Taking marketing strategy risks with seemingly no expected gains

This paper investigates the competitive rationale for firms to invest in marketing activities aiming to enhance valuation and achieve differentiation and competitive advantage, while carrying the strategic risks of causing unintended negative consequences. We build a stylized theoretical model where firms offering similar (homogenous) products are competing by determining their marketing strategy and pricing. Each firm must choose between several marketing activities that have different potentials of enhancing consumers’ product valuations while carrying some risk of lowering consumer valuation if unintended negative outcomes occur. The stochastic nature of marketing implies that (1) even when both firms invest the same amount of money aiming to enhance product valuations by the same level, there will be a variety of (posterior) vertical differentiation scenarios where the consumers could value either firm’s product as better as or worse than the rival’s. (2) The firms may employ marketing activities that do not even lead to gains in consumer product valuation in expectation. The duopoly model analysis indicates that associated with strategic pricing, even such stochastic marketing activities may constitute desirable strategies for two a priori symmetric firms in order to avoid a Bertrand type competition as the benefit from differentiation is found to be significant enough to offset the unintended negative outcomes. The oligopoly model analysis indicates that there is an increased incentive to take marketing risk when there is a greater level of competitive intensity in the marketplace. Preliminary experimental evidence is presented to support the main findings from theoretical model analyses. The paper thus provides important managerial implications for firms contemplating investment in seemingly risky marketing activities.

     

人工智能时代个性化定价行为的反垄断规制--从大数据杀熟展开

人工智能时代,数据规模显著扩张,算法能力持续优化。科技实力雄厚、市场力量强大的经营者凭借大数据与算法工具的紧密结合,收集和分析能够反映消费者特征和行为的相关信息,以无限接近消费者购买能力和支付意愿上限的方式对消费者实施个性化定价。个性化定价行为涉及对条件相同的交易相对人在交易价格上实施差别化待遇,可能构成反垄断法所禁止的价格歧视行为。但与以往反垄断实施重点关注的排他性价格歧视不同,个性化定价突出表现为直接针对终端消费者实施的剥削性价格歧视,且在具体情形下呈现出不同的限制竞争效果,引发消费者选择能力与选择范围的双重限制。鉴于此,个性化定价行为的反垄断规制需要准确识别涉案行为,综合判断竞争效果,慎重选择福利标准。对于同时降低消费者剩余和社会总福利的个性化定价行为,可认定其具有限制竞争效果且不具备正当理由,从而构成违法价格歧视;对于降低消费者剩余却提高社会总福利的个性化定价行为,如果选择消费者福利标准则可认定其构成违法价格歧视,如果选择社会总福利标准则可认定其具备正当理由;对于同时提高消费者剩余与社会总福利的个性化定价行为,因涉及消费者之间的剩余转移,对其竞争效果的评价仍待反垄断实施予以明确。     

Alibaba’s IT platform and electronic commerce synergy in driving “Singles’ Day”

Global electronic commerce (ecommerce) development is growing exponentially, especially in the business-to-consumer (B2C) field. Consumers in the Asia-Pacific region have spent more on ecommerce purchases in 2014 than consumers in North America, making them the largest regional ecommerce market in the world. Singles’ Day on November 11 (also known as Double 11 Day or Chinese National Ecommerce Day) is the most successful online shopping day in China. What drives the success of Singles’ Day? We conducted in-depth interviews with Alibaba senior managers, observed the progress of Singles’ Day, and investigated this issue. We find that over the past six years, Alibaba has successfully implemented five critical strategies associated with value activities from identifying merchants and pricing, marketing and sales, payments, and outbound logistics. Along with these strategies, Alibaba has created a synergistic IT platform to connect consumers, merchants, and service providers through identifying merchants and pricing, marketing and sales, payments, and outbound logistics to facilitate value creation by increasing efficiency in their value activities and expanding the market base. These successes have driven the interest of Chinese consumers to its annual shopping carnival on Singles’ Day, changing consumer shopping from traditional stores to online sites and creating the miracle of the Chinese National Ecommerce Day.     

Are consumers heterogeneous in their preferences for odd and even prices? Findings from a choice-based conjoint study

While marketing theories provide some justification for the common practice of setting 9-ending prices, the results of empirical studies are not conclusive on the effects of odd pricing. Nearly all empirical studies have been conducted at the aggregate consumer level, thereby implicitly assuming that consumers respond to odd prices homogeneously. In this research, we analyze consumers' preferences for 9-ending versus 0-ending prices at the individual level. Our findings suggest that some consumers strongly prefer 9-ending prices, whereas other consumers favor 0-ending prices. We further address the existence of level effects and investigate the influence of consumer characteristics on preferences for odd prices.     

