bluuebunny/crossref_metadata_2025 huggingface dataset:
Advertising Pulsing Policies for Generating Awareness for New Products
Authors: Mahajan Vijay , Muller Eitan
Published: October 2008

The question of whether a pulsed advertising policy is superior to an even policy (constant spending over time) is of practical relevance to both advertising practitioners and model builders. This paper presents an analytical model that can be used to analyze the impact of the various pulsing and even policies on awareness. In addition to establishing the relationships between the various advertising policies analytically, an application of the proposed model to the actual Zielske's data is included.
A Multivariate Polya Model of Brand Choice and Purchase Incidence
Authors: Wagner Udo , Taudes Alfred
Published: October 2008

In this paper we develop an integrated stochastic model of purchase timing and brand selection which incorporates the influence of marketing mix variables, seasonality and trend, and also allows for various individual choice mechanisms. Our approach rests on the assumptions of a zero-order choice process, a Poisson timing process and purchase rates following a multivariate Gamma Distribution over the population, the scale parameters of which vary according to marketing activities and time. The resulting model is a Multivariate Polya Process, and the distribution of brand choice probabilities turns out to be a Generalized Dirichlet Distribution. Thus, most currently used zero-order models can be considered to be special cases of this approach. Furthermore, we derive a number of market diagnostics which provide insights into market structure and demonstrate the model's use for marketing strategy simulation. Based on extensive testing of the underlying hypotheses we finally validate the model using empirical data and show that it fits the market in question.
Technical Note—Aggregating Individual Purchases to the Household Level
Authors: Kahn Barbara E. , Morrison Donald G. , Wright Gordon P.
Published: October 2008

Household level panel data are the input for many types of marketing studies. An interesting, but until now unaddressed, question is what is the effect of aggregating individual members' purchases to the household level. Under “standard” assumptions the answer is unambiguous: the household brand switching pattern looks more zero order than the typical individual family member's behavior. When the standard assumptions are relaxed the overall spirit of the results do not change. These conclusions give comfort to those who use brand switching data to partition product categories. Those looking for variety-seeking behavior from household data are given some cause for concern—as well as reasons for reinterpreting previous studies.
Technical Note—A Simpler Estimation Procedure for a Micromodeling Approach to the Advertising-Sales Relationship
Authors: Weinberg Charles B. , Weiss Doyle L.
Published: October 2008

In a well-known article, Blattberg and Jeuland (Blattberg, R. C., A. P. Jeuland. 1981. A micromodeling approach to investigate the advertising-sales relationship. Management Sci. 27 (September) 988–1005.) apply nonlinear estimation to a market level model based on aggregation of an individual level model of consumer response to advertising. In this paper, a simpler estimation technique is developed and successfully employed for that same model.
The Choice Theory Approach to Market Research
Authors: McFadden Daniel
Published: October 2008

This paper surveys economic choice theory, stressing developments that permit use of data from psychometric and conjoint experiments to produce market demand forecasts. Alternatives to the widely used multinomial logit model are summarized, and a new method for estimating multinomial probits is described. An integration of choice models with attitudinal scaling and perceptual mapping, within a latent variable system, is described. Estimation of such systems under either “random effects” or “fixed effects” descriptions of heterogeneity across individuals is discussed. Issues in the use of choice models to describe responses from conjoint experiments are presented. New regression diagnostic tests for the consistency of multinomial logit representations are discussed.
The Cost of Simplifying Preference Models
Authors: Hagerty Michael R.
Published: October 2008

Formulas are derived which estimate the accuracy of conjoint analysis in predicting preferences in a validation sample. This accuracy turns out to depend on (among other things) which model of preference is used (e.g., whether interactions are added, whether partworth or linear functions are used). I first show a paradoxical result that simpler models often yield higher predictive accuracy, even when a more complex model is the true one. The reason for this is that the additional parameters of the complex model are estimated with larger variance, which tends to overwhelm the benefits of using the true model. I then shift my criterion from predicting an individual's preferences, to predicting market share, which is of most interest to managers. Under this criterion my conclusions reverse, and I show that a true model (even when complex) is much more likely to yield higher predictive accuracy than a simpler incorrect model. This reverses some previous conclusions in marketing, and confirms that finding the correct model of consumer preference is important in improving prediction. Results from four previous empirical papers are correctly predicted by these formulas, as well as results from additional Monte Carlo studies.
Commentary
Authors: Greenberg Marshall G.
Published: October 2008

