bluuebunny/crossref_metadata_2025 huggingface dataset:
Interorganizational Cooperation: The Role of Information Technology an Empirical Comparison of U.S. and Japanese Supplier Relations
Authors: Bensaou M.
Published: October 2008

This paper explores the comparative and cumulative influence of a number of factors on the perceived level of cooperation in a dyadic relationship. Drawing upon the transaction costs economics, organization theory and information systems literatures, we hypothese three sets of key influences: (1) factors exogenous to the relationship, i.e., the characteristics of the environment within which the relationship operates, and factors endogeneous to the relationship including (2) economic and behavioral characteristics of the relationship, and (3) interorganizational information technology applications. These factors have been independently examined in separate research streams. A key contribution of this study is therefore to conceptually and empirically capture their collective influence on cooperation.

We empirically test the five hypotheses we develop within the context of buyer-supplier relationships in the U.S. and Japanese automobile industries. Multiple regressions conducted on a data set of 447 distinct relationships indicate that the relational characteristics (i.e., the behavioral climate of the relationship) are the most robust predictor of cooperation in both countries when compared with other structural (e.g., asset specificity) or technological factors (use of EDI—electronic data interchange). Environmental uncertainty (i.e., technological unpredictability) is positively associated with cooperation in Japanese supplier relations, which suggests that cooperation can act as an uncertainty absorption mechanism. Governance structure is a strong and significant predictor of cooperation in both samples, but with the opposite sign. Similarly, information technology (IT) does not play the same predictive role in the two country samples. Significant only in Japan it reflects an ‘electronic partnership’ approach to the use of IT in supplier relations.
Information Acquisition Policies for Resource Allocation Among Multiple Agents
Authors: Moore J. C. , Rao H. R. , Whinston A. , Nam K. , Raghu T. S.
Published: October 2008

This paper investigates a problem of resource allocation, where a manager allocates discrete resources among multiple agents in a team in a socially optimal manner. In making this allocation, the manager needs to understand the preference orders of the agents for the discrete resources. The manager does this by adopting an information acquisition policy. Three different information acquisition policies are investigated here. The trade off between the amount of information elicited and the costs involved are studied for each of the policies.
Ownership and Investment in Electronic Networks
Authors: Bakos J. Yannis , Nault Barrie R.
Published: October 2008

We employ the theory of incomplete contracts to examine the relationship between ownership and investment in electronic networks such as the Internet and interorganizational information systems. Electronic networks represent an institutional structure that has resulted from the introduction of information technology in industrial and consumer markets. Ownership of electronic networks is important because it affects the level of network-specific investments, which in turn determine the profitability, and in some cases the viability, of these networks. In our analysis we define an electronic network as a set of participants and a portfolio of assets. The salient concept in this perspective is the degree to which network participants are indispensable in making network assets productive. We derive three main results. First, if one or more assets are essential to all network participants, then all the assets should be owned together. Second, participants that are indispensable to an asset essential to all participants should own all network assets. Third and most important, in the absence of an indispensable participant, and as long as the cooperation of at least two participants is necessary to create value, sole ownership is never the best form of ownership for an electronic network. This latter result implies that as the leading network participants become more dispensable, we should see an evolution toward forms of joint ownership.
Advancing the Theory of Adaptive Structuration: The Development of a Scale to Measure Faithfulness of Appropriation
Authors: Chin Wynne W. , Gopal Abhijit , Salisbury W. David
Published: October 2008

Adaptive Structuration Theory (AST) is rapidly becoming an influential theoretical perspective in research on advanced information technologies. However, there still exists a paucity of methods to capture critical AST constructs. This paper describes the development of an instrument to capture the extent to which users of an advanced information technology believe they have appropriated its structures faithfully. The development of such instruments is considered critical if the theoretical base provided by AST is to be fully exploited in understanding the use of advanced information technologies. The development procedure, which occurred in the context of the use of an electronic meeting system, was carried out in three phases that began with initial item development and proceeded through an exploratory to a confirmatory phase. Three experiments, two in the exploratory phase and one in the confirmatory phase, were performed. In the final phase, structural equation modeling techniques were used to confirm the convergent, discriminant, and nomological validity of the resulting five-item scale.
Semantic Structuring in Analyst Acquisition and Representation of Facts in Requirements Analysis
Authors: Marakas George M. , Elam Joyce J.
Published: October 2008

