Why the Generalized Bass Model leads to odd optimal advertising policies

We show that the optimal advertising strategy under the Generalized Bass Model (GBM) involves beginning at an extremely low level (the lower the better) and then increasing spending throughout the planning period. This strategy remains optimal in the presence of decreasing prices that affect both margins and diffusion speed. We provide a simple explanation for why this happens. We further show that the intuitively appealing patterns of continuous decrease or increase-then-decrease (both with an uptick towards the end) identified in earlier research are also possible as optimal dynamic advertising paths under the GBM structure, but only if the advertising at launch is constrained to be higher than a particular threshold, which we identify. The constraint necessary to generate intuitively appealing strategies lowers overall profits. Therefore, the GBM generates advertising policy recommendations that most marketers would deem odd. This casts doubt on the value of the GBM for normative purposes. Other existing diffusion models are preferred when seeking normative guidance on optimal dynamic advertising policies for new products subject to word of mouth.     

Predicting product life cycle patterns

In this paper, we propose a new model of adoption and repurchase due to upgrades driven by the utility of technology products that keep improving. The model is able to predict product life cycle patterns that could not be explained previously. Such patterns were used to challenge diffusion theory validity. Mathematically, the model is described as a nonlinear discrete system that depends on a small set of parameters. We investigate the dynamic properties of the nonlinear system using numerical stability analysis. We find domains in the parameters space in which the equilibrium point and the periodical orbits are stable. The domains correspond to population heterogeneity, tendency to upgrade, and the influence of industry response on market dynamics. We also implement our model to fit actual data of two real-world product life cycles with many irregularities and benchmark the results of our model vs. well-known models.     

Mortality salience – shedding light on the dark experience

ABSTRACT

Mortality salience, a key term in Terror Management Theory, refers to self-awareness of one’s vulnerability and ultimate mortality. This exploratory study, based on psychology and tourism literature, clarifies the degree to which a visit to a heritage site of death and atrocities evokes mortality salience as well as the relationship between mortality salience and various dimensions of the visit experience. The findings indicate that not only was mortality salience evoked during the visit, it is also an important component in understanding the motivation to visit dark sites, the emotional experience of the visit, and the impact of the visit on visitors. We therefore propose that the conceptualization and management of a death-centered heritage site can be enriched by the integration of sense of mortality salience. Additionally, the high Cronbach’s alpha suggests that the study can provide an initial basis for a scale to quantitatively measure Mortality Salience.     

Congestion tolls and parking fees: A comparison of the potential effect on travel behavior

This paper presents a comparison of attitudes towards congestion and parking tolls and explores their effect on travel behavior. The findings indicate that drivers are sensitive mainly to congestion tolls and are willing to change their travel habits to avoid these tolls. The major effect of a congestion toll is the shifting of the time of the journey. High levels of demand elasticity (−1.8 for congestion tolls and −1.2 for parking fees) were found. The readiness to pay parking fees is greater; thus, the effectiveness of congestion tolls in reducing demand is higher during the times the tolls apply.     

Bonding and Bridging Associational Social Capital and the Financial Performance of Local Authorities in Israel

Abstract

This study explores whether bridging and bonding social capital differ in their impacts on government performance at the local level and the extent to which these impacts vary between localities exhibiting differing socioeconomic resources. The study is based on an analysis of 256 local authorities in Israel. The findings show that bridging and bonding social capital do differ in their respective effects on government performance and that the nature of the relationship of each type of capital with government performance varies by the community's socioeconomic profile. Poor communities with high densities of bridging social capital were characterized by lower deficits as a percentage of total municipal budgets, more accurate expenditure forecasts and greater spending on services per capita.     

Forecasting sales and product evolution: The case of the hybrid/electric car

We present a model that forecasts sales and product evolution, based on data on market and industry, which can be collected before the product is introduced. Product evolution can be incremental but can also take place by releasing new generations. In our model adoption of a new product is motivated by attribute improvements (enabled by technology evolution), and firms' attribute improvements strategies are motivated by market growth and directed by market preferences. The interdependency between attributes' improvements and cumulative adoption level makes the problem inherently dynamic. The dependency of attribute levels on adoption levels is assessed using industry and technology analysis. Market preferences and purchase intention response to attribute levels changes are assessed based on a conjoint study. The option of collecting and interpreting data about both demand and supply aspects, before the new product is introduced, enables us to estimate sales and technology progress endogenously rather than to require them as inputs. We demonstrate the method on the hybrid car market.     

Fee or free? How much to add on for an add-on

Sellers often provide complimentary “no extra charge” add-ons (e.g., free Internet connection) to consumers who buy their primary products (e.g., a hotel stay), but recently add-ons that used to be free are offered for a fee. The conventional wisdom is that unadvertised add-ons for high fees help competitors increase profits that are competed away by advertising low prices for the basic products. This theory cannot explain why complimentary add-ons are still offered by some sellers. We show that providing complimentary add-ons can be profitable for sellers with monopoly power under certain demand conditions. If these demand conditions are not met, it is optimal to charge a supplementary fee for the add-on. We also show how pricing policy can be designed to selectively target or deter different consumer segments from purchasing the add-on to boost sellers’ profits, providing a strategic role for selling add-ons at either below-cost or at exorbitantly high prices. Yet such behavior may have repercussions for economic welfare when it results in socially inefficient giveaways when consumers would be better served with a lower price on the basic product without the add-on or, with the other extreme, when it results in excessively high prices for an add-on that restricts sales and leads to its under-provision from a societal perspective. The paper also provides managerial insights on the design and use of add-ons.     

Jews,Arabs, Russians and Foreigners in an Israeli City: Ethnic Divisions and the Restructuring Economy of Tel Aviv, 1983–96

This article examines the role of urban economic restructuring in the emerging new ethnic division of labor in Tel Aviv, in the context of large waves of migration to and from the city. The occupational structures of four groups – veteran Jews, Israeli Arab citizens, new immigrants from the former USSR who are Israeli citizens, and non‐citizen foreign workers – are analyzed. Study of the evolution of polarized occupation and income levels in the city of Tel Aviv relative to the rest of Israel shows that both aspects of polarization widened in the city of Tel Aviv as the restructuring process advanced. The findings are discussed in view of the theoretical debates regarding polarization, professionalization and the emergence of a new urban ‘underclass’. The data are based on Central Bureau of Statistics (CBS) censuses and labor force surveys. Cet article examine le rôle de la restructuration économique urbaine dans la nouvelle division ethnique du travail à Tel Aviv dans le contexte des grandes vagues de migration vers la cité et loin de la cité. Les structures professionnelles de quatre groupes – les vétérans juifs, les citoyens israéliens arabes, les nouveaux immigrants de l'ancienne URSS qui sont des citoyens israéliens, et les travailleurs étrangers qui ne sont pas des citoyens – sont analysées. Une étude de l'évolution de l'occupation et du niveau des revenus polarisés dans la ville de Tel Aviv par rapport au reste d'Israël montre que les deux aspects de la polarisation se sont agrandis dans la cité de Tel Aviv durant la progression du processus de restructuration. Les résultats sont discutés par rapport aux débats théoriques sur la polarisation, la professionnalisation et l'émergence d'une nouvelle ‘sous‐classe’ urbaine. Les données sont basées sur les recensements du Central Bureau of Statistics (CBS) et sur des enquà tes sur les travailleurs.