The effects of competitive context on consumer response to price changes

ABSTRACT

This paper aims to understand how a brand’s price level, relative to its competitors, will affect consumers’ responses to price changes of the brand. The study uses experiments to examine brand choice responses to price increases and decreases across contexts differing in competitor brands and their respective prices. These experiments are conducted with six consumer goods categories. The research identifies three key factors that affect the size of responses to brand price changes – (1) passing a competitor brand’s price, (2) narrowing versus widening the price gaps with competitors, and (3) whether competitors are predominantly higher or lower priced brands.     

Watching the FIFA World Cup 2010 in England: the sojourner perspective

Recent years have seen an emergence of a varied academic literature focused on the football fan, with a wealth of studies exploring issues such as hooliganism, fan behaviour and fan identification. No research, however, has documented the experiences and perspectives of the international sojourner, who follows the televised tournament far away from the home country. This paper offers a contribution to the literature on fandom by focusing on the experiences of becoming a temporary fan among a sample of nine international students in England during the period of the 2010 FIFA World Cup. It shows the importance of the tournament for students away from their home nation, acting as a point of celebration and as a means of bringing sojourners of the same nationality together to support their team. It reveals how the tournament offered escape from stress, became a focal point for social interaction, provided the opportunity for recreation of home, and for the reinforcement of feelings of national identity.     

Going to the movies: cinema development in Singapore

Using readings of Foucault's heterotropia and Friedberg's imaginary mobility, this paper analyses movie-going as leisure practice. In highlighting the paucity of research in this area, the paper argues that such practice should be understood as a symbolic interaction between people's behaviour and the spaces that they occupy. This theorization is applied to Singapore, where per capita movie-going is amongst the highest in the world. The paper illustrates how, in Singapore, the development of cinemas has been used to underpin land use policies associated with the relocation of residential areas and social policies related to the growth in consumerism. While effectively alienating older audiences, the paper argues that the spatial and cultural metonymy of the cinema with other primary consumption sites – the mall and the fast food outlet – offers young people reassurance about the growing centrality of consumerism to contemporary social life in Singapore. We argue that the cinema offers a temporary escape from the regulation of social life – access to ‘deviant’ space. However, this same consumerism that facilitates such access simultaneously denotes conformity with the dominant ideology: acceptance of the heterotropic possibilities – and limitations – of cinema and movie-going as leisure practice.     

Experiential Marketing and Long-Term Sales

This study investigates the ability of winery tasting rooms to create brand awareness and build long-term brand loyalty. Specifically, we test the conjecture that if tasting rooms create brand awareness and a pleasurable tasting room experience, then those visitors are more likely to recognize and seek out those brands once they leave the tasting room. To measure these effects, we exploit differences in tasting room characteristics to conduct a series of natural experiments from which we analyze differences in off-premise retail sales away from the tasting room. We use scan data on wine sold off-premise through traditional retail outlets to then test for differences among tasting room characteristics. Our results indicate that tasting rooms act as a form of experiential marketing for wineries, creating brand awareness and generating greater growth in off-premise retail sales. Finally, we address issues of endogeneity and unobserved heterogeneity as potential sources of bias.     

Participation and retention in a green tourism certification scheme

Tourism certification schemes offer a transitional procedure to a more transparent and sustainable tourism product. Engaging current and previous Green Tourism Business Scheme (GTBS) members in Scotland, this research addresses issues of retention affecting progression of sustainable tourism supply. Quantitative analysis tracking GTBS members over three time points reveals 2% growth but conceals significant flux in membership. Retention was calculated at 66%, where business type analysis discloses distinct issues among accommodation providers with 42% departing the scheme. Decline is greatest among B&;Bs and guesthouses (?61%), where poor and falling recruitment coincides with very poor retention (33%). Our analysis demonstrates that slow growth in membership is primarily a result of enterprises choosing to leave the scheme, rather than poor recruitment. Questionnaires from past and present GTBS members (n = 109) confirm the importance of personal pro-environmental philosophies and perceived business benefits in attracting members, yet anticipated benefits do not always materialise. The main reasons for leaving the GTBS relate to membership cost and unrealised benefits. Lack of scheme awareness, management, criteria, bureaucracy and time commitment were further departure factors. The paper offers some suggestions to address issues and enhance retention leading to sustainable growth among tourism certification schemes.     

Research note: religious doctrine and its influence on the choice to gamble as a leisure pastime among African American Methodists

This research note examines the relationship between adherence to religious doctrine and participation in gambling as a leisure pastime. In the United States, recreational gambling is a common leisure pastime for many African Americans. Our ideals about the value of gambling are often shaped within families, based on their lived experience with recreational gambling and also within religious communities. Two doctrinal statements from the Methodist strand of Protestantism provide critical assessment of gambling as a leisure pastime. This case study examined African American Methodists’ perceptions about religious doctrine that addresses gambling; their choice to gamble despite their familiarity with the doctrinal position of the Church; and the perception of gambling as a sinful leisure pursuit. Religious doctrine may deter some adherents from participating in gambling as a leisure pursuit but not everyone. Many can be familiar with religious doctrine, may not agree with it and will proceed to gamble. Finally, even if gambling is perceived as a sinful leisure activity, it concurrently can be viewed as a ‘harmless’ vice.     

Options with Constant Underlying Elasticity in Strikes

Closed-form solutions are derived and interpreted for European options, with stochastic strike prices, that maintain constant elasticity of the strike with respect to the price of the underlying asset. We refer to such options as CUES. CUES preserve the relative shares of exercise price risk for both the buyer and writer of the option, regardless of whether the price of the underlying asset moves up or down. The relevance of the CUES concept is established through applications in two distinct fields. First, it is established that CUES-like options are embedded in private equity investments. This concept is then used in a novel application to determine the equity share of a private company corresponding to a given level of investment. Secondly, the advantages that CUES would provide over traditional executive stock option grants are considered and it is shown that CUES can provide enhanced incentive-alignment without increasing options expense to the company. JEL Classification: G130     

Portfolio Optimization under Solvency Constraints: A Dynamical Approach

We develop portfolio optimization problems for a nonlife insurance company seeking to find the minimum capital required that simultaneously satisfies solvency and portfolio performance constraints. Motivated by standard insurance regulations, we consider solvency capital requirements based on three criteria: ruin probability, conditional Value-at-Risk, and expected policyholder deficit ratio. We propose a novel semiparametric formulation for each problem and explore the advantages of implementing this methodology over other potential approaches. When liabilities follow a Lognormal distribution, we provide sufficient conditions for convexity for each problem. Using different expected return on capital target levels, we construct efficient frontiers when portfolio assets are modeled with a special class of multivariate GARCH models. We find that the correlation between asset returns plays an important role in the behavior of the optimal capital required and the portfolio structure. The stability and out-of-sample performance of our optimal solutions are empirically tested with respect to both the solvency requirement and portfolio performance, through a double rolling window estimation exercise.