The determination of information requirements is one of the most crucial stages in the software design and development process (Montezemi 1988). It is during this stage that the greatest degree of interaction occurs between the analyst and the user (Lauer et al. 1992). Despite the system development method employed, the functional success of many aspects of requirements determination ultimately rests on how well the user(s) and analyst(s) communicate (Holtzblatt and Beyer 1995). The purpose of this paper is to report the results obtain from a laboratory experiment that investigated the effects of a semantic structuring process of inquiry on the process of interview-derived information acquisition and the subsequent overall correctness of the logical representation of the facts obtained. The study focused on the specific question types used by systems analysts and the role their semantic construction played in representing the information flows in a business system. Three underlying semantic patterns of questions emerged from the analysis. The results showed that certain question types were associated with increased accuracy of logical representations regardless of analyst experience level. Further, the semantic and process patterns that emerged were also directly related to accurate representation of facts and demonstrated an experience-level independence. The results indicate that disciplined questioning strategies are not necessarily learned from practice and they can be improved via structured training. Each of the patterns provide insight into the questioning process employed and the effectiveness of different strategies of inquiry. Implications for both the practitioner and the academic research communities with regard to analyst interview behavior are discussed.
Globalization and Increasing Returns: Implications for the U.S. Computer Industry
Authors: Kraemer Kenneth L. , Dedrick Jason
Published: October 2008

Over the last twenty years, the computer industry has become global with respect to computer production as well as computer use, a trend which has raised concerns among U.S. policymakers of hollowing out the industry and exporting employment. This paper uses the framework of increasing returns to analyze the issue. It classifies market segments within the computer industry, shows how the advent of the personal computer created these segments, examines how this change in the structure of the industry led to the evolution of an Asia-Pacific production network, identifies company and country leadership in this network, and evaluates the implications for the United States. It shows that some manufacturing employment, mainly in the decreasing returns segments of the industry, has shifted to the Asia-Pacific region. However, it also shows that employment in some manufacturing segments and in software and services, which are increasing returns or hybrid markets, has increased dramatically in the United States. It concludes that the global division of labor between the United States and both companies and countries in the Asia-Pacific region has been largely positive in that it has supported the continuing U.S. leadership position in the global computer industry.
Clockspeed and Informational Response: Evidence from the Information Technology Industry
Authors: Mendelson Haim , Pillai Ravindran R.
Published: October 2008

This paper presents evidence on ways in which firms in the IT industry respond to increased business dynamics. We show that the use of internal and external communication technologies and the adoption of informational “focus” strategies increase with the “clockspeed,” or dynamics, of the business environment. Our results support the information processing view of the firm.
Maximum Likelihood Estimation for an Innovation Diffusion Model of New Product Acceptance
Authors: Schmittlein David C. , Mahajan Vijay
Published: October 2008

A maximum likelihood approach is proposed for estimating an innovation diffusion model of new product acceptance originally considered by Bass (Bass, F. M. 1969. A new product growth model for consumer durables. Management Sci. 15 (January) 215–227.). The suggested approach allows: (1) computation of approximate standard errors for the diffusion model parameters, and (2) determination of the required sample size for forecasting the adoption level to any desired degree of accuracy.

Using histograms from eight different product innovations, the maximum likelihood estimates are shown to outperform estimates from a model calibrated using ordinary least squares, in terms of both goodness of fit measures and one-step ahead forecasts. However, these advantages are not obtained without cost. The coefficients of innovation and imitation are easily interpreted in terms of the expected adoption pattern, but individual adoption times must be assumed to represent independent draws from this distribution. In addition, instead of using standard linear regression, another (simple) program must be employed to estimate the model. Thus, tradeoffs between the maximum likelihood and least squares approaches are also discussed.
Patterns in Parameters of Buyer Behavior Models: Generalizing from Sparse Replication
Authors: Farley John U. , Lehmann Donald R. , Ryan Michael J.
Published: October 2008

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.
Effects of Usage and Name on Perceptions of New Products
Authors: Moore William L. , Lehmann Donald R.
Published: October 2008

Longitudinal changes in perceptions of both new and existing brands in the same product class are studied. Specifically pairwise similarity judgments are collected before and after participation in a 6-occasion choice and usage experiment. Comparisons are made across both the original similarity jugments and the resulting group-level perceptual spaces. Changes are a function of type of brand (old or new) and experimental manipulations.

