implications of market structure for elasticity structure though considerable attention has been given to market structure little research has been done on the relationship between market structure and elasticity structure the authors develop and partia

an analysis of the tradeoff between advertising and price discounting the authors examine an important influence on the price advertising tradeoff the ratio of price and advertising elasticities their theoretical analysis stresses the centrality of the elasticity r

marketing s impact on firm value generalizations from a meta analysis abstractthe interest in the value relevance of marketing investments has given rise to numerous studies on the marketing finance interface this study integrates extant research findings and establishes empirical generalizations on marketing s impact on firm value specifically the authors conduct a meta analysis of prior econometric elasticity estimates of the stock market impact of marketing actions and marketing assets analyses based on 488 elasticities drawn from 83 studies reveal a mean elasticity of 04 for advertising expenditure variables and of 54 for marketing asset variables among marketing assets customer related assets show a higher mean elasticity of 72 compared with 33 for brand related assets further analyses show that advertising elasticities are lower in more concentrated industries and that marketing asset elasticities are higher during recession times researchers should also be aware that characteristics of the research design e g the type of firm value metric used the om

examining generic competitive strategy types in u s and european markets identification of generic competitive strategy types has recently attracted considerable attention most of this research has however focused on competitive strategy of u s businesses in their domestic market the present study extends these findings to markets outside the united states and more specifically europe based on a sample of industrial businesses drawn from the pims database similar dimensions underlying competitive strategy and similar generic types are found among business in the u s and in europe some differences in the performance and business characteristics of certain strategy types were however observed between u s and european markets rate of market growth also appeared to have more significant relation to performance of businesses in europe than in the u s

robust dynamic estimation managing marketing resources over time requires dynamic model estimation which necessitates specifying some parametric or nonparametric probability distribution when the data generating process differs from the assumed distribution the resulting model is misspecified to hedge against such a misspecification risk the extant theory recommends using the sandwich estimator this approach however only corrects the variance of estimated parameters but not their values consequently the sandwich estimator does not affect any managerial outcomes such as marketing budgeting and allocation decisions to overcome this drawback we present the minimax framework that does not necessitate distributional assumptions to estimate dynamic models applying minimax control theory we derive an optimal robust filter illustrate its application to a unique advertising data set from the canadian blood services and contribute several novel findings we discover the compensatory effect advertising effectiveness increas

consumption externalities and diffusion in pharmaceutical markets antiulcer drugs we examine the role of consumption externalities in the demand for pharmaceuticals at both the brand level and over a therapeutic class of drugs externalities emerge when use of a drug by others affects its value and or conveys information about efficacy and safety to patients and physicians this can affect the rate of market diffusion for a new entrant and can lead to dominance of one drug despite the availability of close substitutes we use data for h2 antagonist antiulcer drugs to estimate a dynamic demand model and quantify these effects the model has three components an hedonic price equation that measures how the aggregate usage of a drug as well as conventional attributes affect brand valuation equations relating equilibrium market shares to quality adjusted prices and marketing levels and diffusion equations describing the dynamic adjustment process we find that consumption externalities influence both valuations and rates of diffusion and that they operate at the brand and not the therapeutic class level

coupon redemption and the demand for frozen concentrated orange juice a switching regression analysis a switching regression model was estimated and used to study the impact of florida department of citrus coupon promotional programs on the demand for frozen concentrated orange juice the empirical results show that discounts and information provided by coupons were effective in increasing the demand for fcoj and that the fdoc s coupon programs had positive impacts on the probability of using coupons for purchasing fcoj moreover different types of coupon promotions had different impacts and coupon users and nonusers demonstrated different degrees of response to price changes

the persistence of marketing effects on sales are marketing efforts able to affect long term trends in sales or other performance measures answering this question is essential for the creation of marketing strategies that deliver a sustainable competitive advantage this paper introduces persistence modeling to derive long term marketing effectiveness from time series observations on sales and marketing expenditures first we use unit root tests to determine whether sales are stable or evolving trending over time if they are evolving we examine how strong this evolution is univariate persistence and to what extent it can be related to marketing activity multivariate persistence an empirical example on sales and media spending for a chain of home improvement stores reveals that some but not all advertising has strong trend setting effects on sales we argue that traditional modeling approaches would not pick up these effects and therefore seriously underestimate the long term effectiveness of advertising the paper concludes with an agenda for future empirical research on long run marketing effectiveness

clearance pricing and inventory policies for retail chains clearance pricing and end of season inventory management are challenging and important problems in retailing sales rates depend upon price seasonal effects and the remaining assortment of items available to customers there is little time to react to observed sales and pricing errors result in either loss of potential revenue or excess inventory to be liquidated this paper develops optimal clearance prices and inventory management policies that take into account the impact of reduced assortment and seasonal changes on sales rates versions of these policies have been tested and implemented at three major retail chains and these applications are summarized and discussed

prices as signals of product quality this paper is concerned with the provision of quality in markets in which consumers have only imperfect information the analysis focuses on a market for a product that can be produced at different quality levels all consumers prefer higher to lower quality but they may differ in their willingness to pay for quality producers can produce any quality they like but higher qualities are more costly to produce the information in this market is imperfect in the sense that the exact quality chosen by a firm is known only to the firm itself some information about the quality of a firm s product will however reach its potential customers even if they do not make any special effort to acquire it within the framework suggested here two conclusions are drawn first prices may serve as signals which exactly differentiate the available quality levels that is there exists a fulfilledexpectations equilibrium at which each price signals a unique quality level second the pricesignals are not arbitrary each price signal exceeds the marginal cost of producing the quality it signals such a mark up depends on the nature of the product specific information received by consumers the poorer the information the higher the mark up

recovering stockkeeping unit level preferences and response sensitivities from market share models estimated on item aggregates abstract the authors propose a new approach to obtaining stockkeeping unit sku level preferences and response sensitivities the authors distinguish an attribute level model in which the unit of analysis is the market share for an alternative created by aggregation e g colgate toothpaste from a truly disaggregate sku level model and they establish an analytical relationship between parameters that they obtain from the two models the authors show that sku level parameters can be recovered by calculation from estimated attribute level parameters circumventing the need for direct estimation of the more complex sku level model they calibrate the store data market share model using 98 weeks of data for ten brands and 168 skus of toothpaste rather than estimate 168 preference parameters when there is an outside alternative in addition to the 168 inside ones it is only necessary to estimate ten brand preference parameters from which the 168 parameters can be computed as long as share and mar

testing competitive market structures an accurate understanding of the structure of competition is important in the formulation of many marketing strategies for example in new product launch product reformulation or positioning decisions the strategist wants to know which of his competitors will be most affected and hence most likely to respond many marketing science models have been proposed to identify market structure in this paper we examine the managerial problem and propose a criterion by which to judge an identified market structure basically our criterion is a quantification of the intuitive managerial criterion that a submarket is a useful conceptualization if it identifies which products are most likely to be affected by our marketing strategies we formalize this criterion within the structure of classical hypothesis testing so that a marketing scientist can use statistical statements to evaluate a market structure identified by 1 behavioral hypotheses 2 managerial intuition or 3 market structure identification algorithms mathematically our criterion is based on probabilities of switching to products in the situation where an individual s most preferred product is not available submarkets are said to exist when consumers are statistically more likely to buy again in that submarket than would be predicted based on an aggregate constant ratio model for example product attributes e g brand form size use situations e g coffee in the morning versus coffee at dinner and user characteristics e g heavy versus light users are specified as hypotheses for testing alternate competitive structures measurement and estimation procedures are described and a convergent approach is illustrated an application of the methodology to the coffee market is presented and managerial implications of six other applications are described briefly

