Distressed comps

We consider the use and impact of distressed properties as comparables in residential appraisals. First, we describe the incidence of their use and their relative comparability; second, we estimate their impact on the appraisal value itself; and third, we consider their impact on the probability that the appraisal is below the proposed transaction price. We find, generally, that distressed comps are largely good matches to their subject properties, which suggests that they are not necessarily used as a last resort. We find that they are not a drag on appraised value because appraisers learn to make the right adjustments over time. The use of distressed comps is associated with a higher probability of a below-price appraisal due to the increased spread of appraisals around the contract price, particularly for higher priced homes. Overall, the use of distressed comps increased the uncertainty in the valuation process, but appraisers learned the appropriate adjustments over time.     

Outsourcing the sales process: Hiring a mercenary sales force

In today's highly competitive environment, many firms make the decision to outsource a business process on the well-established idea that it is better to contract for services that are not within the scope of a company's core set of competencies. While outsourcing was once limited to peripheral firm activities such as advertising, firms are expanding the types of functions they outsource. For instance, many firms have begun to outsource their sales force, or at a minimum, have begun to consider ‘renting’ a sales force rather than ‘owning’ their own sales force. Being a recent trend, very little is known about what prompts firms to outsource their sales forces, nor the consequences of doing so. As such, this research explores the factors associated with determining whether a firm should outsource their sales force as well as the value to be had by engaging in such a decision. Most importantly, we offer that beyond the standard cost-based analysis, there are numerous issues that deserve consideration and examination before a firm elects to outsource its sales force.     

Mechanism choice and the buy-it-now auction: A structural model of competing buyers and sellers

A striking feature of many online sales platforms is the coexistence of multiple sales mechanisms. Items on eBay, for instance, are frequently offered through auctions, posted prices, and buy-it-now auctions. In this article, I study how this mechanism multiplicity influences the welfare of buyers and sellers. I specify and estimate a structural model of mechanism choice in online markets, in which I consider both sides of the market: On the demand side, buyers' choices among available listings are equilibrium outcomes of an entry game. On the supply side, sellers make equilibrium decisions when choosing sales mechanisms and prices. I estimate this model using data from sales of baseball tickets on eBay and calculate consumer and seller rents in three markets: the actual market with all three sales mechanisms and two counterfactual markets with auctions and fixed prices or only fixed-price listings, respectively. I find that the addition of auctions to fixed-price markets hurts sellers and risk-averse buyers but benefits risk-neutral buyers. Additionally, the consumer surplus increases when buy-it-now auctions are offered but the seller surplus is reduced further. I discuss the intuition for the cause of this result.     

A Methodology for Constructing Vacant Land Price Indices

Existing estimates of movements in vacant land prices are limited to a few metropolitan areas and infrequent time intervals. This paper develops a new methodology for estimating vacant land price trends for subareas within states and metropolitan areas. It utilizes data from a sales ratio study, a large database available in most states. The methodology uses assessed value to control for "hedonic characteristics" associated with the property and its location. A model is developed to correct assessed value for measurement errors. Statistical results for forty-one Connecticut towns indicate that the model provides a reasonable compromise between data availability and accuracy of price trend estimates.     

Estimates of the Effect of School Desegregation Plans on Housing Values Over Time

This study investigates the impact that school desegregation can have on the market values of affected residential properties. It improves upon previous studies in that it is able to estimate not only the "racial enrollment" effect but also "other" desegregation-related effects correlated with white perceptions of school quality, etc. Through the use of a controlled longitudinal and cross-sectional data set of property sales and a ridge-regression methodology, it is able to estimate these effects over time and separate them from amenity-related effects. Results are significant in that they predict substantial desegregation-related effects on house values over time, averaging 11.4% of property value, which correlate with school desegregation court rulings and other events. Furthermore, over one-third of the magnitude of this discount is related to desegregation factors other than actual racial enrollment patterns in the schools.     

