The Assimilative and Contrastive Effects of Word-of-Mouth Volume: An Experimental Examination of Online Consumer Ratings

The popularity of online rate-and-review websites has increased the importance of word-of-mouth (WOM) volume (number of ratings) yet the retail literature has not paid adequate attention to understanding its impact. This paper highlights WOM volume as a high-scope, decision-making cue upon which the influence of other WOM-relevant characteristics on a WOM message's persuability depends. We begin, via a pretest, by demonstrating the intuitive expectation that high volume, relative to low volume, accentuates or assimilates perceptions of positivity or negativity of WOM targets. Then, through two experimental studies, we show that depending upon how high volume interacts with WOM consensus and consumer decision precommitment, it can contrast preference away from the valence of a target also. In our third and final experimental study, we demonstrate that consumers differ in their susceptibility to the influence of high volume. Those with a higher desire to be different from others, compared to those with a higher desire to be similar, are resistant to high volume's assimilative sway and do not show the valence-accentuating effects demonstrated in the pretest. Retail managers and researchers should find these insights about the different roles of WOM volume beneficial.     

Local competition, entry, and agglomeration

This paper analyzes competition between two spatially differentiated multi-product retailers who encounter entry from a low-cost discounter. We assess how entry affects the pricing of the incumbent stores and the role played by the location of the entrant. Our primary objective is to identify how traditional retailers respond to new forms of low-cost retailing. Results show that post entry, the prices for some products are higher than the pre entry. However, which product prices increase depends on the incumbent’s location. Contrary to conventional wisdom, we find that the store closer to the entrant is better off compared to the incumbent located further away. We empirically demonstrate the main workings of our theory using sales data from several grocery stores that saw entry by discount stores in their trading areas.     

Daily price adjustments in the U.S. market for natural gas

A daily model of cash market for natural gas in the U.S. is presented and estimated over 1997. The model develops the notion that the expected rather than the actual amount of gas in storage (along with weather) and storage changes impact the current daily cash price. These notions are supported by the estimations presented. At the daily observation level, reported changes in storage levels are signals that actual consumption or production are either as expected and result in no price pressure or are not as expected and do result in price pressures.     

Functional marketing plan development in department store retailing

Retailers are now implementing the types of formal marketing planning programs that have long characterized consumer goods firms. The functional marketing plans that are developed tend to be a year or less in duration. The primary responsibility for developing the plans resides with the general merchandise manager. The planning efforts of the retailing executive, in spite of their short term nature, do reflect an awareness of the importance of understanding the strengths and weaknesses of competitors and of the need to spell out issues involving profit planning, sales promotion planning, merchandise addition/deletion decisions, and issues involving inventory/physical distribution. A variety of marketing plans are developed. Separate plans are developed by merchandise lines in many organizations. The authors wish to express their appreciation to The Conference Board for permission to use the questionnaire, with modifications, underlying research for The Marketing Plan, Report No. 801, The Conference Board, 1981, as the basis for formulating the questionnaire used in this research     

THE VOLUNTARY PRESENTATION OF VALUE ADDED STATEMENTS IN AUSTRALIA: A POLITICAL COST PERSPECTIVE

This paper explores corporate management's incentive to voluntarily disclose Value Added Statements in their yearly financial reports. Adopting a political cost perspective, hypotheses relating Value Added Statement disclosure to labour intensity, corporate tax payments, rate of return, size and industry volatility are developed. Using a sample of Australian publicly listed companies, the results of our empirical testing support the hypotheses that the decision to voluntarily disclose Value Added Statements is related to a company's size (in terms of both market concentration and profitability), a proportional measure of tax payments and the industry to which it belongs. Labour intensity and rate of return were found to be unrelated to the voluntarily disclosure of Value Added Statements.