estimating automotive elasticities from segment elasticities and first choice second choice data of the share lost to one product because of a price change diversion fractions are the fractions of that lost share going to each of the other products this paper expresses product cross elasticities in terms of diversion fractions and a scaling factor since the automotive market includes more than two hundred products time series data are insufficient for estimating all elasticities instead this paper estimates automotive elasticities by specifying the diversion fractions using cross sectional first choice second choice data and estimating the remaining scaling factor and own elasticities using more aggregate elasticities estimated from time series copyright 1993 by mit press

emissions intensity targeting from china s 12th five year plan to its copenhagen commitment china is currently the world s largest single source of fossil fuel related co2 emissions in response to pressure from the international community and in recognition of its role in global climate change mitigation the chinese government has announced a series of climate policy commitments in both the copenhagen accord and its domestic 12th 5 year plan to gradually reduce emissions intensity by 2020 emissions intensity reduction commitments differ significantly from emission level reduction commitments that are commonly adopted by developed economies in this paper we investigate the economic implications of china s recent commitments to reduce emissions intensity and highlight the complexities involved in modelling intensity targets under uncertainty using g cubed an intertemporal computable general equilibrium model of the world economy we show that china s emissions intensity targets could be achieved with a range of low and high growth emissions level trajectories corresponding to low and high growth gdp scenarios which lead to different welfare consequences

optimal advertising strategies this paper considers advertising policies for a very general class of response functions it is shown that if a pulsing policy is used awareness or sales eventually settle down to a steady cycle and the average response over the cycle is a decreasing function of the length of the cycle when response shows increasing returns to scale it is possible in theory to use a device called chattering to replace the true response by a straight line which lies above the true response in the region in which chattering is used a numerical example is given to show how the optimal policy can be computed when part of the response is linear and the results obtained are compared with those of the best practicable approximation to chattering it is shown that the problem of maximising awareness or sales subject to a budget constraint is structurally identical with maximising profit after advertising with or without a constraint in either case it is possible that for part of the time the optimal policy involves chattering

advertising budget allocation under uncertainty this article presents a model for the allocation of an advertising budget to geographic market segments or territories when the sales response to advertising in each segment is characterized by a probability distribution it is shown that allocation decisions that are based on the expected sales response may be associated with a relatively large degree of risk and therefore non optimal to a risk averse manager the model derives an efficient frontier in terms of the expected profit and its variance resulting from alternative budget allocations the manager then chooses the optimal allocation based on his her preference function

empirical generalizations and marketing science a personal view marketing has matured to the point where it seems desirable to take stock of where we are what we have learned and fruitful directions for extending the knowledge base that has developed science is a process involving the interaction between empirical generalizations and theory an empirical generalization is a pattern or regularity that repeats over different circumstances and that can be described simply by mathematical graphic or symbolic methods one of the purposes of the empirical generalizations conference held at wharton on february 16 18 1994 was to develop a list of examples of such empirical generalizations in marketing empirical generalization can precede a theory to explain it or it can be predicted by a theory science is the process of interaction between theory and data that leads to higher level theories examples are provided here of empirical generalizations in marketing and their theoretical counterparts one example is provided of a higher level theory

financial performance and survival of multinational corporations in china this study investigates the impact of entry timing mode of entry market focus and location advantages on the financial performance and survival of multinational corporations mncs in china three major results were found first mncs that entered china in an earlier year had a higher level of profit than those that entered in a later year second equity joint ventures ejvs had a higher profit level than cooperative operations or wholly foreign owned subsidiaries third mncs that utilized well the location advantages in china had a higher profit we also found that ejvs were more likely to survive compared to cooperative operations while wholly owned subsidiaries did not differ from ejvs the findings are based on a 2 year study of about 1000 mnc operations in china copyright 1999 john wiley sons ltd

offshore sourcing reaction maturation and consolidation of u s multinationals the authors conducted a quasi longitudinal investigation of u s multinationals r d manufacturing offshore sourcing strategies and resultant global market performance implications utilizing comprehensive data collected by the 1977 1982 and 1989 benchmark surveys of u s direct investment abroad hypotheses were tested in a path analytic framework despite increased competition at home and abroad causing their global market share positions to weaken in recent years u s multinationals have maintained and even may have improved their global consolidated profitability levels by skillfully exploiting their technological prowess through technology transfer and off shore sourcing rapidly changing roles of u s parent firms and their foreign affiliates in technology development and global sourcing relationships portend a maturing yet arduous shift toward a global rationalization

cross national laws and differences in market response international differences in general and cultural differences in particular exert profound influence on what people buy in modeling market response highly visible international differences in purchase behavior seem to lead to an assumption by management scientists that there are large parallel international differences in market response to such things as price and advertising in an interpretive review of market response models we do find international differences in response parameters but we also find that parameter differences due to cross national factors tend to be smaller than differences related to technical characteristics of the model or to product market specifics we suggest two new intermediate categories of generalizability between the extremes of everything is the same and everything is different we also argue that one promising approach to international generalization is through appropriate statistical adjustment of parameters from existing models

endogeneity and heterogeneity in a probit demand model estimation using aggregate data two issues that have become increasingly important while estimating the parameters of aggregate demand functions to study firm behavior are theendogeneity of marketing activities typically price andheterogeneity across consumers in the market under consideration ignoring these issues in the estimation of the demand function parameters can lead to biased and inconsistent estimates for the effects of marketing activities endogeneity and heterogeneity have achieved prominence in large measure because of the increasing popularity of logit models to characterize demand functions usingaggregate data the logit model accounts for purchase incidence and brand choice by including a no purchase alternative in the consumer s choice set this allows for category sales to change as a function of the marketing activities of brands in the category there are three issues with using the logit model with the no purchase option to characterize demand when studying competitive interactions among firms 1 the marketing literature dealing with brand choice behavior at the consumer level has found that the iia restriction is not appropriate as each brand in the choice set is more similar to some brands than it is to others 2 studies have found that the purchase incidence decision is distinct from the brand choice decision hence it may not be appropriate to model the no purchase decision as just another alternative in the choice set with the iia restriction holding across all brands and the no purchase option 3 even if the distinction between the purchase incidence and brand choice decisions is accounted for via for example a nested logit specification accounting for the purchase incidence decision with aggregate data requires assumptions for computing the share of the no purchase alternative which is otherwise unobserved in this paper we propose a probit model as an alternative to the logit model to specify the aggregate demand functions of firms competing in oligopoly markets the probit model avoids the iia property that affects the logit model at the individual consumer level furthermore the probit model can naturally account for the distinction between the purchase incidence and brand choice decisions due to the general covariance structure assumed for the utilities of the alternatives we demonstrate how the parameters of the proposed model can be estimated using aggregate time series data from a product market in the estimation we account for the endogeneity of marketing variables as well as for heterogeneity across consumers our results indicate that both endogeneity as well as heterogeneity need to be accounted for even after allowing for a non iia specification at the individual consumer level specific to our data we also find that ignoring endogeneity has a bigger impact on the estimated price elasticities than ignoring the effects of heterogeneity a comparison of the elasticities obtained from the probit model with those from the corresponding logit specification indicates that therange of elasticities obtained from the probit model across brands is larger than that obtained from the logit the results have implications for issues such as firm level pricing in addition to specifying a probit model and providing comparisons with the logit model the paper also addresses the third issue raised above we propose a simple alternative to the purchase incidence brand choice specification by decomposing the demand for a brand into a category demand equation and a conditional brand choice share equation we provide a comparison of results from this specification to those from the specification that includes the no purchase alternative and find that estimated elasticities are sensitive to the specification used we also estimate the demand function parameters using a traditional specification such as the double logarithmic model here we find that the estimated elasticities could be signed in such a manner as to be not useful for firm level pricing decisions one of the key limitations of the proposed model is that while it accounts for the purchase incidence and brand choice decisions of households it does not account for differences across consumers in their purchase quantities the model and analysis are best suited for product categories in which consumers typically make single unit purchases another limitation is more practical in nature while recent advances have been made in computing probit probabilities it could nevertheless be a challenge to do so when the number of alternatives is large