Substantively, the results support the previously untested configural invariance hypothesis, i.e., the perceptions of existing brands are not substantially changed by the introduction of new brands that are relatively different. This suggests this type of scaling technique can be used to predict consumer reactions to new product introductions—even if they are fairly different from current offerings.
Technical Note—A Note on Optimal Strategic Pricing of Technological Innovations
Authors: Bass Frank M. , Bultez Alain V.
Published: October 2008

The experience curve phenomenon of falling marginal costs associated with accumulated output or production experience has given rise to dynamic pricing models. Optimal pricing policies will depend upon the nature of the dynamic demand and cost functions. In this note we shall show that the demand function employed by Bass (Bass, F. M. 1980. The relationship between diffusion rates, experience curves, and demand elasticities for consumer durable technological innovations. J. Bus. 53 (July) S51–S67.) when taken in conjunction with the experience curve cost function leads to a multiperiod pricing strategy which is always less than the myopically optimal price. Further, we present a dynamic programming algorithm for the multiperiod strategy in which we have explored the effects on discounted profits of myopic pricing versus multiperiod pricing. The results of this comparison may, to some, be somewhat surprising and may have managerial significance.
A Simultaneous Approach to the Whether, What and How Much to Buy Questions
Authors: Chiang Jeongwen
Published: October 2008

Consumer's purchase decisions of whether to buy, what to buy and how much to buy are examined simultaneously. Based on a consumer utility maximization problem, an unobservable threshold price, about which a consumer pivots from nonpurchase to purchase, can be deduced. With any model specification, the interrelationships between purchase decisions can be explicitly derived. The model is applied to coffee purchasing data. In addition, by suppressing the nonpurchase options the model is compared with an alternative approach appearing in the marketing literature.
On “Testing Competitive Market Structures”
Authors: Kannan P. K. , Wright Gordon P.
Published: October 2008

A recent paper by Novak and Stangor (Marketing Science, Winter 1987) on testing competitive market structures involves testing a two-sided hypothesis to determine the nature of the competitive market structure. In this paper we provide an improvement to the Novak and Stangor procedure by considering a one-sided multivariate hypothesis and suggest methods for testing such hypotheses.
The BB/NBD + 1 Model Applied to Rotation Policy
Authors: Yun Kyeho , Buchanan Bruce , Rao Ambar G.
Published: October 2008

An early dismissal policy for unproductive recruiters is proposed. The policy is based on a bivariate stochastic model for productivity; this model considers both incidence of reporting a positive quantity of sales and the quantity per report. All recruiters are observed for a probational period; those who exceed minimum incidence and quantity requirements are allowed to continue to the end of a (fixed) maximum tenure while others are replaced with new recruiters after the probational period. We show that those who report less often must report a larger total quantity over the probational period in order to compensate for a larger chance variation. The univariate negative binomial distribution (NBD) model which considers quantity only is examined with respect to its robustness as an approximation in this context. It is found that the NBD leads to serious errors when the quantity reported is relatively homogeneous and reporting incidence is bimodal. Extensions to more conventional salesforces and to direct mail applications are indicated.
Structural Analysis of Models with Composite Dependent Variables
Authors: Farris Paul W. , Parry Mark E. , Ailawadi Kusum L.
Published: October 2008

Composite variables are those that may be mathematically decomposed into additive and/or multiplicative component variables. Several researchers have noted that the relationship between a composite variable and its components may be a mathematical artifact, but the effect of their inclusion as independent variables on the coefficients of the remaining variables in the model has not been recognized, nor has a formal expression for the resulting bias been presented. Structural analysis of composite dependent variables, as presented here, provides the key to understanding the nature and extent of this bias. It separates higher and lower level components from one another and also separates these components from other antecedent variables in the model. The advantages of this hierarchical decomposition are that (1) it reduces problems of misspecification and omitted variables, (2) by separately estimating antecedent effects on each component, it offers some insights into the underlying causal mechanisms that are not available from other techniques and (3) it ensures that regression coefficients can be interpreted in the standard way: the expected change in the dependent variable associated with a change in the independent variable, holding other independent variables in the equation constant. Moreover, hierarchical decomposition of the dependent variable can reproduce all information available from techniques that mix levels of analysis, but the converse is not true.
Exploring the Relationship Between the Markets for New and Used Durable Goods: The Case of Automobiles
Authors: Purohit Devavrat
Published: October 2008