Conjoint analysis has achieved widespread acceptance and use among applied market researchers as a tool for forecasting and diagnosing the market performance of new and existing products. Given our reliance on the procedure, those of us who use it are highly receptive to suggestions on how to increase its effectiveness. Hagerty's (Hagerty, M. R. 1986. The cost of simplifying preference models. Marketing Sci. 5 298–319.) paper offers us some provocative new ideas which should force any user of conjoint analysis to reflect upon the models he or she is using and to determine whether there is sufficient evidence to dictate a change.
Commentary
Authors: Johnson Richard M.
Published: October 2008

Commentary to Hagerty, M. R. 1986. The cost of simplifying preference models. Marketing Sci. 5 298–319.
Technical Note—Price as an Aspect of Choice in EBA
Authors: Rotondo John
Published: October 2008

Elimination By Aspects (EBA) is a feature-based, psychological processing model of choice whose potential for customer decision modeling has not been exploited. One of several barriers to econometric application of the theory is the lack of an explicit framework for incorporating quantitative variables, such as price. The present study discusses a theoretical treatment of price within EBA which also serves as a guide to the treatment of other quantitative variables. Specifically, it is proposed that prices be represented as a sequence of nested price feature sets, in which the price feature set of an alternative is included in the price feature sets of all lower priced alternatives. The formal consequences of this representation are examined. Some predictions from the theory are tested on customer choice data.
Quantity Discounts: Managerial Issues and Research Opportunities
Authors: Dolan Robert J.
Published: October 2008

Marketing managers frequently administer pricing policies involving substantial quantity discounts. However, our understanding of the precise role of these discounts, and their design, is quite limited. This paper reviews and integrates the economics and marketing literature and presents a detailed analysis of the policies of four firms in order to: (i) specify the variety of motivations for quantity discounts, (ii) provide guidelines to managers in designing quantity discount schedules, and (iii) set out the most fruitful directions for future research.
Reply
Authors: Dolan Robert J.
Published: October 2008

Reply to the commentary (Frey, J. B. 1987. Commentary. Marketing Sci. 6 23.) to author's paper (Dolan, R. J. 1987. Quantity discounts: Managerial issues and research opportunities. Marketing Sci. 6 1–22.).
A Panel-Data Based Method for Merging Joint Space and Market Response Function Estimation
Authors: Moore William L. , Winer Russell S.
Published: October 2008

Multidimensional Scaling (MDS) techniques have proven to be useful in understanding market structures at a single point in time. In addition to examining snapshots of markets, it has been suggested that the construction of longitudinal joint spaces in conjunction with econometric modeling techniques would provide useful insights into the dynamic structure of a market. However, several pragmatic factors related to data collection have limited the amount of research in this area. In this paper, a method is proposed that enables researchers to use commonly available consumer diary panel data to construct a time series of joint space maps and then to integrate these maps into market response models. Two illustrations using longitudinal maps demonstrate successful applications of this methodology.
Commentary
Authors: Ries Paul N.
Published: October 2008

Commentary about the article Moore, W. L., R. S. Winer. 1987. A panel-data based method for merging joint space and market response function estimation. Marketing Sci. 6 25–42.
An Approach to Simultaneous Estimation and Segmentation in Conjoint Analysis
Authors: Ogawa Kohsuke
Published: October 2008

This paper presents a simultaneous approach to estimating partworths and aggregating consumers in conjoint analysis. First, based on a logit choice model, a “ridge”-like procedure for estimating individual partworths is proposed, and using simulation, the reliability of the estimator is examined. A method of aggregating consumers homogeneous in preference is then presented. The effectiveness of the aggregation procedure is tested on the simulated data. Finally, to illustrate how the total procedure can be applied to the real world, a set of preference data for Japanese automobiles is used.
Technical Note—Testing Competitive Market Structures: An Application of Weighted Least Squares Methodology to Brand Switching Data
Authors: Novak Thomas P. , Stangor Charles
Published: October 2008