Factors affecting farmers market produce prices in Missouri

Produce marketers who participate as farmers market vendors or otherwise directly market their goods should understand not only the location-related characteristics that affect consumer selection of local, fresh produce but also the product attributes that consumers prefer to find in local products. Understanding attribute-price relationships will allow marketers to better plan for value-added marketing opportunities. Using a hedonic pricing model, this study analyzed the influence that product attribute levels have on prices for seven types of produce: sweet corn, tomatoes, cantaloupe, cucumbers, green beans, bell peppers, and zucchini. Based on data collected from Missouri farmers markets, multiple attributes affect produce price variation. In the dataset, one of the strongest effects was exerted by sale location. The importance of this finding is that prices can be collected in a single location and extrapolated to other farmers market locations, which implies reduced search and reporting costs in collecting representative farmers market produce prices. Additionally, a higher weight may increase prices for some types of produce but decrease prices of others after a certain point. Farmers market vendors, as well as other direct marketers, can use attribute pricing information to identify the quality attributes that consumers prefer.     

The effect of privacy choice in cookie notices on consumers' perceived fairness of frequent price changes

Recent regulatory changes (i.e., General Data Protection Regulation of the European Union) enforce that seller (e.g., retail and service) and all other websites disclose through cookie notices which data they collect and store. At the same time, websites must allow consumers to disagree to the tracking of their browsing behavior. Despite sellers' concern about the loss of consumer insights—as consumers might disagree to the collection of their browsing data—cookie notices might also have a surprising side-effect: Consumers might accept frequent price changes (from personalized or dynamic pricing) more readily, if they agree through a cookie notice that their behavior can be tracked. Specifically, two experimental studies show that consent to the tracking of browsing behavior increases consumers internal attribution of a price change, as consumers attribute the cause of the change (here: giving up data) to themselves. This increases price fairness perceptions and, in turn, purchase intent. As a result, for online sellers of goods or services the implementation of cookie notice should no longer be thought as a matter to be avoided, but rather a trade-off decision: Loss of a part of consumer insights versus higher acceptance of data-driven marketing mix decisions, such as frequent price changes.     

Price discrimination in service industries

This article outlines recent methods and applications directed at understanding the profit and consumer welfare implications of increasingly prevalent price discrimination strategies in the service sector. These industries are typically characterized by heterogeneity in consumers?? valuation and usage of the service, resale constraints, and a focus on price as the service??s key attribute. The article focuses on how firms use nonlinear pricing or bundling strategies to benefit from the heterogeneity in consumer demand. We describe the basic economic model commonly used in the literature to analyze such strategic choices and present recent methodological improvements to this benchmark. A discussion of existing applications and future research opportunities concludes the article.     

Ethical Consumerism: A View From the Food Industry in Morocco

Both consumers and firms are now more concerned about ethics as a way to make business transactions a win–win deal. As consumers ensure profitability to businesses, they expect fair practices and honest behaviors toward society. The study reported here attempts to investigate Moroccans’ perceptions and attitudes toward ethical consumerism of food. Consumers’ willingness to buy those products and their motives for such purchases as well as factors preventing ethical purchases is investigated. Besides price, which drives most their decision to buy a food or not, Moroccans are driven by ethical claims such as “healthy,” “no fat,” “pasteurized,” etc. It was shown that consumers trust information on the labels of products besides information provided by consumer authorities. In relation to ethical aspects, Moroccans are mostly concerned about the environment and religion. Older men with high income are shown to be a good target for the ethical food market.     

“I love it” or “I hate it”? The positivity effect in stated preferences for agent evaluation

Consumers often interact with agents to obtain advice about products and services. A consumer’s evaluation of an agent as a source of personalized advice depends, in part, on the extent to which the consumer believes the agent knows and shares her tastes. In this research, we show a positivity effect in the agent evaluation process, whereby consumers perceive alternatives they love (compared to hate) to be more informative to agents about their tastes, and hence more diagnostic to agents for predicting their future evaluations. Further, we show that this positivity effect is moderated by the agent’s level of agreement with the consumer, and is driven by the greater accessibility of information about loved, compared to hated, alternatives. We discuss the implications of these results for interpersonal judgments and agent choice.     