Given that durable products are long-lived, there exists the possibility of secondary markets for used products as well as the potential for product obsolescence. This is an important issue in markets where technology changes rapidly, because the introduction of new versions of a product can make earlier versions obsolete. More generally, prices of older versions in the secondary market adjust in response to changes incorporated in new versions of the product. Thus, another method of evaluating consumers' response to a new product is by looking at the variation in market prices of the old product. This paper develops a general model to explore the relationship between primary markets for new cars and secondary markets for used cars. The results suggest that the depreciation of used cars is influenced strongly by the types of changes in new model cars.
Incorporating Reference Price Effects into a Theory of Consumer Choice
Authors: Putler Daniel S.
Published: October 2008

Although there has been a good deal of research on incorporating the effects of reference price formation into empirical models of consumer buying behavior, little formal theoretical work had been undertaken to date. This paper incorporates reference price effects into the traditional economic theory of consumer choice, and examines the effects of reference price formation on the results of the traditional theory, its marketing implications, and the implications for empirical models which examine the effects of reference price formation on actual consumer behavior. Several implications of the theoretical model are empirically tested using weekly retail egg sales data from Southern California. This analysis indicates that reference price formation does have significant effects on consumer behavior. Furthermore, these effects are asymmetric with consumers two and a half times more responsive to egg price increases that are in excess of the reference price than they are to comparable egg price decreases.
An Equilibrium Analysis of Defensive Response to Entry Using a Coupled Response Function Model
Authors: Gruca Thomas S. , Kumar K. Ravi , Sudharshan D.
Published: October 2008

We determine the optimal response to competitive entry in a market characterized by a market share attraction model. The response of an incumbent is limited to changes in prices, advertising and distribution expenditures; brand positions are assumed to be fixed. We also assume that the entrant's position is chosen exogenously and that the sales potential of the market is constant.

After proving the existence of a unique Nash equilibrium, we show that the optimal response depends on the relative market share of the incumbents. The response by nondominant brands (with market shares less than 50%) mirrors the prediction by decoupled response function models—reduce price, advertising and distribution spending. For the dominant brand (having a market share of 50+%), the response is to reduce price and increase marketing spending. This finding explains previous empirical results that could not be addressed by the decoupled models.
Estimating Nonlinear Parameters in the Multinomial Logit Model
Authors: Fader Peter S. , Lattin James M. , Little John D. C.
Published: October 2008

Multinomial logit models, especially those calibrated on scanner data, often use explanatory variables that are nonlinear functions of the parameters to be estimated. A common example is the smoothing constant in an exponentially weighted brand loyalty variable. Such parameters cannot be estimated directly using commercially available logit packages. We provide a simple iterative method for estimating nonlinear parameters at the same time as the usual linear coefficients. The procedure uses standard multinomial logit software and, in experience to date, converges rapidly. We prove that, under suitable conditions, the resulting parameter values are maximum likelihood estimates and show how to calculate asymptotic standard errors from normal computer output. Three applications illustrate the method in practice.
An Empirical Investigation of Returns to Search
Authors: Ratchford Brian T. , Srinivasan Narasimhan
Published: October 2008

Using data on search and choice behavior from a local automobile market, we estimate monetary returns to search in terms of lower prices resulting from additional time invested in price search. For our analytical framework, we adapt a model developed in the job search literature to the problem of consumer search; this framework is especially useful for illuminating the relationship between time spent searching, the outcome of search, and demand and supply side variables. Our results indicate that, for this particular sample of buyers, marginal returns to search are broadly consistent with what one might expect if consumers balance costs and benefits of search, and that potential gains from additional search for lower car prices do not appear to be large for most consumers. Our study highlights many of the methodological difficulties involved in estimating returns to search, including isolating returns to different outcomes of search, and sensitivity of results to model specification and sampling error. We deal with these problems by trying to isolate time spent searching for price from other uses of search time, by deriving our model used in estimation from a specific conceptual framework, and by extensive specification testing.
Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef
Authors: Hoffman Elizabeth , Menkhaus Dale J. , Chakravarti Dipankar , Field Ray A. , Whipple Glen D.
Published: October 2008