Weighted least squares (WLS) analysis of categorical data is used to provide a general framework for the analysis of brand switching data. As in an earlier approach described by Urban, Johnson, and Hauser (Urban, G. L., P. L. Johnson, J. R. Hauser. 1984. Testing competitive market structures. Marketing Sci. 3(2, Spring) 83–112.), a forced switching matrix of first and second choice brands is created, and a partitioning scheme that places brands into mutually exclusive partitions is identified. Then, using the WLS approach, the off-diagonal elements of the forced switching matrix are transformed into dependent variables in a linear model. The dependent variables specify whether observed switching of brands within the hypothesized partitions is greater or less than would be expected based upon the market shares of the brands. Chi-square statistics, in the context of a linear model, are used to test the goodness of the partitioning scheme as a whole and for individual brands, and to evaluate partition homogeneity by testing whether the level of switching within a partition is the same for each brand. Parsimonious models which explain brand-to-partition switching can be identified.
Commentary—Approaches to Promotion Evaluation: A Practitioner's Viewpoint
Authors: Struse Rudolph W.
Published: October 2008

As a marketing practitioner, I applaud Messrs. Abraham and Lodish and Messrs. Blattberg and Levin for attempting to unravel the effects of promotional actions, especially those directed at the retail trade. Both papers demonstrate a keen awareness of the “messy” problems confronting practitioners, such as gaps in companies' internal records, numerous deviations from nominal promotional plans, inadequacies in the common sources of competitive sales data, and the confounding of various merchandising actions.
Reply
Authors: Blattberg Robert C.
Published: October 2008

Author's reply to comments by Kruger (Kruger, M. W. 1987. Commentary—Steps toward mastering trade promotions. Marketing Sci. 6 147–149.) and Struse (Struse, III, R. W. 1987. Commentary—Approaches to promotion evaluation: A practitioner's viewpoint. Marketing Sci. 6 150–151.).
Commentary
Authors: Koon Richard E.
Published: October 2008

Commentary to Rangan, V. K. 1987. The channel design decision: A model and an application. Marketing Sci. 6 156–174.
Reply
Authors: Rangan V. Kasturi
Published: October 2008

Reply to commentaries (Blitzer, H. L. 1987. Commentary. Marketing Sci. 6 175–176 and Koon, R. E. 1987. Commentary. Marketing Sci. 6 177–178.) to author's paper (Rangan, V. K. 1987. The channel design decision: A model and an application. Marketing Sci. 6 156–174.).
A Simulation Comparison of Methods for New Product Location
Authors: Sudharshan D. , May Jerrold H. , Shocker Allan D.
Published: October 2008

Four algorithms for locating an “optimal” new product in a multiattribute product space—Albers and Brockhoff's PROPOPP; Gavish, Horsky, and Srikanth's Method IV; May and Sudharshan's PRODSRCH; and GRID SEARCH—are compared in terms of the relative share of preferences the new product will capture under different simulated market environments. These environments were both ones for which the algorithms were designed as well as other “more realistic” environments. Results indicate that algorithm performance is sensitive to the number of customers or segments, and the presence of probabilistic choice, and less sensitive to the numbers of existing products. Gavish, Horsky, and Srikanth IV (GHS IV) and PROPOPP performed best under the market conditions for which they were designed and GHS IV proved quite robust under variation from these conditions. PROPOPP's performance deteriorated, however, in large sample size problems (n ≥ 200). PRODSRCH (a general purpose optimizer) was inferior under these special market conditions, but superior under other more general ones.
Commentary
Authors: Dodson Joe A. , Brodsky John B.
Published: October 2008

Commentary to Sudharshan, D., J. H. May, A. D. Shocker. 1987. A simulation comparison of methods for new product location. Marketing Sci. 6 182–201.
Cross-Sectional Estimation in Marketing: Direct Versus Reverse Regression
Authors: Vanhonacker Wilfried R. , Day Diana
Published: October 2008

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.
Does it Pay to Change Your Company's Name? A Stock Market Perspective
Authors: Horsky Dan , Swyngedouw Patrick
Published: October 2008

A company's name is commonly considered to be an integral part of its image, just like the quality of its products or the quality of its technical services. Changing a company's name is a major policy decision contemplated by many firms and actually implemented by some each year. This paper attempts to examine, albeit indirectly, whether a name change can improve the profit performance of a firm and what type of firm is more likely to succeed in doing so. We use the “event study” methodology developed in finance to examine the above questions with respect to 58 corporations that changed their names in 1981–1985. Our findings are that, for most of the firms, name changes are associated with improved performance, and that the greatest improvement tends to occur in firms that produce industrial goods and whose performance prior to the change was relatively poor. Evidence that industrial good producers are also heavy users of corporate advertising lends further credence to this finding. Our findings do not support, however, the contention that the new name per se will enhance demand for the firm's products. Rather, it seems that the act of a name change serves as a signal that other measures to improve performance such as changes in product offerings and organizational changes will be seriously and successfully undertaken. The rationale behind why such a signal is sent and why it is believed is discussed.
Removing Heterogeneity Bias from Logit Model Estimation
Authors: Jones J. Morgan , Landwehr Jane T.
Published: October 2008

