study was to examine two main questions regarding Indonesian consumers. First, what are the brand origin recognition accuracy (BORA) scores for both foreign brands and local brands among Indonesian consumers? Second, are socio-economic characteristics (education and income/spending), international experience (international travel and foreign language expertise), and demographic factors (age and gender) related to consumers’ brand origin recognition accuracy? The present research follows BORA procedures in the selection of 88 brands (44 foreign and 44 local brands). Questionnaires were distributed both offline and online, with 138 respondents participating offline and 163 people responding online. The BORA scores for both foreign and local brands among Indonesian consumers were relatively low (28.79% and 53.85%, respectively). BORA was also related to socio-economic characteristics, international experience, and age. In addition, men demonstrated higher BORA levels for foreign brands than women did. Most consumers were unable to differentiate brand origins because of the use of foreign languages for the brand names. Therefore, the foreign branding strategy of using languages of other countries (e.g., English, Chinese, Japanese, and so forth) that have positive images for particular product categories could be effectively employed in Indonesia.     

Are two brands better than one? Investigating the effects of co-branding in advertising on audience memory

Co-branded advertising, where advertisements feature two partnered brands from different categories, should ideally benefit both brands. We test this assertion by studying the effect of featuring a second brand in advertisements on ad and brand name memorability, and the role of category context on which brand is recalled. Our test covers online display advertisements for consumer-packaged brands paired with charity and retailer brands in three markets (USA, UK, and Australia). Independent sample comparisons across 54 brand pairs show that advertising two brands has a neutral effect on ad memorability and negative effect on brand memorability. Furthermore, the advertisement’s category context determines which of the brands is recalled. Our findings support a competitive interference theory of dual-brand processing, whereby the two brands compete for attention resources. The results have implications for the return on investment from advertising expenditure, which will vary substantively depending on whether the costs of advertising are shared or borne by one brand in the pair.     

Determining Customer Satisfaction From Mobile Phones: A Neural Network Approach

Abstract

This research examines the effects of extension mode (online to online vs. online to offline), web-brand concept (function oriented vs. experience oriented) and extension similarity (high vs. low) on consumer web-brand extension evaluations, attitude, perceived quality, and purchase intention of the extension brands. The analysis reveals two significant interaction effects: (1) the positive effect of brand extension similarity on consumer evaluations is stronger when the parent brand is function oriented compared to the experience-orientated ones; (2) the positive effect of brand extension similarity on consumer evaluations is more pronounced when the web-brands extend to offline markets rather than to online markets. Implications for marketing theory and practice are discussed.     

How category characteristics affect the number of store brands offered by the retailer: a model and empirical analysis

Our research examines why retailers offer, not one, but multiple store brands in some product categories. More specifically, we are interested in how certain product category characteristics affect the number of store brands. We model a product category consisting of two incumbent national brands that may differ in strength. The retailer may introduce one or two store brands depending on which maximizes category profits. Our analysis suggests that the retailer is likely to carry two store brands in categories where (i) the national brands are similar in strength; and (ii) the price sensitivity between the national brands is low. Interestingly, the conditions that support the introduction of more than one store brand are quite different than the conditions that would facilitate the introduction of additional national brands. We provide empirical evidence that support our model-based predictions.     

How advertising in offline media drives reach of and engagement with brands on Facebook

ABSTRACT

Research investigating the drivers of consumers’ engagement with brands on social media is proliferating. However, little is known about how advertising outside social media drives engagement with brands on social media. This study aims to explore the relation between advertising spend in different offline media (TV, radio, newspapers, magazines, out of home), and reach of and engagement with brand pages on Facebook. The study uses a unique real-life data-set containing information about the Facebook pages of 45 brands for approximately three years combined with Nielsen Advertising Spend data. Results showed that while advertising in offline media influenced organic and viral reach, the number of page likes was directly influenced by advertising on Facebook only. It can be concluded that offline advertising is relevant in driving consumers’ online brand engagement; however, there is a unique set of drivers for organic reach, viral reach and likes.     