This paper illustrates the use of laboratory experimental auctions in a pretest market research program for new products. We review the experimental auctions literature, discuss the range of auction mechanisms available and present the advantages and disadvantages of using a particular mechanism for a laboratory pretest market. We then present a step-by-step example of how a theoretically incentive compatible auction mechanism (fifth-price, sealed-bid) was used in a laboratory pretest market for vacuum-packaged beef. Based on the illustration, we discuss the potential for using laboratory experimental auctions in pretest market research. We present the limitations that may be encountered in such applications and outline research aimed at improving the behavioral properties of the technique.
Experimental Evidence on the Negative Effect of Product Features and Sales Promotions on Brand Choice
Authors: Simonson Itamar , Carmon Ziv , O'Curry Suzanne
Published: October 2008

Sales promotions and product enhancements are commonly expected to increase a brand's sales, when they do not negatively impact its utility and cost. That is, the purchase probability of consumers who find the promotion or additional feature attractive will increase, whereas the purchase likelihood of other consumers will not be affected. In contrast, we propose that consumers, who perceive a new feature or promotion as providing little or no value, will be less likely to purchase the enhanced brand even when the added feature clearly does not diminish the value of the brand. Thus, a new product feature or promotion may decrease a brand's overall choice probability when the segment of consumers who perceive it as providing little or no value is large compared to the segment that finds the feature attractive. This prediction was supported in three studies using actual promotions that have been employed in the marketplace (e.g., a Doughboy Collector's Plate that buyers of Pillsbury cake mix had the option to purchase for $6.19). We examined five alternative explanations for this effect. The results suggest that, when consumers are uncertain about the values of products and about their preferences, such features and premiums provide reasons against buying the promoted brands and are seen as susceptible to criticism. We discuss the theoretical and practical implications of the findings for segmentation, product, promotional, and pricing strategies.
Structuring a Multiproduct Sales Quota-Bonus Plan for a Heterogeneous Sales Force: A Practical Model-Based Approach
Authors: Mantrala Murali K. , Sinha Prabhakant , Zoltners Andris A.
Published: October 2008

This paper presents an agency theoretic model-based approach that assists sales managers in determining the profit-maximizing structure of a common multiproduct sales quota-bonus plan for a geographically specialized heterogeneous sales force operating in a repetitive buying environment. This approach involves estimating each salesperson's utility function for income and effort and using these models to predict individual sales achievements and the associated aggregate profit for the firm under a specified plan. The utility function estimation is based on the salesperson's own preference rank-ordering of alternative sales quota-bonus plans. Once these functions have been estimated, they are incorporated in a mathematical programming model that the sales manager can use to determine the best plan. The authors demonstrate the approach in the context of a case involving the design of a two-product sales quota-bonus plan for a set of salespeople at a pharmaceutical products firm.
Competition to Retain Customers
Authors: McGahan A. M. , Ghemawat Pankaj
Published: October 2008

This paper contains theoretical and empirical analysis of competition to retain customers. A formal game-theoretic model suggests that large firms are likely to exhibit greater customer retention rates than their smaller rivals in equilibrium even when their (common) customer retention technology does not exhibit increasing returns to scale. This hypothesis is corroborated by an empirical analysis of competition in ordinary life insurance.
The Effects of Television Advertising on Local Telephone Usage: Exploratory Data Analysis and Response Modeling
Authors: Koschat Martin A. , Sabavala Darius J.
Published: October 2008

In increasingly competitive and deregulated service environments, telecommunications service providers are interested in using advertising to stimulate usage. Measuring response in telephone usage to advertising presents difficulties because the effects are likely to be small, and the usage exhibits high variability. The substantive question of whether advertising has any effect on telephone usage is addressed through a systematic analytical process that combines exploratory data analysis with formal modeling. We find that telephone usage does respond to advertising, that this response can be quantified, and that households with heavy usage of telephone service respond proportionally more than light usage households.
What Should You Do When Your Competitors Send in the Clones?
Authors: Purohit Devavrat
Published: October 2008

This paper develops a model to address an important problem facing a manufacturer of a durable product. That is, how can it plan its new product introductions to minimize the obsolescence of the old product, preserve its market for the new product, and keep copycat products at bay? We analyze these issues by developing a two-period model in which a firm sells an “old” product in period 1 and a “new” product in period 2. We consider various new product introduction strategies such as product replacement, line extension, and upgrading. We find that the optimal response to a threat of competitive clones is to increase the level of product innovation. This increase in innovation coupled with the entry of a competitive product implies that the incumbent firm has less of an incentive to leapfrog the old product or shelve the new product.
The Persistence of Marketing Effects on Sales
Authors: Dekimpe Marnik G. , Hanssens Dominique M.
Published: October 2008