environment market share and market power in this paper we develop a process model relating market share to firm profits in particular we specify average price and average cost equations as a function of previous year market share position changes in market share environmental conditions and interactions of environmental conditions with the lagged market position and market share change variables we estimate these equations using pims data after controlling for unobservable factors our results suggest that firms with high market shares derive no extra market power benefits except if they operate in environments with little buyer power instead environmental factors and changes in market share most strongly influence price and cost an analysis of the market share associated with maximal firm profits indicates that for the majority of firms in our sample steadily increasing market share does not always associate with increasing profits giving credence to the proposition that more market share is not always better

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

evaluation of salesforce size and productivity through efficient frontier benchmarking the efficient operation of a salesforce is a critical element in the profitability of many firms three factors play key roles the salesforce s size its allocation and its productivity this gives rise to the following questions can salesforce performance be improved by 1 hiring more salespeople 2 allocating them more effectively to the various sales districts and or 3 improving salesperson productivity through better calling patterns in terms of consumers and product line items the practice of most firms and the methodology used in most of the academic literature to address salesforce design and productivity questions is a bottom up approach this approach starts with assessments by each salesperson of the sales and effort corresponding to each customer and prospect in their territory these assessments are then aggregated to the territory district and national levels this paper takes an alternative top down approach it is based on an estimated relationship between district level sales and salesforce size effort and other variables this more macro level decision tool can be used by management in parallel to and as an objective check of the more conventional and more subjective bottom up approach we develop an efficient frontier methodology which allows us to estimate how total district sales respond to salesforce size district potential and competitive activity in the firm s best performing districts the methodology utilized is based on data envelopment analysis dea and yields a benchmark measure of each district s efficient frontier sales sales assuming the district s salesforce allocates its effort as done in the best performing districts based on the estimated response function we discuss the three potential sources of increased profitability closing the inefficiency gap of each of the lower performing districts optimally reallocating the current salesforce to the various districts and changing the current size of the salesforce to its optimal level the inefficiency gap issue is addressed through comparison of the parameter estimates for the best districts obtained through our methodology with those of an average district sales response function obtained using regression analysis this comparison points to an important methodological finding the use of multiple estimation results may lead to an improved understanding of the phenomenon being studied in our case the identification of the likely causes of district productivity inefficiencies the latter two sources of increased profitability salesforce reallocation and changes in the current salesforce size are addressed analytically given the district level efficient frontier sales response function the proposed top down procedure using the efficient frontier methodology and the insights it provides are examined by evaluating the operations of two different salesforces one selling manufacturing equipment and the other business equipment in both cases regression based analysis would have resulted in a declaration that the status quo was close to optimal while the frontier based analysis pointed out that strong gains were possible in certain districts in particular for both firms the greatest increases in profit are obtained through improved salesforce efficiency in the lower performing districts not through salesforce size or district allocation adjustments at the more micro level a comparison of the frontier and regression parameters made it possible to identify which specific changes in the daily operations of the salesforces would allow the realization of these potential productivity gains in our two cases this could be obtained through more emphasis on pursuing prospective accounts

an analysis of optimal advertising under uncertainty we examine the firm s optimal advertising behavior under conditions of uncertainty for the static one period model we show that the firm s attitude toward risk may be responsible for the potential divergence between advertising decisions under uncertainty and those under deterministic conditions for the dynamic multi period model the ultimate impact of uncertainty on advertising is further complicated when the sales response function contains an unknown parameter and the firm wishes to gain more information about it through experimentation we demonstrate that whether it is optimal for the firm to experiment at an advertising rate higher equal to or lower than the myopic one period level would depend on the specification of the response function finally we offer some empirical evidence for our assumption of a quadratic sales response function using time series data of twelve major brands of cigarettes

technical note a price vector model of demand for consumer durables preliminary developments although considerable research has been conducted on optimal pricing policies for manufacturers relatively little work has been done on how price enters the consumer choice process in this paper a model is developed for durables purchasing which integrates both economic and behavioral research by specifying a vector of five price concepts which affect purchasing behavior of particular interest are variables relating to future price expectations due to data limitations a revised model is estimated and the results provide preliminary support for the general model

designing an emissions trading scheme for china an up to date climate policy assessment abstract we assess recent chinese climate policy proposals in a multi region multi sector computable general equilibrium model with a chinese carbon emissions trading scheme ets when the emissions intensity per gdp in 2020 is required to be 45 lower than in 2005 the model simulations indicate that the climate policy induced welfare loss in 2020 measured as the level of gdp and welfare in 2020 under climate policy relative to their level under business as usual bau in the same year is about 1 the chinese welfare loss in 2020 slightly increases in the chinese rate of economic growth in 2020 when keeping the emissions target fixed at the 2020 level after 2020 in absolute terms the welfare loss will reach about 2 in 2030 if china s annual economic growth rate is 0 5 percentage points higher lower the climate policy induced welfare loss in 2030 will rise decline by about 0 5 percentage points full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation but full auctioning leads to higher reductions in output than free allocation for ets sectors linking the chinese to the european ets and restricting the transfer volume to one third of the eu s reduction effort creates at best a small benefit for china yet with smaller sectoral output reductions than auctioning these results highlight the importance of designing the chinese ets wisely

information marketing and pricing in the u s antiulcer drug market introduced into the united states in 1977 tagamet was the pioneer product in the class of antiulcer drugs known as h2antagonists by promoting ulcer healing through inhibiting acid secretion tagamet was able to heal ulcers and treat pre ulcer conditions pharmacologically on an outpatient basis thereby substituting for more costly hospital admissions and surgeries in 1983 another h2 antagonist called zantac entered and by early 1987 u s zantac sales surpassed those of the pioneering tagamet today there are four h2 antagonists sold in the united states tagamet zantac pepcid and axid zantac is now the world s largest selling prescription drug having estimated worldwide sales in 1994 of about 4 billion each of the four h2 antagonists is among the top 100 in world drug sales although tagamet lost u s patent protection on may 17 1994 in this paper we examine empirically the role of information in facilitating and explaining growth of the overall antiulcer drug market as well as in shaping the changing market shares of the four patented products the dissemination of information is due largely to the use of marketing channels such as visits by manufacturers representatives to physicians called detailing advertising in medical journals and most recently by direct to consumer advertising we examine these and also explore pricing policies product differentiation and orderof entry effects

modeling asymmetric competition the effects of the marketing actions of one brand can be distributed among its competitors market shares in a complex manner this paper presents and illustrates methods for modeling brand competition and brand strategies in markets where competitive effects can be differentially and asymmetrically distributed we discuss the empirical specification parameter estimation and competitive strategy implications of the models proposed price and advertising competition among eleven brands of an australian household product is used to illustrate the application of these procedures

