Low price signal default: an empirical investigation of its consequences

Low-price guarantees (LPG) signal the market position of a seller’s offer price and promise to compensate consumers in case that information is erroneous. In this research, we demonstrate that when retailers default on the information provided by an LPG, consumer perceptions of the retailer suffer, but the extent of the damage depends on the conditions associated with the default. On the basis of attribution theory, we posit that consumers may attribute default to the retailer’s opportunism but emphasize this attribution differently in various default conditions. Furthermore, we show that the restoration of consumer perceptions after a refund depends on consumers’ focus in terms of the signal itself. If they consider the protective, compensatory function of a low price signal, their post-refund outcomes are more favorable; when they focus on the informational function, these outcomes are less favorable. We discuss the theoretical and practical implications of these findings.

Understanding Retail Managers’ Role in the Sales of Products and Services

This research investigates the influence of retail chain-level activities (e.g., district supervisor directives and policies) and store manager behaviors on the sale of physical products versus services. Using data gathered within a U.S.-based retail automotive parts chain, the authors discover that to sell services, especially in competitive environments, store managers should focus on sales planning and transformative leadership behaviors, which accentuate both the long-term planning horizon and the effects of managerial actions. In less competitive environments though, a more transactional approach (e.g., selling orientation) can be effective for selling services. Alternatively, to sell products, store managers’ selling effort appears to be the most important driver of success, and a transformative leadership approach may be detrimental when the retailer faces a high level of direct competition. In total, the findings suggest that corporate chain activities, such as the level and clarity of store managers’ goals and supervisor monitoring, influence store manager behaviors, which in turn affect the sale of physical products and services.     

Customer Experience Management in Retailing: Understanding the Buying Process

Retailers recognize that greater understanding of customers can enhance customer satisfaction and retail performance. This article seeks to enrich this understanding by providing an overview of existing consumer behavior literature and suggesting that specific elements of consumer behavior—goals, schema, information processing, memory, involvement, attitudes, affective processing, atmospherics, and consumer attributions and choices—play important roles during various stages of the consumer decision process. The authors suggest ways in which retailers can leverage this understanding of consumer behavior. Each of these conceptual areas also offers avenues for further research.     

International industrial buyer behavior: An exploration and a proposed model

A large proportion of world’s trade revolves around a long list of industrial products which are pruchased by industrial buyers. Although it has been suggested that the impact of culture on international markets is more predominant in the consumer goods than industrial goods (Keegan 1984), little has been done in terms of understanding other variables besides culture that effect the international industrial buyer and his/her behavior.     

Environments, unobserved heterogeneity, and the effect of market orientation on outcomes for high-tech firms

The interaction between market orientation and facets of the environment is theoretically compelling and is hence the primary interaction studied in market orientation literature. Yet empirical literature offers mixed findings regarding these interaction effects. We suggest that these mixed findings may result from the failure of extant research to control for unobserved heterogeneity that may mask the true relationships among market orientation, facets of the environment, and firm outcomes. Such unobserved heterogeneity might arise due to presence of higher order (e.g., three-way, four-way) moderators (e.g., firm size and innovativeness). To illustrate our assertions on unobserved heterogeneity and the role of firm size and innovativeness, we present two studies that use firm performance or new product performance as the outcome variable; the studies (1) include market orientation, two facets of the environment (technological turbulence and market dynamism), and the interactions between market orientation and facets of the environment as explanatory variables, (2) employ finite mixture regression models to estimate the relationships of interest while explicitly accounting for unobserved heterogeneity in the form of latent regimes (segments), and (3) use firm size and innovativeness as concomitant profiling variables in the finite mixture model specification. The results indicate that disaggregate models (i.e., multi-regime solutions) offer the best fit in both studies. The effects across the latent regimes differ, demonstrating the possibility of an aggregation bias in empirical literature and suggesting the need for using disaggregated analyses to study important marketing phenomena. In theoretical terms, these results also suggest the possibility of developing theories that incorporate unobserved heterogeneity and perhaps higher order (e.g., three-way) interaction effects.     

Who competes with whom? A demand‐based perspective for identifying and representing asymmetric competition

A host of strategic management and marketing issues, including competitive analysis and strategic decision making, hinges on accurately identifying and representing competitive market structures. It is readily acknowledged that competitive market structures are typically asymmetric; namely, one firm may actively compete with another in a given market but not vice versa. However, empirical efforts to assess these competitive asymmetries have been lacking in the strategy literature. We propose a new spatial methodology to identify and represent asymmetric competitive market structures. Specifically, we devise a new stochastic multidimensional scaling procedure that is calibrated from actual consumer consideration/choice sets to estimate and uncover competitive asymmetries. The proposed methodology can be effectively employed in the analysis of appropriate data from either demand‐ or supply‐side approaches to assess competitive market structure. We illustrate our proposed methodology with survey data collected from two different commercial applications: one from the U.S. luxury automobile market and the other from the U.S. portable telephone market. We contrast the findings of the proposed methodology against traditional symmetric approaches for identifying and representing competitive market structures, and discuss the respective strategic insights. Copyright © 2005 John Wiley & Sons, Ltd.     

Imperfect information: The persistence of price dispersion on the web

In this article, the authors empirically test the notion that as the mean price of durables increases, the degree of dispersion also increases. This effect holds even when they specifically consider variables such as the number of competitors and store quality. The authors suggest that an individual-level perceptual mechanism, the psychophysics of price, at the aggregate level helps explain continued price dispersion on the Web. These results are contrary to predictions from standard economic theory, which suggest that readily available price information will result in increased price competition and lower price dispersion. Two studies consistently demonstrate that as the mean price of an item increases, price dispersion also increases. These results provide evidence that, contrary to general economic expectations, the Internet has not commoditized products. Retailers and managers need to pay attention to Internet information but not be fearful of its impact on their pricing strategies. Joan Lindsey-Mullikin (jmullikin@babson.edu; Ph.D., Arizona) is an assistant professor of marketing at Babson College. Her research and teaching interests focus on pricing, retailing, and consumer behavior. She has published in journals such as theJournal of Retailing, Journal of the Academy of Marketing Science, Journal of Consumer Affairs, Journal of Social Psychology, andJournal of Product and Brand Management. She serves on the review board of theJournal of Product and Brand Management. Dhruv Grewal (dgrewal@babson.edu; Ph.D., Virginia Tech) is the Toyota Chair in Commerce and Electronic Business and a professor of marketing at Babson College. He is currently coeditor of theJournal of Retailing (2001-present). His research and teaching interests focus on e-business, retailing, global marketing, pricing and value-based marketing strategies. He will be awarded the 2005 Lifetime Achievement in Behavioral Pricing Award (Fordham University, November 2005). He is a “Distinguished Fellow” of the Academy of Marketing Science. He has published more than 65 articles in journals such as theJournal of Marketing, Journal of Consumer Research, Journal of Marketing Research, Journal of Retailing, andJournal of the Academy of Marketing Science. He was won awards for his teaching and research. He cochaired the 1993 Academy of Marketing Science Conference, the 1998 Winter American Marketing Association Conference “Reflections & Future Directions for Marketing,” and the 2001 AMA doctoral consortium. He will be cochairing the American Marketing Association 2006 Summer Educator’s Conference.