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.
A Three-Stage Model of Industrial Trade Show Performance
Authors: Gopalakrishna Srinath , Lilien Gary L.
Published: October 2008

Trade shows are an important but under-researched component of the promotion mix for most industrial products. In this paper, we develop a three-stage model of trade show performance, relying on different indices of performance at each stage: attraction, contact, and conversion efficiency. We model the impact of preshow promotion, booth space, use of attention-getting techniques, competition, number and training of booth salespeople on the extent of attraction, contact, and conversion. The results from an empirical application using data from 85 firms that participated in a major trade show in 1991 suggest significant and different impact of these variables. In addition, we illustrate how the model can be used to evaluate trade-offs among different decision variables. Finally, we develop some general results implied by our model concerning the optimal allocation of trade show resources.
A High-Tech Product Market Share Model with Customer Expectations
Authors: Bridges Eileen , Yim Chi Kin (Bennett) , Briesch Richard A.
Published: October 2008

In a product category based on dynamic technology, new products enter the market in rapid succession, and the competitive situation changes almost daily. Because technological features of available products tend to improve while prices tend to decline, customers develop expectations that may influence their purchase decisions. We model the impact of customer expectations regarding price and technology on product market share in the personal computer industry, finding significant nonlinear effects of both. These effects are observed when actual product price and/or technology differ from expectations by a threshold amount. Our results suggest implementable implications for high-tech product managers: in particular, price and technology should meet, but not exceed, customer expectations. This does not mean that managers should strive for mediocrity; rather, continuous improvement should be implemented so that product development efforts lead customer expectations.
The Forecaster's Dilemma
Authors: Ehrman Chaim M. , Shugan Steven M.
Published: October 2008

Influential forecasts occur when the forecast itself determines whether the forecast is tested. New product sales forecasts are often influential because a low forecast may cause a firm not to launch a new product so that actual sales are never observed.

This paper considers a dilemma we face as influential forecasters. Our client requests an unbiased forecast but pressures sometimes exist to provide a bias forecast. From theoretical and empirical perspectives, we discuss the impact of these pressures on the quality of forecasts. We find that:

• Noninfluential forecasts, generally, create no pressure for statistically biased forecasts.

• As influence increases, the pressures increase.

• When our forecasts eliminate alternatives, (e.g., product designs, advertising campaigns), not all forecasts are tested.

• Not validating all forecasts causes two effects: Survivor's Curse and Prophet's Fear.

• Survivor's Curse makes statistically unbiased forecasts appear optimistic (i.e., overestimate actual sales) because, often, only optimistic forecasts are tested.

• Forecasts appearing statistically unbiased or pessimistic might cause concern. Perhaps, some failures are justified.

• Prophet's Fear encourages pessimistic forecasts because these forecasts cause hidden opportunity losses while optimistic forecasts cause observable actual losses.

• Tested forecasts may appear completely unbiased despite a pessimistic pre-launch bias.

• Although no perfect solution exists, clients may lessen bias with experimentation and by seeking more accurate forecasts. Forecasters may lessen bias with forecasts conditioned on launching and by seeking more accurate forecasts.
Signalling Price Image Using Advertised Prices
Authors: Simester Duncan
Published: October 2008

This paper addresses the issue of retail price image by offering an explanation for how and when stores can use their advertised prices to signal the prices of other products in the store. A model of a two-product retail market is presented in which stores advertise the price of one product and customers do not know the price of the other product before selecting which store to visit. In a model with full customer information, stores with different marginal costs charge different prices for each product. When customers do not know each store's marginal cost type, an opportunity arises for each store to signal its cost type using its advertised prices. In such a model, additional equilibria exist. In particular, stores with different costs may charge the same advertised price while continuing to charge different prices for the unadvertised product. Data from competing drycleaning stores is generally consistent with the model predictions. A number of additional properties of the equilibria are discussed and possible extensions to the model are proposed.
Attribute Importance Weights Modification in Assessing a Brand's Competitive Potential
Authors: Green Paul E. , Krieger Abba M.
Published: October 2008

Increasingly, researchers in marketing are recognizing the “lability” of attribute importance weights derived from measurement techniques, such as conjoint analysis. As has been suggested by Simonson and Tversky, attribute importance weights can be sensitive to competitive product context and to purchase situation.