deconstructing the pioneer s advantage examining vintage effects and consumer valuations of quality and variety several studies have demonstrated an order of entry effect on market share suggesting that pioneers outperform later entrants however other research has pointed out the limitations of these studies and found evidence that many pioneers fail or have low market share given this background the purpose of this research is to understand the conditions under which pioneers are more likely and also less likely to have an advantage we propose a game theoretic model that includes important sources of pioneer advantages as well as disadvantages specifically we incorporate a pioneer advantage due to preemption in markets with heterogeneous tastes in addition we incorporate a potential pioneer disadvantage due to technology vintage effects where later entrants utilizing improved technology can have lower costs and higher quality the model allows us to evaluate the extent of vintage effects necessary to overcome a pioneer s advantage key relationships are found between the magnitude of the pioneer advantage or disadvantage and consumer valuations of product attributes e g variety and quality we empirically validate the model with vintage effect data in 36 product categories and measures of consumer valuations of product variety and quality for 12 of these 36 categories the results show that pioneers do better in product categories wherevariety is more important and worse in categories where productquality is more important pioneers in categories with high vintage effects are shown to have lower market shares and higher failure rates similar results appear when analyzing persistence of market leadership over time further validating our model s major implications we also present two case studies that illustrate key elements of the model

substitutability and the cost of climate mitigation policy we explore how and by how much the values of elasticities of substitution affect estimates of the cost of emissions reduction policies in computable general equilibrium cge models we use g cubed an intertemporal cge model to carry out a sensitivity and factor decomposition analysis the decomposition analysis determines the contributions of changes in average abatement costs and changes in baseline emissions to the change in total mitigation costs the latter has not previously been considered average abatement cost rises non linearly as elasticities are reduced changes in the substitution elasticities between capital labor energy and materials have a greater impact on mitigation costs than do inter fuel elasticities of substitution the former have more effect on business as usual emissions and the latter on average abatement costs as elasticities are reduced business as usual emissions and gdp growth also decrease so that there is not much variation in the total costs of reaching a given target across the parameter space our results confirm that the cost of climate mitigation policy is at most a few percent of global gdp

innovation orientation environment and performance a comparison of u s and european markets much attention has been paid to the importance of innovation in ensuring the survival and growth of companies for u s companies a key issue is to what extent findings for the u s market can be extrapolated to non u s markets to provide a basis for designing innovation strategy similar innovation orientation types were identified in both markets using a sample of consumer businesses from the pims database a number of similarities and differences in associated environments and performance levels were also identified a major finding was that a high degree of product innovativeness leads to generally poor financial and market share performance in both markets but high rates of market share growth another major finding was that having pioneered in a market leads to effective performance results for the associated environments were more mixed in the sense that there was not a perfect correlation in the environments associated with the types in both markets

modelling impact of advertising and optimizing advertising policy an application in recreation abstract this paper deals with the problem of the desirable level of advertising expenditure the optimal distribution of this expenditure in time and the allocation over the media tv radio and newspaper for a recreation park in the netherlands although the model id developed for the specific situation of this park in principle it can be applied in all situations where the interest is in short term day by day effects of promotional activities on sales examples are other situations in the recreation and leisure business cultural events theatre cinema and sales promotions e g weekend offerings for products in supermarkets first a model was specified and estimated that relates number of visitors to advertising effort it also takes into account non advertising variables that effect the number of visitors then this model was used in a heuristic advertising planning procedure which by means of incremental analysis for a given budget level searches for the optimal allocation of the advertising budget over media and time with this procedure ways to readjust the advertising policy were found by allocating the budget differently over media and time and by changing the overall budget level several recommendations were made to the management of the park a number of which have already been implemented

price induced patterns of competition this research focuses on how price changes influence the observed pattern of brand competition the paper begins with a basic utility model formulation and examines the implications of three major classes of preference distributions on the expected patterns of competition a price tier model is proposed to operationalize the theory and to allow predictive testing the price tier model is estimated on 28 brands across four product categories the results show a specific asymmetric pattern of price competition higher price higher quality brands steal share from other brands in the same price quality tier as well as from brands in the tier below however lower price lower quality brands take sales from their own tier and the tier below brands but do not steal significant share from the tiers above the results are consistent with a bimodal preference distribution with the regular price indifference point being located toward the lower quality end of the preference distribution for the categories analyzed

combining bottom up and top down abstract we motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions the complementarity format permits an energy economy model to combine technological detail of a bottom up energy system with a second best characterization of the over all economy our primary objective is pedagogic we first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom up activity analysis into a top down representation of the broader economy we then provide a stylized numerical example of an integrated model within both static and dynamic settings finally we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries nuclear phase out green quotas and environmental tax reforms

patterns in parameters of buyer behavior models generalizing from sparse replication elasticities calculated from estimates of parameters in four consumer behavior system models are pooled in order to assess systematic differences related to variables and to study characteristics the pooling proves to be plausible because the elasticities from particular variable pairings do not vary systematically with study characteristics few elasticities other than those associated with controllable exogenous variables price and distribution differ significantly from the overall mean although the mean elasticity is significantly different from zero the magnitudes of estimated elasticities indicate that the system would tend to converge after being subjected to external shock

the cultural relativity of organizational practices and theories this paper summarizes the author s recently published findings about differences in people s work related values among 50 countries in view of these differences ethnocen tric management theories those based on the value system of one particular country have become untenable this concept is illustrated for the fields of leadership organization and motivation a key issue for organization science is the influence of national cultures on introduction management twenty or even 10 years ago the existence of a relationship be management and tween management and national cultures was far from obvious to many and it national cultures may not be obvious to everyone even now in the 1950s and 60s the dominant be lief at least in europe and the u s was that management was something univer sal there were principles of sound management which existed regardless of na tional environments if national or local practice deviated from these principles it was time to change local practice in the future the universality of sound manage ment practices would lead to societies becoming more and more alike this ap plied even to the poor countries of the third world which would become rich as well and would be managed just like the rich countries also the differences be tween management in the first and second world capitalist and socialist would disappear in fact under the surface they were thought to be a lot smaller than was officially recognized this way of thinking which dominated the 1950s and 60s is known as the convergence hypothesis during the 1970s the belief in the unavoidable convergence of management prac tices waned it was too obviously in conflict with the reality we saw around us at the same time supranational organizations like the european common market which were founded very much on the convergence belief had to recognize the stubbornness of national differences even within existing nations regional dif ferences became more rather than less accentuated the welsh the flemish the basques the bangladeshi the quebecois defended their own identity and this was difficult to reconcile with a management philosophy of convergence it slowly became clear that national and even regional cultures do matter for management the national and regional differences are not disappearing they are here to stay in fact these differences may become one of the most crucial problems for man agement in particular for the management of multinational multicultural orga nizations whether public or private

practice prize winner dynamic marketing budget allocation across countries products and marketing activities previous research on marketing budget decisions has shown that profit improvement from better allocation across products or regions is much higher than from improving the overall budget however despite its high managerial relevance contributions by marketing scholars are rare in this paper we introduce an innovative and feasible solution to the dynamic marketing budget allocation problem for multiproduct multicountry firms specifically our decision support model allows determining near optimal marketing budgets at the country product marketing activity level in an excel supported environment each year the model accounts for marketing dynamics and a product s growth potential as well as for trade offs with respect to marketing effectiveness and profit contribution the model has been successfully implemented at bayer one the world s largest pharmaceutical and chemical firms the profit improvement potential is more than 50 and worth nearly 500 million in incremental discounted cash flows