Interpersonal influence strategies in complex B2B sales and the socio-cognitive construction of relationship value

The investigation of how exactly salespeople create value at the individual level of interaction is still incomplete. While there have been lively debates on value creation and co-creation processes at the organizational level in the business marketing literature, researchers have paid much less attention to the fact that such processes almost always start at the interpersonal level of buyer-seller interactions. Through utilizing a symbolic interactionist perspective and the ethnographic research method of shadowing, the present study moves research insights into value creation in sales forward by depicting the detailed activities and tactics that influence customers’ value perceptions during the sales encounter. We complement the sales influence literature with three additional tactics: disrupt, reassure and dedicate. We also expand the framework of value creation in sales interactions by identifying three value strategies that change, strengthen or expand customer value perceptions through different socio-cognitive mechanisms.     

On the economics of nonprofit sellers: Output policies in community hospitals

In applications of the theory of the nonprofit firm it is commonly assumed that output and sales are equal. This paper proposes that the nonprofit firm may plan to produce, and actually produce, an output larger than it sells. We call such a strategy an "excess output" production policy. The policy can lead to chronic excess capacity, and it always implies that seller average revenue exceeds unit costs evaluated at the level of sales. Using the nonprofit community hospital as an example, the paper examines the characteristics of excess output policies and the possibilities for controlling their performance impacts. Data on a sample of U.S. community hospitals are used to test for the existence of excess output policies in the hospitals are used to test for the existence of excess output policies in the hospital sector. The results give qualified support for the conclusion that some hospitals follow excess output production policies.     

Manipulation Through Biased Product Reviews*

We study a signal-jamming model of product review manipulation in which rational consumers consult product reviews and price to better estimate a product's quality, and a firm, whose quality is either high or low, chooses its price and how much bias to insert into product reviews. We show that both firm types always exert positive effort to manipulate product reviews, and, depending on the equilibrium price level, one or both of them can increase its sales. When the high-type firm exerts more effort than the low-type, review manipulation benefits consumers by raising [lowering] their demand for the high-quality [low-quality] product.     

The effects of sales supervisor relationships on work meaning: The case of Canadian and Chinese salespersons

Although the meaning of work—an individual's understanding of the purpose and significance of his or her work—is often discussed, the issue of how to enrich the meaning of work for salespeople remains poorly understood. This study examines the role of sales manager-salesperson relationships in the development of work meaning in a cross-cultural context. To better understand how work meaning might differ in Eastern (collectivist) and Western (individualist) cultures, data were gathered from salespersons in the Chinese and Canadian telecommunications industries. Findings suggest that the development of work meaning among Canadian salespeople is ascribed to the perceptions of customer orientation and self-determination. Conversely, in China, a quality relationship with one's sales supervisor is a direct factor in the development of work meaning. Managers of global sales forces should carefully consider the cultural differences of their salespersons and how a close personal relationship can impact the understanding of the purpose and significance of work for their sales team. After discussing the findings, managerial implications and suggestions for future research are offered.     

Optimal Comparable Selection and Weighting in Real Property Valuation: An Extension

Vandell (1991) recently developed a rigorous minimum variance technique for selecting and weighting comparables in real estate appraisal. This article extends Vandell's methodology in three areas: (1) an alternative objective function; (2) an approach that explicitly recognizes the non-negativity constraint on comparable weights; and, (3) a more robust comparable inclusion process. Using Vandell's data, we show how our methodology modifies Vandell's results.     

Balancing Development Costs and Sales to Optimize the Development Time of Product Line Additions*

Development teams often use mental models to simplify development time decision making because a comprehensive empirical assessment of the trade‐offs across the metrics of development time, development costs, proficiency in market‐entry timing, and new product sales is simply not feasible. Surprisingly, these mental models have not been studied in prior research on the trade‐offs among the aforementioned metrics. These mental models are important to consider, however, because they define reality, specify what team members attend to, and guide their decision making. As such, these models influence how development teams make trade‐offs across the four metrics to try to optimize new product profitability. Teams with such an objective should manage to a development time that minimizes development costs and to a proficient market‐entry timing that maximizes new product sales. Yet many teams use mental models for development time decision making that focus either just on development costs or on proficiency in market‐entry timing. This survey‐based study uses data from 115 completed NPD projects, all product line additions from manufacturers in The Netherlands, to demonstrate that there is a cost to simplifying decision making. Making development time decisions without taking into account the contingency between development time and proficiency in market‐entry timing can be misleading, and using either a sales‐maximization or a cost‐minimization simplified decision‐making model may result in a cost penalty or a sales loss. The results from this study show that the development time that maximizes new product profitability is longer than the time that maximizes new product sales and is shorter than the development time that minimizes development costs. Furthermore, the results reveal that the cost penalty of sales maximization is smaller than the sales loss of development costs minimization. An important implication of the results is that, to determine the optimal development time, teams need to distinguish between cost and sales effects of development time reductions. To determine the relative impact of these effects this study also estimates the elasticities of development costs, new product sales, and new product profitability with regard to development time. Armed with this knowledge, development teams should be better equipped to make trade‐offs among the four metrics of development time, development costs, proficiency in market‐entry timing, and new product sales.     