This paper describes and applies a procedure for adjusting conjoint importance weights to predict consumers' actual or potential product choices. We discuss the approach from both a descriptive and prescriptive viewpoint. In particular, the latter perspective provides strategic insights into how attribute importance modifications can increase brand share. An industry case, based on real data, is used to illustrate the approach.
A Nonparametric Density Estimation Method for Brand Choice Using Scanner Data
Authors: Abe Makoto
Published: October 2008

Nonparametric density estimation using a kernel method is proposed to model consumer brand choice. Recent availability of large scanner panel data allows the use of nonparametric approach, which has few or at least fewer underlying assumptions and affords greater structural flexibility. By removing as many assumptions as possible, the author constructs the “ultimate” nonparametric model, radically departing from the traditional approaches, to highlight the differences in implementation and performance. The proposed model does not involve either parameters that approximate certain distributions as in stochastic models or latent concepts such as utility as in utility maximization models. The performance criteria include prediction of market response and brand choice, share tracking, and robustness under violation of various assumptions involved in parametric choice models, such as correlated disturbance and misspecification. The method is compared with a popular parametric counterpart, the multinomial logit model, on simulated and actual scanner panel data. The paper emphasizes the conceptual importance of the nonparametric approach by discussing its advantages, limitations, and its complementary role in developing, refining, and diagnosing parametric models. This perspective affords insight to modeling philosophy and suggests the possibility of a hybrid approach.
The Spatial Representation of Heterogeneous Consideration Sets
Authors: Desarbo Wayne S. , Jedidi Kamel
Published: October 2008

Consideration sets have been the recent focus of a large volume of research in marketing. The primary orientation of this stream of research has been toward consideration set composition, measurement, and the theoretical formation process itself. This paper proposes a new multidimensional scaling methodology (MDS) devised to spatially represent preference intensity collected over consumers' consideration sets. Predictions concerning the probability of consideration set membership, as well as the degree of preference intensity of these brands within a consideration set, are possible from such a model. In addition, consumer heterogeneity is accommodated vis á vis latent market segment level estimation. The technical details of the proposed MDS methodology are presented. Two actual commercial applications of the procedure are provided in the modeling of consideration sets and respective preference intensity for “intenders” for mid-size and luxury automobiles. Finally, limitations and directions for future research in this area are discussed.
Competitive Response and Equilibria
Authors: Lal Rajiv , Padmanabhan V.
Published: October 2008

This paper investigates the relationship between market share and promotional expenditures the long run. Using data that span a decade and 91 product categories we find that market shares are stationary for a majority of the products in the data base. We find that relative promotional expenditures for the products are offsetting in the long run. Finally, for products whose market shares show a trend, it is difficult to discern the impact of relative promotional expenditure on the evolution of market share. This result generalizes the empirical finding of Bass et al. (Bass, F. M., M. M. Givon, M. U. Kalwani, D. Reibstein, G. P. Wright. 1984. An investigation into the order of the brand choice process. Marketing Sci. 3(4) 267–287.) that “… offsetting competitive activity plays a role in the maintenance of what appears to be stationary and zero order behavior.”
Empirical Generalizations About Market Evolution and Stationarity
Authors: Dekimpe Marnik G. , Hanssens Dominique M.
Published: October 2008

We present empirical generalizations about conditions under which marketing variables evolve or remain stationary. We first define evolution statistically and make the case why it is an important concept for increasing our understanding of long-run marketing effectiveness. We then briefly review ways in which evolution can be tested empirically from readily available data. We present a database of over 400 prior analyses and catalog the relative incidence of stationarity versus evolution in market performance and marketing spending. We find that evolution is the dominant characteristic for sales and marketing-mix spending, but that stationarity is the dominant characteristic for market share. Thus we find strong support for the conjecture that many markets are in a long-run equilibrium where the relative position of the players is only temporarily disturbed by their respective marketing activities. We assess the impact of a number of covariates on the likelihood of finding stationarity/evolution in sales and market share, and discuss the managerial implications of our findings.
A Summary of Fifty-Five In-Market Experimental Estimates of the Long-Term Effect of TV Advertising
Authors: Lodish Leonard M. , Abraham Magid M. , Livelsberger Jeanne , Lubetkin Beth , Richardson Bruce , Stevens Mary Ellen
Published: October 2008