Pricing and return strategy of online retailers based on return insurance

With the development of e-commerce, online shopping has become increasingly common, and as a result, consumers inevitably encounter the problem of returns. Therefore, pricing, return policy and return insurance strategy have attracted considerable research attention. In this paper, we construct four models to study pricing, return policy and return insurance strategy. We show that when a product's net residual value is greater than or equal to zero, online retailers should offer a money-back guarantee (MBG) return policy; however, they do not have to offer free return insurance because the latter does not increase their market share and profit, nor does it increase consumer surplus. The optimal strategy of insurance providers is unaffected by whether the policyholder is an online retailer or a consumer and should be neutral, which helps insurance providers gain the trust of policyholders. Consumers should buy products only when online retailers offer an MBG return policy; however, consumers should not do so if the online retailer provides free return insurance.     

Effectiveness of Marketing Cues on Consumer Perceptions of Quality: The Moderating Roles of Brand Reputation and Third‐Party Information

Consumers usually infer unobservable product quality by processing multiple‐quality cues in the environment. Prior research considering the simultaneous effects of marketing cues on consumer quality perceptions is sparse. Despite the growing importance of third‐party information, research examining its simultaneous effects with marketing cues on consumers’ decision making is especially absent. This research, drawing on cue‐diagnosticity, cue‐consistency, and negativity bias theories, proposes and tests a conceptual framework to reveal interplays among various marketing‐ and nonmarketing‐controlled product cues. The first study examines how two‐ and three‐way interactions of high‐scope (i.e., brand reputation) and low‐scope marketing cues (i.e., price and warranty) affect consumer perceptions. The second study examines a set of interaction effects between third‐party quality ratings and marketing cues (i.e., price and warranty) on consumers’ perceptions. Overall, the results reveal theoretical and managerial implications for processing multiple‐quality cues in consumers’ inference‐making behaviors and suggest that consumers generally aggregate perceptions in more complex ways than suggested in the prior literature when making global product quality evaluations.     

Construction of consumer choice in the market: challenges for environmental policy

Drawing from the literature on the analytics of government, the paper discusses marketing as a form of government, elaborating and illustrating the many ways in which consumer choice is shaped, modified and directed in the market through practices and techniques of consumer marketing. The aim is to critically reflect upon and render problematic the individualistic ideas of the green consumer as a powerful market force and to provoke discussion on the conceptualization – and construction – of consumer subjectivity and social problems in marketing. Taking examples particularly from the fashion and clothing industry, the paper discusses the ways in which marketing activities come to shape consumer conduct by operating through the choice of individuals who freely pursue their needs and desires, and by working on the environment within which this freedom of choice is exercised. The paper contributes to the literature on green consumerism by systematically interrogating and elaborating on the modes and practices of marketing thought and expertise through which consumers and consumption are rendered intelligible and actionable in the market.     

A Welfare Evaluation of History-Based Price Discrimination

We design an asymmetric duopoly model with inherited market dominance such that the dominant firm and the smaller firm can price discriminate based on consumers’ purchase history. We show that uniform pricing softens competition leading to higher industry profits than under history-based pricing. Consumers benefit from history-based price discrimination unless the switching cost is sufficiently high and the inherited degree of dominance is sufficiently weak. A ban on history-based pricing would typically introduce a distributional conflict between consumers and producers. Finally, we establish that the gains to industry profits associated with uniform pricing exceed the associated losses to consumers.     

Consumers’ perception of CSR motives in a post‐socialist society: The case of Serbia

Questionnaire‐based consumer research was conducted in Serbia, as a country in a long post‐socialist transition. The focus was on consumers’ opinions of benefits and attitudes which motivate companies to act in a socially responsible way. Analysis resulted in a division of CSR motives into two main clusters: cluster I—stakeholder and value‐driven motives, and cluster II—egoistic motives, performance, and market‐driven motives. The division obviously concerned motives which were the socialist legacy (endogenous motives in cluster I), and motives imported from open market economies (exogenous motives in cluster II). Consumers’ perceptions are significantly different for endogenous and exogenous CSR motives. Exogenous motives are perceived as principal companies’ motives to practice CSR, but there are no significant correlations between the perception of these motives and consumers’ purchase decisions. Endogenous, value, and stakeholder‐driven motives are perceived in a significantly lower degree as CSR motivators with highly divided consumers’ opinions and female consumers rating them significantly higher. Consumers’ purchase decisions are in a statistically significant positive correlation with attribution of endogenous, value, and stakeholders’ needs‐driven motives.     

Explaining Individual and Task Differences in Consumer Attitudes toward Ambiguity

Consumers frequently face choices involving ambiguity, or uncertainty about the probabilities of the various possible outcomes. Past research has found that attitudes towards ambiguity vary across tasks. It is the purpose of this paper to suggest that such variation in consumer attitudes can be explained by examining the nature of the source of the uncertainty. It is suggested that consumers will have different attitudes depending upon whether the ambiguity is generated internally (by the consumer) or externally (by some outside source). Exploratory evidence and propositions for future research are presented. The results suggest that marketing strategies and de-biasing methods for ambiguous situations should consider the source of the ambiguity.     