Bridging the online offline gap: Assessing the impact of brands’ social network content quality on brand awareness and purchase intention

Social media is shaping the way companies and brands engage and interact with consumers, particularly Millennials. In light of this growing trend, this study aims to understand the influence of content quality and brand interactivity within social media on consumers' brand awareness and purchase intentions by proposing an empirical model which is tested using structural equation modeling. The study also explores whether the relation between social media stimuli and offline purchase intention is mediated by hedonic motivation, consumer engagement and brand awareness. Results reveal that the quality of content provided by brands on social media and company-users' interactivity are of major importance to Millennials. They increase the hedonic motive derived by these users from social media, strengthen their online engagement and intensify their brand awareness. This heightened online consumer engagement coupled with an increased online consumer brand awareness leads to an increase in the purchase intention of these brands offline. Consequently, companies are encouraged to invest in producing high-quality content on their social media pages, deploy all possible strategies to enhance brand users’ interactivity given the important role these variables play in entertaining, engaging users online, building brand awareness and influencing their offline purchase intentions.     

Modeling Dependencies in Brand Choice Outcomes Across Complementary Categories

We build an econometric model of a household's contemporaneous brand choice outcomes in complementary product categories. This model explicitly captures cross-category dependencies in brand choice outcomes of a household. Such dependencies have not been modeled in existing multi-category demand models.Our model accommodates cross-category dependencies that arise on account of three component effects: (1) complementarity due to the additional utility that a household derives from the joint purchase of brands in complementary categories, (2) marketing spillovers due to the effects of brands’ prices in one category affecting the households’ latent utilities for brands in the complementary category, (3) unobserved dependencies due to correlations in households’ latent utilities for brands across categories.We estimate our proposed multi-category brand choice model using scanner panel data on cake mix and frosting categories. We find that complementarity accounts for the vast majority of the estimated cross-category effects in demand. We also find that as much as 55 percent of the total retail profit impact of price promotions arise on account of brand-level (focus of our study), as opposed to category-level (focus of previous studies), dependencies in household demand. Finally, we propose an easily interpretable visual representation – Largess and Free-Ride Plot – of cross-category price elasticities that summarizes the differential abilities of brands to influence, or be influenced by, brands in the complementary category.     

Drivers of the synergy between price cuts and store flyer advertising at supermarkets and discounters

Despite retailers’ intense use of both price cuts and store flyer advertising, it is still unclear whether and when it is beneficial for retailers to combine the two promotion tools at the same time as opposed to using them separately. We systematically investigate synergies between price cuts and store flyers for a broad set of 488 brands from 44 consumer packaged goods categories across six leading German retailers. We find that a clear majority of the brands benefit from positive synergies and hence, combining price cuts and store flyer advertising is recommended, especially at supermarkets. This synergy can be strong. For instance, a 15 % price cut without store flyer support at a supermarket, on average, increases sales by 11 %, and medium spending on store flyers for the brand at its regular (non-promoted) price results in a sales lift of 8 %. The combined use of both tools, however, increases sales by 52 %, much more than the sum of their separate effects (11 % + 8 % = 19 %). Yet, there is also substantial variance in the synergy, which we explain with retailer format (supermarkets versus discounters) as well as various brand and category characteristics. Our findings have important implications for the coordination of promotion activities by retailers.     

Brand competitiveness and resilience to exogenous shock: Usage of smartphone apps during the COVID-19 pandemic

This study examines the factors that affect brand competitiveness in an environment of uncertainty caused by exogenous shocks. In particular, this study focuses on smartphone apps and examines differences between “digital” brands that primarily do business online and “phygital” brands that have already established their brands offline. We also distinguished the highly uncertain environment into multiple phases and found non-linear changes in the magnitude of the parameters. We find that phygital brands have different factors affecting their competitiveness compared to digital brands. The results also provide insights into the online channel strategies of retail companies that already have brand value offline.     

Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

Feedback effects of brand extensions on the brand image of global brands: a comparison between Spain and Norway

Abstract

Global brands often attempt to increase their sales through the launch of brand extensions. Such a strategy may, however, dilute existing brand beliefs at an international level, as two sets of data from Norway and Spain indicate. This paper illuminates how the attitude towards a brand extension affects the image of a parent brand. The extension attitude is mainly determined by the degree of perceived fit between the extension and the parent brand image. In the Spanish sample, it is also determined by the degree of familiarity with the parent brand and the perceived fit at the product category level. After analysing these relationships, the paper focuses on the moderating role of two dimensions of consumer innovativeness: hedonist innovativeness (tied to need for stimulation) and social innovativeness (tied to need for uniqueness). Finally, the cultural orientation of the origin country is analysed as a moderating factor.     

A Micromodel of New Product Adoption with Heterogeneous and Forward-Looking Consumers: Application to the Digital Camera Category

We develop an empirical model for the adoption process of a new durable product that accounts for consumer heterogeneity as well as consumers forward-looking behavior. Accounting for heterogeneity is important for two reasons. As the mix of consumers with different preferences and price sensitivities could change over time, firms need to update their marketing strategies. Further, it allows for a variety of shapes for the aggregate adoption process over time. As prices for durable and technology products fall over time with firms continually introducing enhanced products, consumers may anticipate these prices and improvements and delay their purchases in the product category. Forward-looking consumers optimize purchase timing by trading off their utilities from buying the product and their expectations on future prices, quality levels, and brand availability. Such forward-looking behavior will result in price dynamics in the marketplace as price changes today influence future purchases. And it results in different shapes of the new product sales pattern over time by influencing the time to take-off. We show how the parameters of our model can be estimated using aggregate data on the sales, prices, and attributes of brands in a product category. We apply our model to market data from the digital camera category. Our data are consistent with the presence of both heterogeneity and forward looking behavior among consumers. At the product category level, we are able to decompose the effects of the entry of Sony into primary demand expansion and switching from other brands. At the brand level, we find that there exist several segments in the market with different preferences for the brands and different price sensitivities leading to differences in adoption timing and brand choice across segments. For a given brand, we show how the changing customer mix over time has implications for that brands pricing strategies. We characterize how price effects vary across brands and over time and how price changes in a given time period influence sales in subsequent periods. Model comparison and validation results are also provided.     

The Pareto rule for frequently purchased packaged goods: an empirical generalization

Many markets have historically been dominated by a small number of best-selling products. The Pareto principle, also known as the 80/20 rule, describes this common pattern of sales concentration. Several papers have provided empirical evidence to explain the Pareto rule, although with limited data. This article provides a comprehensive empirical investigation on the extent to which the Pareto rule holds for mass-produced and distributed brands in the consumer-packaged goods (CPG) industry. We used a rich consumer panel dataset from A.C. Nielsen with 6 years of purchase histories from over 100,000 households. Our analysis utilizes a large number of potential factors such as brand attributes, category attributes, and consumer purchase behavior to explain variation in the Pareto ratio at the brand level across products. Our main conclusion is that the Pareto principle generally holds across a wide variety of CPG categories with the mean Pareto ratio at the brand level across product categories of .73. Several variables related to consumer purchase behavior (e.g., purchase frequency and purchase expenditure) are found to be positively correlated with the Pareto ratio. In addition, niche brands are more likely to have a higher Pareto ratio. Finally, brand/category size, promotion variables, change-of-pace brands, and market competition variables are negatively correlated with the Pareto ratio.     

Brands as substitutes for the need for touch in online shopping

This article addresses the potential of reputable brands to overcome the lack of tangibility that characterizes the process of e-commerce through an experiment-based analysis. In a sequential argument, the authors propose that (1) the brand becomes more important in online than in offline channels, as a consequence of the intangibility or lack of physical contact in online purchasing processes; (2) the limitations associated with the need for touch and the lack of access to the physical product during the buying process does not have equal importance across all product categories and (3) the role of the brand in online channels thus is more relevant if the product category is associated with a higher need for touch. The study based on the experimental design reveals that leading brands enjoy an advanta in consumers' quality assessments, regardless of the objective attributes that characterize the products. This advantage may be greater in online channels, though only for product categories for which the lack of physical contact with the product during the purchase process is an important limitation. In such cases, brand associations can compensate for intangibility during purchase.     