This paper introduces a new estimation procedure for the logit model that is an extension of a conditional estimation procedure developed by Chamberlain (Chamberlain, G. 1978. On the use of panel data. Working paper, Harvard University, 1–52; Chamberlain, G. 1980. Analysis of covariance with qualitative data. Rev. Econom. Stud. 47 225–238.). The method eliminates heterogeneity bias which is present in the estimates produced by traditional estimation techniques. It improves the goodness of fit and explanatory power of these models, while incorporating purchase event feedback.
The Rotterdam Demand Model and its Application in Marketing
Authors: Clements Kenneth W. , Selvanathan E. Antony
Published: October 2008

This paper shows how the system-wide approach to demand analysis can be utilized in marketing. In the context of the Rotterdam model, we describe how the approach can be applied to narrowly defined groups of goods (such as beer, wine and spirits) to estimate income and price elasticities of demand. The paper also provides extensions to deal with advertising and introduces a new way of identifying market structure.
Technical Note—Existence and Uniqueness of Price Equilibria in Defender
Authors: Hauser John R. , Wernerfelt Birger
Published: October 2008

This note provides a formal proof that for the Defender model, with uniformly distributed tastes, the Nash price equilibria exist and, for a given set of positions, that they are unique. We also show that the profit function is well-behaved—continuous and quasi-concave—and that the maximum occurs on the concave portion of the curve.
Comment—Recall, Recognition and the Dimensionality of Memory for Print Advertisements: An Interpretative Reappraisal
Authors: Howard Daniel J. , Sawyer Alan G.
Published: October 2008

Bagozzi and Silk (Bagozzi, R. P., A. J. Silk. 1983. Recall, recognition and the measurement of memory for print advertisements. Marketing Sci. 2 95–134.), B&S hereafter, report the results of LISREL analyses of the covariance structure of aggregate recognition and recall data collected 30 years ago by the Advertising Research Foundation (1956) in a study of Printed Advertising Rating Methods (PARM). The authors conclude that “memory is multidimensional.” Several conceptual and methodological issues, however, cloud the interpretation of their results.
Positioning and Pricing a Product Line
Authors: Dobson Gregory , Kalish Shlomo
Published: October 2008

A central problem in marketing is: how should the firm position (reposition) and price a line of related (substitute) products in order to maximize profits (or welfare). We formulate this problem faced by a monopolist as a mathematical program, outline how to obtain the market data from a sample of customers, discuss what cost data are relevant, and suggest a heuristic algorithm to solve the problem. The output of the process is a list of products to offer, their prices, and the customer segments which purchase each product.

While additional real world complexities, e.g., uncertainty about customer wants, product performance, and competitive response, are not modeled, we believe the system developed can serve as an important input into the decision process when new products are designed and priced. The methodology can be used as a part of a decision support system, where management specifies the number of products desired. The system suggests a few good solutions, together with the prices and customer segments served by each product.

We use the standard assumption that the market is composed of different customer segments of various sizes, each containing homogeneous customers. Customers choose one brand only, the one that provides them with maximum value for the money. The firm faces both fixed and variable production and marketing costs for each product. Competition is either nonexistent, or assumed not to respond to the firm's moves.

The information available to the firm is the sizes and preferences of the segments, based on a sample of customers, and the cost data. As an alternative to the traditional approach of estimating a parametric utility function, and aggregating customers into segments, we can also use the raw data as input, where each customer in the sample represents a segment. This, we believe, allows us to reduce the errors introduced in the process.