comparing model results to national climate policy goals results from the asia modeling exercise abstract while the world has yet to adopt a single unified policy to limit climate change many countries and regions have adopted energy and climate policies that have implications for global emissions in this paper we discuss a few key policies and how they are included in a set of 23 energy and integrated assessment models that participated in the asia modeling exercise we also compare results from these models for a small set of stylized scenarios to the pledges made as part of the copenhagen accord and the goals stated by the major economies forum we find that the targets outlined by the united states the european union japan and korea require significant policy action in most of the models analyzed for most of the models in the study however the goals outlined by india are met without any climate policy the stringency of climate policy required to meet china s copenhagen pledges varies across models and accounting methodologies

strategic pricing and detailing behavior in international markets we study three determinants of the levels of price and detailing effort across geographic markets the within market response to each variable the nature of interfirm strategic interactions both within that market and across markets we empirically examine the interactions of prozac zoloft and paxil across the united states the united kingdom germany france and italy our results indicate that all three factors driving marketing mix interactions are at play in this product category the u s market is less price sensitive than the european markets detailing elasticities are comparable across the united states germany and italy while the united kingdom and france show greater elasticity for the u s market we find that almost all deviations from nash pricing and detailing levels are due to within market interactions in the u k market deviations from nash prices come about due mostly to across market interactions both with the united states as well as the rest of europe whereas deviations from nash detailing levels are mainly due to across market interactions with the united states for italy we observe that both within and across market interactions affect price and detailing levels overall the pattern of interactions makes observed prices more similar across countries than prices implied by the estimated elasticities this underscores the importance of considering within and across market interactions in developing multimarket strategy

chapter 9 econometric and time series market response models publisher summary marketing has seen a rapid expansion in the widespread use of quantitative methods correlation and regression analysis were among the first techniques used as marketing research emerged as a discipline after world war ii in the early 1970s regression analysis became econometrics simultaneous equation systems could be estimated almost as easily as single regression equations while econometrics as a whole continues to flourish as new and more sophisticated estimation techniques and associated computer software have become available simultaneous equation systems have not become widely prevalent the dynamic structure of marketing variables themselves is addressed in the chapter followed by discussions of leads and lags among marketing variables and the assessment of the direction of causality dynamic properties of sales response functions have been discussed in more detail marketing generalizations that have been uncovered as well as empirical evidence on the shape of the sales response function is reported

determining the optimal return on investment for an advertising campaign abstract in this this paper we adopt the point of view that advertising is an investment and propose a simple formula for calculating the level of media spending which maximizes the return on investment the information which must be supplied for the calculation is commonly available and we express the optimal expenditure level in terms which are meaningful to media planners we show that when maximizing return on investment not all of the allocated media budget should be spent

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

examining performance of u s multinationals in foreign markets in the u s a basic tenet of business philosophy is that profitability is related to market share the generality of this finding in markets outside the u s is examined based on a sample of product businesses drawn from the pims profit impact of marketing strategy data base all businesses belong to firms whose corporate headquarters are located in the u s the relation between 7 marketing mix variables and market share and roi return on investment is compared in general the relationship between market share and roi appears to hold in european and other foreign markets the marketing mix variables associated with these measures of performance however as well as the strength of the relationship vary by market area

the demand for information and the diffusion of a new product abstract the paper examines the implications of the ability of a consumer to learn about the characteristics of a new product on the diffusion of the product over time the demand for information by the consumer is shown to generate a sigmoid diffusion curve for total sales of the product further it is shown that over time the elasticity of demand along the diffusion curve increases

international portfolio analysis and strategy the challenge of the 80s this paper suggests an operational approach to strategic planning for international marketing using a portfolio perspective the need for such a perspective is discussed followed by an examination of current approaches to international business portfolio analysis and strategic planning a new approach to international portfolios based on a combined stochastic dominance and analytic hierarchy process approaches is suggested the data requirements and analysis of this approach are outlined and the issues and challenges in the design and implementation of an international business portfolio system are discussed

marketing strategies that make entrepreneurial firms recession resistant abstract the recession of 1990 1991 adversely affected nearly every industry in the united states and entrepreneurial manufacturing firms were among those hardest hit by the recession the failure rate among this group by mid year 1991 had risen 37 from the previous year thus recessions pose a serious threat to the survival of entrepreneurial firms understanding how the business cycle influences performance and what strategies are effective in such turbulent times has practical value for managers of entrepreneurial firms in this paper we report a large scale empirical research study involving subjective and financial information from 118 publicly traded u s manufacturing firms the participating firms are involved in technologically demanding and highly innovative industry segments industrial and computer equipment electrical equipment and components and measuring analysis and control instruments none of the firms has achieved a market share of more than one half of one percent we find that in these industries a company s marketing strategies preceding a recession strongly impact the extent of economic downturn on the firm and influence its odds of a timely and complete recovery our specific prescriptions follow first maintain marketing activities in the core business as assurance against recession increasing sales and advertising increasing breadth of production and increasing geographic coverage improve performance during both the peak and the contraction of the business cycle second during the peak period cautiously expand with an emphasis on marketing efficiency increasing the number of channels of distribution and cutting price have a negative effect unless accompanied by sales force performance measurement a simple emphasis on incentives and efficiency alone hurts a firm as a recession hits all of these prescriptions run counter to existing views that suggest that recession simply requires cutbacks and retrenchment recessions seem to be different from other threats to firm viability and marketing activities appear to help pull the firm through a macroeconomic downturn

an investigation into the order of the brand choice process this paper investigates the order of the brand choice process at the individual family level using a variety of tests t likelihood ratio binomial runs and multinomial runs tests the test of stationarity developed permits separate analyses for stationary and nonstationary purchase sequences our analyses indicate that the purchase sequences of a majority of stationary consumers are consistent with the zero order assumption this result is observed for all the nine frequently bought packaged goods studied with the use of panel data and for a product category soft drinks using experimental data

an econometric study of recruitment marketing in the u s navy since the abolishment of the mandatory draft the u s navy along with the other services has engaged in aggressive marketing strategies in order to attract a sufficient number of qualified individuals to volunteer enlistment the purpose of this study is to investigate the effectiveness of these efforts primarily advertising and personal selling within the general framework of the recruiting environment the study uses insights into the recruiting process provided by the navy recruiting command along with principles of economics and marketing to develop an econometric model of recruiting performance the parameters of the model are then estimated on a monthly data base for the 43 navy recruiting districts from january 1976 to december 1978 the objective of the model is descriptive i e it quantifies the effects of various environmental and marketing variables on three measures of recruiting performance nationally generated leads contracts for the delayed entry program and direct shipment contr

economic analysis of a low carbon path to 2050 a case for china india and japan abstract this article studies the economic implications that different global ghg emission mitigation policies may have in the major asian economies namely china india and japan the analysis covers the period 2010 2050 and is performed by means of a recursive dynamic computable general equilibrium model gem e3 four scenarios are investigated the three standard ame scenarios and a fourth scenario with a ghg emission reduction path compatible with the 2 c target reducing global ghg emissions in 2050 by 50 relative to 2005 the scenarios are compared with the already adopted and announced policies of the respective countries in the context of the copenhagen pledges for 2020 and their long term objectives in 2050 we further discuss the role of energy efficiency measures and zero carbon power technologies in order to reach the long term 2 c target we find that postponing significant emission reductions may not accrue an economic benefit over time whereas it may increase some risks by possibly overstretching the reliance on zero carbon technologies