This article reports on the first in-market experimentally based measurement of long-term TV advertising effects for a representative cross-section of 55 tests for established consumer packaged goods. The typical BehaviorScan® weight test has a test group exposed to a heavier TV advertising weight than a matched control group for a one-year period, after which the experiment stops. For this analysis, the two groups were tracked and analyzed for another two years, when the only difference between the two groups was the TV advertising treatment during the first year. The analysis shows that when TV weight increases had a significant impact during the year of the weight increases, during the following two years, on average, the sales impact of the first year is approximately double and, on average, it was from an increasing in buying rate in the test group. The analysis also shows that if TV weight increases had no significant impact during the first year, on average, they had no impact in the two following years.
Empirical Generalizations in the Modeling of Consumer Choice
Authors: Meyer Robert , Johnson Eric J.
Published: October 2008

Are there general algebraic laws which describe how consumers make choices from sets of alternatives? In this paper we review the verdict of research which has sought to answer this question. We focus on the functional forms which have been found to best characterize three component processes of consumer choice: those of attribute valuation, attribute integration, and choice. Our central conclusion is that there exists support for three major generalizations about the form of consumer decision processes: (1) subjective attribute valuations are a nonlinear, reference-point dependent, function of the corresponding objective measure of product attributes; (2) the integration rule which best describes how these attribute valuations are integrated to form overall valuations is multiplicative-multilinear, characterizing an overweighting of negative attribute information; and (3) the choice rule which links overall valuations of an option to the likelihood that it is chosen from a set is a member of a family of functions which recognize the attributewise proximity of a considered alternative to others in the set. The evidence supporting these generalizations is reviewed, as well as their implications for future theoretical and applied work in consumer choice modeling.
The Quality of Economic Output: Empirical Generalizations About Its Distribution and Relationship to Market Share
Authors: Fornell Claes
Published: October 2008

As more nations add customer satisfaction—as a measure of quality of economic output—to what they presently collect about the economy, it becomes increasingly important to understand the role of customer satisfaction and its relationship to other economic measures. In an attempt to contribute to such an understanding, this paper presents two empirical generalizations about customer satisfaction. First, the distribution of customer satisfaction is negatively skewed. It is suggested that negative skewness is a condition for a free market. Second, the association between market share and customer satisfaction is not positive (and often negative) in cross sectional analysis. While challenging to firms that pursue both market share goals and increased customer satisfaction, the finding is consistent with fundamental economic theory and the strategy literature.
Order of Market Entry: Established Empirical Generalizations, Emerging Empirical Generalizations, and Future Research
Authors: Kalyanaram Gurumurthy , Robinson William T. , Urban Glen L.
Published: October 2008

Three established and four emerging empirical generalizations are identified below. The first established generalization is that there is a negative relationship between order of market entry and market share. Second, for consumer packaged goods and prescription anti-ulcer drugs, the entrant's market share divided by the first entrant's share roughly equals one divided by the square root of order of market entry. Third, in mature markets, market pioneer share advantages slowly decline over time. While the emerging generalizations require additional research support, the initial findings suggest: (1) for consumer packaged goods, order of market entry has a stronger negative relationship with trial penetration than with repeat purchase; (2) market pioneers have broader product lines than late entrants; (3) skill and resource profiles differ across market pioneers, early followers, and late entrants; and (4) order of market entry is not related to long-term survival rates. Future research topics are also discussed.
Searching for Generalizations in Business Marketing Negotiations
Authors: Eliashberg Jehoshua , Lilien Gary L. , Kim Nam
Published: October 2008

In this paper we investigate how to make empirical generalizations in marketing. We argue that for substantive empirical generalizations to exist in an area, there should be a sufficient body of relevant research about recurring phenomena. We outline criteria and a procedure to search for and identify such generalizations, and we apply the procedure to the area of business marketing negotiations. We find that, in spite of a sizable literature on business marketing negotiations, there appears to be little overlap between what researchers have studied to date and many characteristics of real-world bargaining situations. We do identify one significant generalization: that bargainers who are problem solvers settle disputes more efficiently than those who take adversarial positions. However, we note that a significant theory–practice gap exists that must be bridged before more substantive generalizations can be identified in the area of business marketing negotiations. More broadly, we suggest that issues such as the sampling or selection of research studies and the match of reported research with real phenomena are serious concerns in our search for empirical generalizations in marketing and that it is not apparent that such generalizations exist in all marketing domains.