Heuristics for solving the problem are suggested. The heuristics are evaluated on a set of simulated problems, and compared to the optimal solutions. The heuristics perform well when compared to all feasible solutions on a set of small simulated problems. We also discuss the application of the procedure to a ‘real life’ sized problem.
An Integer Programming Approach to the Optimal Product Line Selection Problem
Authors: McBride Richard D. , Zufryden Fred S.
Published: October 2008

A zero-one integer mathematical programming formulation is proposed to solve the optimal product line selection problem. Based on individual consumer measurements from conjoint analysis, the formulation seeks to find an optimal subset of products that is drawn from a proposed set of product alternatives with specified product characteristics. In addition to its inherent flexibility in incorporating various realistic constraints, a feature of the proposed approach is its potential determination of verifiable optimal solutions to the product line selection problem. The results of computational experience with an optimization code, known as the X-system, are presented. Using a variety of representative simulated cases, it is shown that the X-system can be used to effectively solve product line selection problems on both mainframe and AT personal computers.
Product and Price Competition in a Duopoly
Authors: Moorthy K. Sridhar
Published: October 2008

This paper examines the role of consumer preferences, costs, and price competition in determining the competitive product strategy of a firm. In the model studied here, there are two identical firms competing on product quality and price. They face consumers who prefer a higher quality product to a lower quality product, but differ in how much they are willing to pay for quality. The consumers can also choose a substitute if they don't like the product-price offerings of the two firms. For the firms, a higher quality product costs more to produce than a lower quality product. The paper shows that the equilibrium strategy for each firm should be to differentiate its product from its competitor, with the firm choosing the higher quality choosing the higher margin as well. This differentiation, however, is not efficient—that is, it is possible to choose two other products and offer them at prices that cover their marginal cost, and still satisfy consumers' “needs” better in the aggregate. A monopolist, by contrast, would differentiate his product line efficiently. This suggests that cannibalization has different effects on product strategy than competition. The paper also shows that if one firm enters the market first, then it can defend itself from later entrants, and gain a first-mover advantage, by preempting the most desirable product position.
SH.A.R.P.: Shelf Allocation for Retailers' Profit
Authors: Bultez Alain , Naert Philippe
Published: October 2008

Shelf space is the retailer's scarcest resource. Space management tools are thus badly needed. For that purpose, commercial computer packages and optimal allocation models have been developed. Building on the work of Corstjens and Doyle, we elaborate a general, theoretical shelf space allocation model, which focuses on the demand interdependencies prevailing across and within product-groups. Rules of thumb are compared to the derived optimal allocation. The SH.A.R.P. model is introduced as a simplified, yet realistic, variant and validated against data collected in a Dutch supermarket chain. Subsequently, the feasibility of its implementation has been experimented in various Belgian chains. Case studies demonstrate the profit potential of SH.A.R.P.
A Flexible Class of Discrete Choice Models
Authors: Dalal S. R. , Klein R. W.
Published: October 2008

In this paper, we propose a flexible class of discrete choice models. These models are flexible in that members of this class can approximate any discrete choice model obtained from utility maximization. All members of this class are intuitively easy to understand, consistent with utility maximization and do not suffer from the “independence of irrelevant alternatives” problem. In addition, there are members of this class for which maximum likelihood is a feasible estimation method even when the number of alternatives and/or attributes is large. Furthermore, appropriateness of specific functional forms can be explored graphically. We examine the properties of this class intuitively, theoretically, and in an empirical example.
Recovering Measures of Advertising Carryover from Aggregate Data: The Role of the Firm's Decision Behavior
Authors: Russell Gary J.
Published: October 2008

Data interval bias, the biased estimation of advertising carryover in aggregate data, can be viewed as a misinterpretation of the aggregate advertising-sales relationship due to missing micro advertising data. This paper argues that if the researcher does not explicitly model the firm's advertising decisions, he will incorrectly interpolate the missing data and thereby allow the firm's decision behavior to influence inferences about advertising carryover. Drawing upon a general model of advertising decision behavior, the expected aggregate form of the Koyck relationship is developed and compared to existing bias correction methodologies. Although it is difficult to find any parsimonious procedure which is robust with respect to all types of decision behavior, allowing lagged advertising to enter the classical Koyck equation emerges as a simple method of obtaining a reasonable estimate of advertising carryover in aggregate data.
Strategic Decentralization in Channels
Authors: Moorthy K. Sridhar
Published: October 2008