marginal costs and co benefits of energy efficiency investments the case of the swiss residential sector abstract key elements of present investment decision making regarding energy efficiency of new buildings and the refurbishment of existing buildings are the marginal costs of energy efficiency measures and incomplete knowledge of investors and architects about pricing co benefits and new technologies this paper reports on a recently completed empirical study for the swiss residential sector it empirically quantifies the marginal costs of energy efficiency investments i e additional insulation improved window systems ventilation and heating systems and architectural concepts for the private sector first results on the economic valuation of co benefits such as improved comfort of living improved indoor air quality better protection against external noise etc may amount to the same order of magnitude as the energy related benefits are given the cost benefit analysis includes newly developed technologies that show large variations in prices due to pioneer market pricing add on of learning costs and risk components of the installers based on new empirical data on the present cost situation and past techno economic progress the potential of future cost reduction was estimated applying the experience curve concept the paper shows for the first time co benefits and cost dynamics of energy efficiency investments of which decision makers in the real estate sector politics and administrations are scarcely aware

new empirical generalizations on the determinants of price elasticity abstract the importance of pricing decisions for firms has fueled an extensive stream of research on price elasticities in an influential meta analytical study tellis 1988 summarized price elasticity research findings until 1986 however empirical generalizations on price elasticity require modifications because of 1 changes in market characteristics i e characteristics of brands product categories and economic conditions and 2 changes in the research methodology used to assess price elasticities therefore the authors present a meta analysis of price elasticity with new empirical generalizations on its determinants across a set of 1851 price elasticities based on 81 studies the average price elasticity is 2 62 a salient finding is that over the past four decades sales elasticities have significantly increased in magnitude whereas share and choice elasticities have remained fairly constant the authors find that accommodating price endogeneity has a strong magnitude increasing impa

the relationship between market characteristics and promotional price elasticities many empirical studies in marketing and economics have estimated brand price elasticities for specific products in markets their results indicate that price elasticities seem to differ across brands product categories retail outlets and regions however there has been very little research which examines the factors associated with these observed differences this paper focuses on the promotional price elasticities of established major brands in stable categories it identifies some characteristics of markets which may be associated with differences in price elasticities for frequently purchased nondurables a cross sectional model of the effect of these market characteristics on price elasticities is developed and estimated utilizing own price elasticity estimates for brands at twelve stores the results indicate market characteristics such as brand market share couponing activity display activity and feature activity explain a substantial amount of the variation in promotional price elasticities

a meta analysis of marketing communication carryover effects abstractto optimally set marketing communication marcom budgets reliable estimates of short term elasticities and carryover effects are required empirical generalizations from meta analyses of prior field studies can help guide these decisions however the last such meta analysis of marcom carryover effects was performed on koyck model based estimates collected before 1984 and was confined to mass media advertising the authors update and extend extant empirical generalizations via two meta analyses of carryover estimates compiled from studies encompassing personal selling targeted advertising and mass media advertising using diverse model forms until 2015 the first is focused on and utilizes 918 estimates of the carryover proportion of the total effect termed long term share of the total effect and the second focuses on 863 derivable estimates of 90 implied duration intervals the authors find the mean long term shares of the total effect for personal selling 687 and targeted advertisin

economic analysis of the climate pledges of the copenhagen accord for the eu and other major countries abstract this article uses the world gem e3 computable general equilibrium model to assess the economic consequences of the climate copenhagen accord the model allows analyzing the macroeconomic costs in terms of gdp the change in employment as well as the impacts on production of specific energy intensive sectors various 2020 climate scenarios are evaluated depending on the ghg mitigation pledges we find that the cost for the developed countries is around 0 5 of gdp in 2020 for the more ambitious pledges whereas the gdp effects are more heterogeneous across developing countries and russia reflecting the different pledges and the assumptions in the reference scenario across these countries further the article explores whether there is a form of double dividend in the eu when the revenues from auctioning or taxation of ghg emissions are used to reduce the social security contributions of employees we conclude that gdp and employment perform better compared to the free allocation of permits when more sectors are subject to auctioning or ghg taxes and the additional government revenues are used to reduce the cost of labour

the synthesis of bottom up and top down approaches to climate policy modeling electric power technologies and the cost of limiting us co2 emissions abstract in the us the bulk of co 2 abatement induced by carbon taxes comes from electric power this paper incorporates technology detail into the electricity sector of a computable general equilibrium model of the us economy to characterize electric power s technological margins of adjustment to carbon taxes and to elucidate their general equilibrium effects compared to the top down production function representation of the electricity sector the technology rich hybrid specification produces less abatement at a higher welfare cost suggesting that bottom up models do not necessarily generate lower costs of abatement than top down models this result is shown to be sensitive to the elasticity with which technologies generating capacities adjust to relative prices

technological change in economic models of environmental policy a survey this paper provides an overview of the treatment of technological change in economic models of environmental policy numerous economic modeling studies have confirmed the sensitivity of mid and long run climate change mitigation cost and benefit projections to assumptions about technology costs in general technical progress is considered to be a noneconomic exogenous variable in global climate change modeling however there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous induced by needs and pressures hence some environmenteconomy models treat technological change as endogenous responding to socio economic variables three main elements in models of technological innovation are i corporate investment in research and development ii spillovers from r d and iii technology learning especially learning by doing the incorporation of induced technological change in different types of environmental economic models tends to reduce the costs of environmental policy accelerates abatement and may lead to positive spillover and negative leakage

measuring consumer and competitive impact with elasticity decompositions abstract marketing investments are designed to change consumer behavior in ways that help goods compete in the marketplace previous research has focused on using elasticity decompositions to measure how these investments affect either consumer decision making or competing goods on the one hand decision based decompositions attribute the growth in own good demand to changes in the consumers decision making processes on the other hand unit based and share based decompositions attribute the same growth to either rivalrous or nonrivalrous sources the objective of this article is to provide a clear and accurate method that simultaneously attributes the growth in own good demand to changes in 1 consumers decisions 2 competitive demand and 3 competitive market share the author accomplishes this by settling some confusion about what the decision and share based decompositions mean by discussing how each of the decompositions are related to the others and by discussing the research questions th

team incentives and performance evidence from a retail chain in a field experiment with a retail chain 1 300 employees 193 shops randomly selected sales teams received a bonus the bonus increases both sales and number of customers dealt with by 3 percent each dollar spent on the bonus generates 3 80 in sales and 2 10 in profit wages increase by 2 2 percent while inequality rises only moderately the analysis suggests effort complementarities to be important and the effectiveness of peer pressure in overcoming free riding to be limited after rolling out the bonus treatment and control shops performance converge suggesting long term stability of the treatment effect

assessing salesforce marginal productivity marginal productivity of salesforce excluding checkout clerks in a retail store is difficult to assess an analytical model is presented here explaining this productivity using salesforce workers per hour as the factor of production the explanatory variable and sales transactions per hour as the level of production the explained variable the model incorporates self service transactions controls for various seasonal effects time of day day of the week month of the year and generates solutions for in store salesforce assignment across opening hours and sales points to control for possible endogeneity between the transactions and salesforce size variables instrumental variables are employed in the calibration process the model is calibrated using data from a major retail chain based in latin america both at the storewide level and for groups of individual store departments the results corroborate the existence of diminishing returns to scale for the workers per hour factor and a significant l

estimating elasticities with pims data methodological issues and substantive implications though the pims data have been used extensively to relate profitability both to specific firm marketing actions and to market conditions no attempt has been made to estimate directly the magnitudes of marketing mix elasticities the authors propose and evaluate a simple cross sectional time series regression method that recovers unbiased estimates of the elasticities despite the presence of firm specific disguise factors in the database though measurement error creates instability for certain variables the recovered elasticities compare favorably with those found in previous research and have predictable relationships with market characteristics