Cross channel effects of search engine advertising on brick & mortar retail sales: Meta analysis of large scale field experiments on Google.com

We investigate the cross channel effects of search engine advertising on Google.com on sales in brick and mortar retail stores. Obtaining causal and actionable estimates in this context is challenging: Brick and mortar store sales vary widely on a weekly basis; offline media dominate the marketing budget; search advertising and demand are contemporaneously correlated; and estimates have to be credible to overcome agency issues between the online and offline marketing groups. We report on a meta-analysis of a population of 15 independent field experiments, in which 13 well-known U.S. multi-channel retailers spent over $4 Million in incremental search advertising. In test markets category keywords were maintained in positions 1-3 for 76 product categories with no search advertising on these keywords in the control markets. Outcomes measured include sales in the advertised categories, total store sales and Return on Ad Spending. We estimate the average effect of each outcome for this population of experiments using a Hierarchical Bayesian (HB) model. The estimates from the HB model provide causal evidence that increasing search engine advertising on broad keywords on Google.com had a positive effect on sales in brick and mortar stores for the advertised categories for this population of retailers. There also was a positive effect on total store sales. Hence the increase in sales in the advertised categories was incremental to the retailer net of any sales borrowed from non-advertised categories. The total store sales increase was a meaningful improvement compared to the baseline sales growth rates. The average Return on Ad Spend (ROAS) is positive, but does not breakeven on average although several retailers achieved or exceeded break-even based only on brick and mortar sales. We examine the robustness of our findings to alternative assumptions about the data specific to this set of experiments. Our estimates suggest online and offline are linked markets, that media planners should account for the offline effects in the planning and execution of search advertising campaigns, and that these effects should be adjusted by category and retailer. Extensive replication and a unique research protocol ensure that our results are general and credible.     

Do mobile banner ads increase sales? Yes,in the offline channel

Firms allocate increasingly large budgets to mobile banner advertising. Yet, existing research paid only scant attention to the sales effects of mobile banner ads. In this paper, we fill this gap by determining the offline and online sales impact of a large-scale mobile banner advertising campaign. As part of a geographical field experiment, over 3.5 million mobile banner ads were served to a predetermined geographical area. We determine the offline and online sales effects of the mobile banner ad campaign by analyzing twenty months of sales data for regions covering the entire country of the Netherlands. Relying on a difference-in-difference approach and two matching methods, we demonstrate an offline sales increase of around 2%. The online sales effect is not significant. We conclude that firms can use mobile banner advertising to boost offline sales. We find no evidence for cross-channel sales cannibalization.     

How consumption values and perceived brand authenticity inspire fashion masstige purchase? An investigation

Rising income and the aspirations of the middle-class have resulted in the emergence of a new category of luxury brands popularly known as “masstige brands”. Researchers have attempted to establish masstige branding and masstige marketing as a differentiated research domain from luxury marketing. As an attempt to this end, the current study, which is confined to women's fashion clothing brands, investigates whether various luxury consumption values are equally applicable in inspiring masstige purchase. In addition, this study investigates whether dimensions of perceived authenticity of a masstige brand moderate the association between various consumption values and masstige purchase intention. By employing an online survey, 462 useable responses were collected from middle-income female consumers in India and analysed using PLS-SEM and multi-group analysis. The findings show that functional, experiential and symbolic consumption values inspire masstige fashion purchase but the zero-moment-of-truth consumption value does not. Quality and sincerity (but not heritage) dimensions of perceived brand authenticity enhance the consumption value perceptions leading to masstige purchase. This study is the first of its kind to examine the applicability of various luxury consumption values in masstige consumption besides testing the moderating effect of perceived brand authenticity.