The purpose of this paper is to understand the effect of strategic interaction on a manufacturer's channel-structure decision. In the model I analyze, if there were no strategic interaction, then the manufacturer would prefer vertical integration to decentralization. With strategic interaction, however, decentralization can be a Nash equilibrium strategy (as McGuire and Staein [McGuire, Timothy, Richard Staelin, 1983a. An industry equilibrium analysis of downstream vertical integration. Marketing Sci. 2(Spring) 161–192.] showed). So the question arises, What is it about strategic interaction that makes decentralization a Nash equilibrium strategy? The answer I give is that strategic interaction makes it possible for a manufacturer's retail demand curve to rise when he decentralizes. I show that this raising of the demand curve on decentralization can happen only if one of the following (mutually exclusive) conditions is satisfied: (1) the manufacturers' products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels, (2) the manufacturer's products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels. Strategic complementarity at the retailer (manufacturer) level means that if one retailer (manufacturer) raises his price, then the other retailer (manufacturer) would raise his price as well; strategic substitutability is just the opposite. These results show that what is important for decentralization to occur is not how (demand) substitutable the two manufacturers' products are (as one might have thought from earlier works in the literature), but rather the nature of coupling between demand dependence and strategic dependence.
Dynamic Advertising Strategies of Competing Durable Good Producers
Authors: Horsky Dan , Mate Karl
Published: October 2008

This work develops a diffusion model which incorporates word-of-mouth and advertising effects for two firms introducing competing brands of a new durable product. The competition between the two firms is formulated as a two-player, nonzero sum Markovian game. The firms are assumed to behave noncooperatively in choosing their advertising strategies and the solution concept is a Nash noncooperative equilibrium. Optimal advertising policies for this stochastic closed-loop control problem are obtained via dynamic programming. Our results indicate that both firms will start with high advertising outlays which will get reduced as the number of adopters increases. This is similar to the result obtained previously for a monopolist. Further, we find that there is a significant value in being the first brand to the market, and the greater the intensity of word-of-mouth effects, the greater the value in being first. The first entrant advantage is due to the goodwill generated by its stock of previous adopters. This first entrant advantage can only be overcome if the second entrant enters with a superior brand which is more enthusiastically endorsed by its adopters.
Marketing Mix Reactions to Entry
Authors: Robinson William T.
Published: October 2008

Initial product, distribution, marketing expenditure, and price reactions by incumbents are examined for 115 entrants into oligopolistic markets. The most common reaction pattern is either no reaction or only a single reaction. It is very unusual for entrants to face reactions across the entire marketing mix. Reactions in the first two years after entry are explained as a function of the entrant's strategy, incumbent characteristics, and industry characteristics. The explanation provides insights into why marketing mix reactions to entry are often limited.
Commentary on “Marketing Mix Reactions to Entry”
Authors: Mehrotra Sunil
Published: October 2008

Commentary on Robinson, W. T. 1988. Marketing mix reactions to entry. Marketing Sci. 7 368–385.
Modeling Asymmetric Competition
Authors: Carpenter Gregory S. , Cooper Lee G. , Hanssens Dominique M. , Midgley David F.
Published: October 2008

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.
Optimal Entry Timing for a Product Line Extension
Authors: Wilson Lynn O. , Norton John A.
Published: October 2008

When should a firm introduce a line extension or improved product in order to maximize total profits from the original product and the line extension? We identify three critical issues which affect the answer to this question: the interrelationship of sales of the two products because of substitution and diffusion, the relative margins of the two products, and the relationship of the length of the firm's planning horizon to the original product's diffusion time. We develop a model in which the first product contributes a higher unit margin; however, sales develop slowly. The line extension contributes a lower unit margin and partially cannibalizes sales of the original product, but also broadens the market, causing sales to develop more rapidly. The timing of the introduction of the line extension affects the subsequent sales pattern for both products and the total profit to be made within the planning period. The optimal entry time depends upon the product pair's substitutability. We show that it is best either to introduce the line extension at a time early in the life cycle of the original product or not to introduce it at all. Consideration of dynamic phenomena can make a difference. For example, our results indicate that in some cases the line extension should be introduced early, whereas a simpler static analysis (which neglects diffusion and the implications of a finite planning horizon) would indicate that the line extension should never be introduced.
Note—Relaxing the Loyalty Condition in the Colombo/Morrison Model
Authors: Bordley Robert F.
Published: October 2008

This note derives the Colombo/Morrison ‘hard-core loyal/potential switcher’ model without assuming the existence of either hard-core loyals or potential switchers. We only assume that the relative probability of buying a product other than what one purchased previously is independent of this previous purchase. This result significantly extends the applicability of the Colombo/Morrison model.
Advertising Experiments at the Campbell Soup Company
Authors: Eastlack Joseph O. , Rao Ambar G.
Published: October 2008

In the mid 1970's, 19 controlled experiments in the marketplace were conducted by the Campbell Soup Company to evaluate the sales impact of advertising changes for various well established packaged food brands. Changes evaluated included: budget levels, seasonality, media type and mix, creative strategy and audience targeted. Markets defined by Selling Areas Marketing Inc. (SAMI) were used as the experimental units.