The Accuracy of Owner-Provided House Values: The 1978–1991 American Housing Survey

The American Housing Survey (AHS) includes the owner's valuation of the house as a measure of the house's value. If owner-stated values are accurate, the AHS (as well as other survey instruments) can be used by researchers studying a variety of topics. In this study we use the metropolitan version of the AHS for three cities over fourteen years to compare owners' valuations with sales prices of houses that sold in the twelve months prior to an interview. We find that, on average, recent buyers report house values that are 8.4% higher than the stated sales prices. Further analysis indicates that these recent buyers, when compared with owners with longer tenure, overvalue their houses by 3.3%, on average. Thus, we find that the average owner overvalues his house by 5.1%. Also, differences between sales prices and owners' valuations are not related to particular characteristics of the house, occupants (other than length of tenure), or neighborhood. Thus, the use of the owners' valuations will result in accurate estimates of house price indexes and will provide reliable estimates of the prices of house and neighborhood characteristics.     

The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy

New vehicle purchases by private companies and government agencies, or ‘fleet’ buyers, represent a significant percentage of overall new vehicle sales in the United States. Yet little is known about fleet demand for new vehicle fuel economy including how it responds to fuel price changes. Using unique disaggregated data on fleet and household registrations of new vehicles from 2009 to 2016, we estimate how fleet demand for new vehicle fuel economy responds to fuel price changes. We find that fleet purchases of low fuel economy vehicles fall relative to high fuel economy vehicles when gasoline prices increase, a finding that is consistent with fleet buyers’ taking into account capitalization of fuel costs in the second‐hand market. Our estimates imply that raising gasoline prices by one dollar would increase fuel economy of new vehicles acquired by fleet buyers by 0.33 miles per gallon. We estimate a similar response for household buyers during the same period. This result justifies basing fuel economy responses to fuel cost changes on household data alone, an assumption widely used in the vehicle demand literature and the fuel economy valuation literature. We also find, however, that the response to fuel price changes varies across the types of fleet buyers: rental companies respond strongly to fuel price changes, whereas commercial and government buyers are insensitive. Our estimates imply that an increase in the federal gasoline tax would modestly increase fuel economy of vehicles bought by households and rental companies but would have little to no impact on fuel economy of vehicles bought by non‐rental companies and governments.     

Why major account selling works

This article builds upon established theories of Industrial Buying Behavior and National Account Marketing to establish some rationale for firms to determine whether targeting their major customers with a separate sales force is a strategy that can work for them. It attempts to describe why major account selling works, where it has been successful, and provides some ideas for firms to consider when determining the organization of their sales force.     

Understanding salespeople's learning experiences through blogging: A social learning approach

Social media has changed the way many salespeople work and interact with their customers and coworkers. We examined 200 salespeople's blogs using netnography method. Drawing on social learning theory and real salespeople's blogs, we illustrate how and why salespeople can learn by reading and writing blogs. Our findings show that writing and reading blogs can be a helpful learning tool for many salespeople and the findings also suggest that companies should consider using blogging as a sales training tool. Our research contributes to marketing and sales literature two ways. First, our study provides a theoretical foundation for future work on social learning theory and online learning in areas of marketing, sales, and business education. Second, our study confirms the importance and usefulness of netnography method beyond its current usage in marketing and sales management. We conclude our paper with avenues for future research.     