How e-WOM recommendations influence product consideration and quality of choice: A motivation to process information perspective

A laboratory experiment examines the effects of electronic word-of-mouth (e-WOM) on consumer consideration and choice of an experience product. Specifically, we manipulated the number of consumer recommendations and the optimality of the recommended product in a realistic online shopping environment. The results indicate that e-WOM is likely to result in more time considering the recommended product. For consumers more motivated to process information, e-WOM recommendations lead to more time spent on the choice task overall. Further, consumers with less motivation to process information make suboptimal decisions based on e-WOM recommendations. Consumers with a high motivation to process information are willing to accept recommendations and switch from declared attribute preferences, but choose only optimal products.     

Consumer spirituality

ABSTRACT

Consumers increasingly turn to the marketplace in search of spiritual well-being. In this introduction to the special issue, we unpack the concept of consumer spirituality. We define consumer spirituality as the interrelated practices and processes engaged in when consuming market offerings (products, services, places) that yield 'spiritual utility'. The market offerings are purposely designed to quench consumers’ thirst for meaningful encounters with one’s inner self or a higher external power. We identify three vehicles – materiality, embodiment, and technology – that consumers engage with to access consumer spirituality. By unpacking the concept of consumer spirituality along three themes - (1) shaping markets for consumer spirituality, (2) the means for accessing consumer spirituality, and (3) making sense of and researching consumer spirituality - we provide a future research agenda to advance scholarly explorations of consumer spirituality and to facilitate a systematic development of this nascent body of literature in marketing and consumer research.     

新品牌规避消费者预期效应的产品营销路径探索

产品营销关乎企业生存与发展,面临众多大品牌的激烈竞争,对于一个新品牌来说,如何规避消费者对新品牌的不信任预期,使自己企业的产品受到更多消费者的青睐,是一个普遍存在的问题.因为知觉恒常性和知觉定势的存在,消费者在购买产品之前就会形成自己的预期,改变消费者的预期会对产品营销带来非常巨大的作用.改变消费者的预期可以通过消费者...     

Promoting green buildings: Do Chinese consumers care about green building enhancements?

This paper explores sustainability‐related choices about buildings by analysing how consumers rated the relative importance of various attributes of conventional and green buildings. It also analyses how consumers judge environmental and health‐oriented improvements in green buildings. Unlike previous studies, this research applied conjoint analysis to explore the green building market at the consumer's level by regarding green buildings as nondurable green products and services. We used a survey to gather consumer preferences about several green building hotel models which partly applied green energy, modern wood structures and improved indoor environmental quality (IEQ). In total, 341 consumers participated the survey in two of China's largest cities: Beijing and Shanghai. The results revealed that green energy was the most preferred attribute of green buildings, exerting an even stronger overall effect on consumer choice than price. Afterwards, we identified distinct consumer segments and determined the background characteristics of each segment based on the similarities in the preferences for each attribute. The largest consumer segment, consisting of younger consumers, ranked green energy as the most important criterion. However, an improved indoor environmental quality was generally not highly ranked, and individuals in the consumer segment, which included more older and female consumers, were more likely to reject modern wood structures. The results also revealed that higher‐income individuals were most concerned with price, and consumers with higher levels of education were willing to pay more to support green buildings.     

Too close to be similar: Product and price competition in retail gasoline markets

We examine how product and pricing decisions of retail gasoline stations depend on local market demographics and the degree of competitive intensity in the market. We are able to shed light on the observed empirical phenomenon that proximate gasoline stations price very similarly in some markets, but very differently in other markets. Our analysis of product design and price competition between firms integrates two critical dimensions of heterogeneity across consumers: Consumers differ in their locations and in their travel costs, as in models of horizontal differentiation. They also differ in their relative preference or valuations for product quality dimensions, in terms of the offered station services (such as pay-at-pump, number of service bays or other added services), as in models of vertical differentiation. We find that the degree of local competitive intensity and the dispersion in consumer incomes are sufficient to explain variations in the product and pricing choices of competing firms. Closely located retailers who face sufficient income dispersion across consumers in a local market may differentiate on product design and pricing strategies. In contrast, retailers that are farther apart from each other may adopt similar product design and pricing strategies if the market is relatively homogeneous on income. Using empirical survey data on prices and station characteristics gathered across 724 gasoline stations in the St. Louis metropolitan area, and employing a multivariate logit model that predicts the joint probability of stations within a local market differentiating on product design and pricing strategies as a function of market demographics and local competitive intensity, we find strong support for the central implications of the theory.