One of the main findings that emerged when the experiments were viewed as a whole was that budget levels, given existing creative executions, generally had little or no impact on the sales of these well established brands. However, changes in copy strategy, media selection, media mix and targeting often produced a substantial payout. These findings had a significant influence on advertising strategy at Campbell Soup Company and led to:

(a) Greater emphasis on strategic development and evaluation of copy.

(b) Evaluation of a larger number of (sometimes unconventional) media.

(c) Implementation of much greater differences in advertising weight in budget level tests.
Note—A Brand Switching Model with Implications for Marketing Strategies
Authors: Colombo Richard A. , Morrison Donald G.
Published: October 2008

A two-class “Hard-Core Loyal” and “Potential Switcher” latent model for the analysis of brand switching data is proposed. Some previously unpublished automobile data will be presented and analyzed along with another data set for frequently purchased packaged goods. We show how our simple model can be easily estimated using a standard log-linear modeling approach. We hope that the approach, examples, and managerial implications presented will stimulate increased collection and analysis of switching data in the areas of durables and services. In fact our model may well be more appropriate for these two aspects of marketing than it is for consumer packaged goods—which up to now represents almost all of the published work using switching data.
The Relationship Between Distribution and Market Share
Authors: Farris Paul , Olver James , De Kluyver Cornelis
Published: October 2008

This paper develops an aggregate-level model of distribution and market share for frequently purchased, branded consumer goods that is founded in the concepts of “push” and “pull.” The model makes a key distinction between uncompromised and compromised demand as sources of market share. Uncompromised demand is demand that is satisfied when the preferred brand is found; compromised demand results from brands that lack broad distribution and whose potential customers are willing to compromise and purchase another brand when the preferred brand is not present. Trade behavior is also addressed by analyzing the effects of consumer demand “feedback” on the trade's decision to stock and merchandise the brand.

Compromised demand and feedback effects may be critical, and often overlooked, determinants of market share. Under a variety of model assumptions, analytical results are consistent with longitudinal and cross-sectional evidence that market share is a convex function of distribution, increasing at an increasing rate up to 100 percent distribution. In addition to these insights, we believe that the model has promise for future normative work on balancing push and pull marketing effects.
Reply
Authors: Farris Paul , Olver James , De Kluyver Cornelis
Published: October 2008

Reply of the authors of Farris, P., J. Olver, C. De Kluyver. 1989. The relationship between distribution and market share. Marketing Sci. 8 107–128 to commentaries Hughes, D. A. 1989. Commentary. Marketing Sci. 8 128 and Kruger, M. W., J. Dennerlein, A. Power. 1989. Commentary—Deciphering distribution effects. Marketing Sci. 8 129–130.
Elimination-By-Cutoffs
Authors: Manrai Ajay K. , Sinha Prabhakant
Published: October 2008

This paper presents Elimination-By-Cutoffs (EBC), an individual-level model of choice which derives choice probabilities from the location of choice alternatives in a perceptual space. EBC is a multidimensional operationalization of Tversky's (Tversky, A. 1972. Elimination by aspects: A theory of choice. Psych. Rev. 79(4) 281–299.) feature-based set-theoretic Elimination-By-Aspects (EBA) model of choice. It employs monotonic and noninteractive utilities of perceptual attributes in a sequential elimination strategy to determine choice. EBC like EBA is free from the property of independence from irrelevant alternatives. Unlike the independent multinomial logit model (IML), EBC takes into consideration the effect of product similarities on the computation of choice probabilities.

An empirical application is also presented in this paper. The EBC model is parameterized from readily available data and is computationally tractable. A comparison between predictions from EBC and IML is drawn using a holdout sample.