patient or physician oriented marketing what drives primary demand for prescription drugs abstract the authors analyze primary demand effects of marketing efforts directed at the physician detailing and professional journal advertising versus marketing efforts directed at the patient direct to consumer advertising the analysis covers 86 categories or approximately 85 of the u s pharmaceutical market during the 2001 2005 period primary demand effects are rather small in contrast with the estimated sales effects for individual brands by using a new brand level method to estimate primary demand effects with aggregate data the authors show that the small effects are due to intense competitive interactions during the observation period but not necessarily to low primary demand responsiveness in contrast with previous studies the authors also find that detailing is more effective in driving primary demand than direct to consumer advertising a category sales model cannot provide such insights in addition a category sales model likely produces biased predictions about period by perio

a cross national investigation of industrial salespeople s ethical perceptions this study examines ethical perceptions of industrial salespeople in the united states japan and south korea marketing ethics in general and selling ethics in particular have experienced increasing research attention many of the empirical studies have focused on ethical situations confronting marketing and sales practitioners despite the abundance of research in the general topic of marketing ethics as well as the globalization of competition in recent years a topic that has been virtually ignored is whether ethical perceptions of sales personnel are consistent across countries this paper reports a cross national comparison of business ethics of industrial salespeople across the three countries the findings indicate that nationality influences salespeople s beliefs about the ethics of selling practices and the need for company policies to guide those practices

asymmetric and neighborhood cross price effects some empirical generalizations this paper provides some empirical generalizations regarding how the relative prices of competing brands affect the cross price effects among them particular focus is on the asymmetric price effect and the neighborhood price effect the asymmetric price effect states that a price promotion by a higher priced brand affects the market share of a lower priced brand more so than the reverse the neighborhood price effect states that brands that are closer to each other in price have larger cross price effects than brands that are priced farther apart the main objective of this paper is to test if these two effects are generalizable across product categories and to assess which of these two effects is stronger while the neighborhood price effect has not been rigorously tested in past research the asymmetric price effect has been validated by several researchers however these tests of asymmetric price effect have predominantly used elasticity as the measure of cross price effect the cross price elasticity measures the percentage change in market share or sales of a brand for 1 change in price of a competing brand we show that asymmetries in cross price elasticities tend to favor the higher priced brand simply because of scaling effects due to considering percentage changes furthermore several researchers have used logit models to infer asymmetric patterns we also show that inferring asymmetries from conventional logit models is incorrect to account for potential scaling effects we consider the absolute cross price effect defined as the change in market share percentage points of a target brand when a competing brand s price changes by one percent of the product category price the advantage of this measure is that it is dimensionless hence comparable across categories and it avoids scaling effects we show that in the logit model with arbitrary heterogeneity in brand preferences and price sensitivities the absolute cross price effect is symmetric we develop an econometric model for simultaneously estimating the asymmetric and neighborhood price effects and assess their relative strengths we also estimate two alternate models that address the following questions i if i were managing the ith highest priced brand which brand do i impact the most by discounting and which brand hurts me the most through price discounts ii who hurts whom in national brand vs store brand competition based on a meta analysis of 1 060 cross price effects on 280 brands from 19 different grocery product categories we provide the following empirical generalizations 1 the asymmetric price effect holds with cross price elasticities but tends to disappear with absolute cross price effects 2 the neighborhood price effect holds with both cross price elasticities and absolute cross price effects and is significantly stronger than the asymmetric price effect on both measures of cross price effects 3 a brand is affected the most by discounts of its immediately higher priced brand followed closely by discounts of its immediately lower priced brand 4 national brands impact store brands more so than the reverse when the cross effect is measured in elasticities but the asymmetric effect does not hold with absolute effects store brands hurt and are in turn hurt the most by the lower priced national brands that are adjacent in price to the store brands 5 cross price effects are greater when there are fewer competing brands in the product category and among brands in nonfood household products than among brands in food products the implications of these findings are discussed

toward a reconciliation of market power and information theories of advertising effects on price elasticity prior work on the economic effects of advertising has presented conflicting views some authors have suggested that advertising creates market power by artificially differentiating brands and thereby lowering price elasticity others have viewed advertising as an efficient source of information about the existence of substitutes arguing that advertising increases price elasticity the present research proposes a unifying theoretical model in which advertising affects price elasticity through its influence on two mediating constructs the size of the consideration set and the relative strength of preference pretests 1 and 2 examine the effects of advertising on these two constructs results from the main experiment show that in accordance with the theoretical framework the same advertisements that increased price elasticity in some decision environments decreased it in others

a look on the cost side market share and the competitive environment in this paper we develop a model relating market share to average costs we start with a theoretical model of the factors that affect the firm s average cost curve partitioning these factors into a measurable firm and competitive environment characteristics and b unobserved factors that are either fixed random or follow a first order autoregressive process we then link this theoretical model to an empirical model in which we specify three average cost equations for the organizational areas of purchasing production and marketing main effects for initial lagged market share position as well as their interactions with factors characterizing the firm s competitive environment represent the variables of key theoretical interest in our equations we estimate these equations using pims data and control for fixed contemporaneous and autoregressive unobservable factors our results suggest that market share can often lead to market power in the form of lower average costs however the firm s operating environment greatly moderates the effect of market share on average cost in particular we find that market share position only leads to lower average costs when the organizational unit operates in a competitive environment that gives it both motivation and ability to realize power from its market share position

proactive and reactive product line strategies asymmetries between market leaders and followers to what extent do firms engage in product line actions simultaneously with actions in other marketing variables what are the determinants of product line actions to what extent are product line actions proactive to what degree are they reactive how can a firms product line action elasticity percent change in product line length with respect to percent change in competitors past and anticipated actions be decomposed into reaction and anticipation elasticities are product line actions and elasticities symmetric across market leaders and followers to address these questions we develop a conceptual framework comprising determinants of product line and other marketing actions in a single framework we formulate hypotheses about the asymmetries between market leaders and followers regarding product line actions based on extended expectancy valence and competitive demand elasticity theories we develop a simultaneous equation model of demand and supply with product line and other marketing actions which can be used to identify reaction and anticipation elasticities through the rational expectations approach we estimate the model using data from the computer printer market comprising the market leader hewlett packard hp and followers epson canon and lexmark the results show that the market leader practices a product proliferation strategy and rarely fights on price in contrast market followers adopt a price fighting strategy a firm is more likely to engage in product line actions when its competitors changed their product lines in the past when the firm is large and when its price is high product line reaction and anticipation elasticities are asymmetric between themselves and across the firms for the market leader followers product line reaction elasticity is higher lower than product line anticipation elasticity these differences are related to product line demand elasticities which are higher for the market leader than they are for the followers