Developing and Using Forecasting Models of Consumer Durables The Case of Color Television

Predicting the future sales of new and established products is a critical activity for companies to be able to plan and control their operations. Forecasting consumer durable sales is an especially difficult and challenging task since the marketplace is always changing. Barry Bayus, Saman Hong and Russell Labe present the concept of a market-driven forecasting model and discuss an application involving the forecasting of color television industry sales for RCA's Consumer Electronics Division. An important aspect of this application is that a single approach or model was inadequate to accurately forecast sales over the entire period since the introduction of color TV. Econometric and simulation models which were developed are described, along with their forecasting performance and management acceptance and use.     

Measuring value creation and appropriation in firms: The VCA model

Research summary : Using a productivity technique (VCA model), we estimate the economic value created by a firm and appropriated by its stakeholders in two specific empirical contexts. In the first application, we use publicly available data from the U.S. airline industry to illustrate how the VCA model can be used with multiple stakeholder groups. In the second application, we provide estimates for three global automobile companies (GM, Toyota and Nissan), showing how the model can be reformulated using value added. In both industries we find substantial heterogeneity among firms in the creation and distribution of value. We discuss strengths and limitations of the VCA model and implications for strategic management research. Managerial summary : Firms create value not only for shareholders, but also for other stakeholders, including employees, customers and suppliers. This article applies a method to quantify the “new” economic value created by a firm over an interval of time; the method also reveals the distribution of that value among the stakeholders. The proposed method gives managers some means to assess changes in the economic value created and distributed. We find that the creation and distribution of value has varied greatly among major U.S. airlines and global automakers in recent decades. Moreover, returns to shareholders typically accounted for only a small proportion of firms' total value creation and often had little relation to broader changes in the magnitude and distribution of value. Copyright © 2016 John Wiley & Sons, Ltd.     

Reducing the Error in Monthly Housing Starts Estimates

This paper describes a method for developing estimates of total monthly housing starts that are more accurate than the published Census Bureau figures. The technique makes use of the facts that (1) estimated building permit issuance is subject to far less sampling error than is the starts estimate and (2) permit issuance and starts bear a strong contemporaneous correlation. The conclusion is that monthly housing starts and monthly building permit issuance should be assigned nearly equal weights in developing an improved estimate of total housing starts.     

Search and price dispersion in online grocery markets

Consumers often purchase multiple products at a time from retailers, creating multi-product incentives for search. In this paper we consider how product variety affects consumer search intensity and the dispersion of prices in multi-product retail markets. We employ online grocery pricing data from four large retailers in the UK to estimate search costs and equilibrium price dispersion for food products under circumstances where: (i) consumers search for single products; and (ii) consumers search for multiple products at once. We compare estimates in each case between a model in which utility increases with product variety and a model in which utility is not a function of variety. Relative to our preferred specification with variety effects in utility, we find estimates of both search cost and search frequency to be biased upwards in single product settings when variety effects are ignored; however, we find estimates of search costs are biased upwards while search frequency is biased downwards in multi-product settings when variety effects in utility are ignored.     

Selling Value in Business Markets: Individual and Organizational Factors for Turning the Idea into Action

Modern business-to-business firms focus increasingly on understanding and selling value, as a strategic priority and to achieve marketing and sales excellence. Yet many companies struggle to implement their value orientation, without sufficient knowledge of how to translate it into sales practice. This study therefore examines value-based selling (VBS) as an implementation of value-based marketing at the sales force level. The proposed motivation–opportunity–ability framework integrates individual- and organizational-level antecedents, outcomes, and moderators in an attempt to explain the adoption and performance outcomes of VBS in business markets. Multilevel path modeling with cross-sectional survey data from 944 salespeople and managers in 43 sales organizations confirms the prediction that VBS enhances salespeople's performance, beyond that achieved with established selling approaches. However, firms need specific types of salespeople and dedicated organizational support for effective VBS implementation. A salesperson's learning orientation and networking competencies emerge as critical antecedents. Organizational value assessment tools can compensate for individual salespeople's lack of learning orientation; reference marketing efforts also strengthen the performance outcomes of VBS. Finally, VBS is most effective in organizational settings where perceived customers value demandingness is lower, enabling salespeople to use VBS as a proactive selling approach.