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

empirical marketing generalization using meta analysis a decade of work in marketing meta analysis has produced empirical generalizations concerning parameters in models of advertising price diffusion and consumer behavior results from these meta analyses should replace the now discredited zero null hypotheses of such parameters in future work probably more important than nonzero grand mean average effects is an approach called parametric adjustability which provides estimated parameter values for specific conditions reflecting markets and research technologies systematic application of the methodology can also help guide research along productive routes and away from repetition of work which has little potential to add new knowledge

cross sectional estimation in marketing direct versus reverse regression empirical results in marketing research are often derived from linear additive models estimated on cross sectional data an underlying assumption of these model specifications is that each exogenous variable contributes an additive effect to the endogenous variable measuring these additive effects is problematic if some components of the endogenous variable are not observable to the researcher reliance on observable correlates to capture those aspects of the endogenous variable might require reverse regression to ensure unbiasedness of the estimated effects in contrast to direct regression used exclusively in marketing research reverse regression first estimates the effect of the endogenous variable on those correlates and then derives unbiased estimates of the additive effect of other exogenous variables specified in the basic model this paper discusses the reverse regression approach relying on recently published analytic results a statistically powerful and analytically simple test is developed which allows the marketing researcher to assess a priori whether direct or reverse regression will provide unbiased parameter estimates an empirical illustration focuses on the measurement of potential market share rewards for pioneering businesses contained in the pims data base other areas in marketing where the issue of direct versus reverse regression is pertinent are mentioned

strategic underinvestment in informative advertising the cases of substitutes and complements the authors analyze the strategic pricing and informative advertising decisions made by firms in duopolistic contexts they show that whether the products are substitutes or complements there exist strategic settings in which firms keep potential consumers uninformed about their products even if the advertising cost is zero

costa contribution optimizing sales territory alignment the alignment of sales territories has a considerable impact on profit and represents a major problem in salesforce management practitioners usually apply the balancing approach this approach balances territories as well as possible with respect to one or more attributes such as potential or workload unfortunately this approach does not necessarily guarantee maximizing profit contribution thus it does not provide an evaluation of the profit implications of an alignment proposal in comparison with the existing one in consequence several authors proposed nonlinear integer optimization models in the 1970s these models attempted to maximize profit directly by considering the problems of allocating selling time calling plus travel time across accounts as well as of assigning accounts to territories simultaneously however these models turned out to be too complex to be solvable therefore the authors have either approximated the problem or proposed the application of heuristic solution procedures on the basis of the suboptimal principle of equating marginal profit of selling time across territories to overcome these limitations we propose a new approach costa an acronym for contribution optimizing sales territory alignment in contrast to previously suggested profit maximizing approaches costa operates with sales response functions of any given concave form at thelevel of sales coverage units scus that cover a group of geographically demarcated individual accounts thus costa works with sales response functions at a more aggregated level that requires less data than other profit maximization approaches costa models sales as a function of selling time which includes calling time as well as travel time assuming a constant ratio of travel to calling time in addition the formulation of the model shows that an optimal solution requires only equal marginal profits of selling time across sales coverage units per territory but not across scus of different territories basically costa consists of an allocation model and an assignment model both of which are considered simultaneously the allocation model optimally allocates the available selling time of a salesperson across the scus of his or her territory whereas the assignment model assigns the scus to territories thus costa predicts the corresponding profit contribution of every possible alignment solution which enables one to perform what if analyses the applicability of the model is supported by the development of a powerful heuristic solution procedure a simulation study showed that costa provided solutions that are on average as close as 0 195 to an upper bound on the optimal solution the proposed heuristic solution procedure enables one to solve large territory alignment problems because the computing time increases only quadratically with the number of scus and proportionally to the square root of the number of salespersons in principle we also show how costa might be expanded to solve the salesforce sizing as well as the salespersons location problem the usefulness of costa is illustrated by an application the results of this application indicated substantial profit improvements and also outlined the weaknesses of almost balanced territories it is quite apparent that balancing is only possible at the expense of profit improvements and also does not lead to equal income opportunities for the salespersons this aspect should be dealt with separately from territory considerations by using territory specific quotas and linking variable payment to the achievement of these quotas furthermore the superiority of costa turned out to be stable in a simulation study on the effect of misspecified sales response functions costa is of interest to researchers as well as practitioners in the salesforce area it aims to revive the stream of research in the 1970s that already proposed sales territory alignment models aimed at maximizing profit such profit maximizing models are theoretically more appealing than approaches that strive to balance one or several attributes such as potential or workload costa s main advantage over previous profit maximizing approaches is that it is less complex consequently costa demands less data so that even large problems can be solved close to optimality within reasonable computing times

personal selling elasticities a meta analysis abstract this article presents a meta analysis of prior econometric estimates of personal selling elasticity that is the ratio of the percentage change in an objective ratio scaled measure of sales output e g dollar or unit purchases to the corresponding percentage change in an objective ratio scaled measure of personal selling input e g dollar expenditures the authors conduct a meta analysis of 506 personal selling elasticity estimates drawn from analyses of 88 empirical data sets across 75 previous articles they find a mean estimate of current period personal selling elasticity of 34 they also find that elasticity estimates are higher for early life cycle stage offerings higher from studies set in europe than from those set in the united states and smaller in more recent years in addition elasticity estimates are affected significantly by analysts use of relative rather than absolute sales output measures by cross sectional rather than panel data by omission of promotions by lagge

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

chapter 6 market share models publisher summary this chapter describes that three basic principles motivate the specification of the market share models market share models should be competitive descriptive as well as predictive and profit oriented being fundamentally competitive implies that one cannot know the effect or effectiveness of a marketing action without accounting for the actions of competitors market share models are models for understanding how the marketing efforts of every brand impact the results in a competitive marketplace only by describing the influence of each marketing instrument can one gain a basis for marketing planning prediction alone is not enough time series models that forecast the future from the past sales provide no insight into how sales are generated the emphasis on being descriptive also embraces the need to understand the areas in which consumer choice probabilities are synonymous with market shares as well part of the goal of description transcends what can be done by market share models alone managers need to understand that their efforts have potentially competitive effects and potentially market expansive effects in sales response models these effects are comingled but by combining descriptive market share models for the competitive effects with descriptive category volume models for the market expansive effects managers obtain a much richer understanding of the market the profit oriented goal of market share analysis urges us to ask how the firm s allocations of resources to aspects of the marketing mix produce bottom line results

modeling competitive marketing strategies the impact of marketing mix relationships and industry structure this paper empirically analyzes the formulation of competitive marketing strategies consisting of product quality levels promotional expenditures and prices using a simultaneous equation model we examine the use of prices and promotional spending as signals or indications of product quality the impact of promotional spending on prices and the impact of industry structure on the formulation of the complete marketing mix the structural equations are developed using a theoretical model of optimal competitive marketing mix and are estimated using business level pims data which consists largely of industrial durable goods producers for a cross section of 1 100 of these businesses three results of the estimation are especially interesting price cost margins are high for high quality products suggesting that high prices indicate or signal high quality promotional intensity is unrelated to product quality suggesting that promotional effort provides no reliable signals of quality intensely promoted products earn low price cost margins however indicating that promotional spending is associated with high price sensitivity quality levels promotional intensity and price cost margins vary significantly with competitive and market conditions such as the concentration of competitors and the stability of market shares although these relationships are generally weaker than relationships between quality promotion and price cost margins quality levels are high and margins low in markets with unstable shares or unconcentrated competitors

an empirical pooling approach for estimating marketing mix elasticities with pims data the pims profit impact of marketing strategies data entail sparse time series observations for a large number of strategic business units sbus in order to estimate disaggregate marketing mix elasticities of demand a natural solution is to pool different sbus the traditional a priori approach is to pool together those sbus which one believes in advance to be very similar with respect to their marketing mix elasticities we propose an alternative maximum likelihood latent pooling method for simultaneously pooling estimating and testing linear regression models empirically this method enables the determination of a fuzzy pooling scheme while directly estimating a set of marketing mix elasticities and intertemporal covariances for each pool of sbus our analyses reveal different magnitudes and patterns of marketing mix elasticities for the derived pools pool membership is influenced by demand characteristics business scope and order of market entry