Approaches for assessing the implications of alternative product positioning strategies are also developed. Finally, extensions to nonmonotonic utility functions, interactive utility functions and other directions for further work with the EBC model are discussed.
Reservations: Customer Insurance in the Marketing of Capacity
Authors: Png I. P. L.
Published: October 2008

This paper develops a simple model of pricing and choice of capacity in a market where risk-averse customers are ex-ante uncertain about their valuation for use of the capacity. As unused capacity has no salvage value, the seller maximizes profit by economizing on capacity through over-booking. Thus each customer faces both uncertainty in his own valuation as well as uncertainty about availability of capacity. Because he is risk-averse, the customer seeks insurance.

Provision of insurance is complicated because each customer's realized valuation is private information. Since the seller does not know each customer's type, she must elicit the information. The most profitable pricing strategy takes the form of a reservation that induces each customer to act according to his private information: those with high valuation for use of the capacity exercise while those with lower valuation do not exercise. In this way, the reservation provides partial insurance against the customer's uncertainty in valuation (privately observed contingency) and full insurance against unavailability of capacity (observable by both seller and customer).
Taste Tests: Changing the Rules to Improve the Game
Authors: Givon Moshe
Published: October 2008

In the food industry, taste tests are an important element in product development, test marketing and advertising. The primary factor detracting from the reliability of taste tests is guessing by subjects; it confounds true discrimination and preference with random responses. In this paper simple modifications of discrimination and preference tests are suggested. Easily implemented, these changes do not increase the costs of the test while greatly reducing the probability of a subject guessing correctly. Two experiments to check the effect of these changes on task difficulty were carried out. Results show that there may be some increase in respondent's task difficulty, but this increase is overshadowed by the increased reliability of the suggested test design.
Price-Induced Patterns of Competition
Authors: Blattberg Robert C. , Wisniewski Kenneth J.
Published: October 2008

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.
Salesforce Compensation: Theory and Managerial Implications
Authors: Coughlan Anne T. , Sen Subrata K.
Published: October 2008

This paper discusses recent advances in the study of salesforce motivation and compensation. Special emphasis is given to quantitative approaches from the economics, finance, and marketing literatures. The paper summarizes the findings in this analytical work in the context of some examples of compensation practice in order to illustrate the usefulness of the paradigm for the evaluation and setting of compensation systems.

We consider some major issues in setting compensation, such as the firm's own objective; the salesperson's objective; and the nature of the sales response function. Variations in these factors imply significant variation in optimal compensation policy, where “optimal” takes into account the components in the plan, the parameter levels of the components, and whether or not a menu of such plans should be made available to the salesforce. By highlighting the results in the literature in light of some relevant compensation examples, we show the applicability of theory to the practical concerns of salesforce management.

We close with a summary of these insights and directions for future research in the area.
Optimal Advertising Strategies
Authors: Sasieni Maurice W.
Published: October 2008

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.
Note—Conjoint Reliability Measures
Authors: Wittink Dick R. , Reibstein David J. , Boulding William , Bateson John E. G. , Walsh John W.
Published: October 2008

Researchers have used a variety of measures for the assessment of conjoint analysis reliability. In this note we critically evaluate two different measures and identify potential shortcomings for each one. We identify the context for which a given measure is suitable, and recommend the use of multiple measures for other cases.
The Optimality of Consumer Stockpiling Strategies
Authors: Meyer Robert J. , Assunção João
Published: October 2008

The ability of consumers to make rational sequential purchase quantity decisions under imperfect knowledge about future prices in a product category is explored. Normatively, a consumer should make such decisions by defining a series of reservation prices which define how many buying-periods' supply should be held given an observed price. An experiment is reported in which consumers make sequential purchase quantity decisions under variations in the shape of the distribution of prices and its trend over time. Results suggest a number of systematic deviations from optimality. When facing stationary uniform and bimodal price distributions, for example, subjects tend to systematically overbuy when small purchases are called for and underbuy when large purchases are called for. Likewise, when facing ascending or descending series, behavior is the opposite of that predicted by the normative analysis: there is an increasing tendency to defer purchases given increasing prices and accelerate purchases given descending prices. An explanation for the findings in terms of a Prospect Theory-type loss function in expenditures is offered.
New Product Entries and Product Class Demand
Authors: Mason Charlotte H.
Published: October 2008

Because new products are critical to success and survival, the evaluation of new product ideas receives much attention. In the early stages of product development, concept evaluation models are used to predict market share and/or sales of hypothetical product concepts. These models have focused on consumer preferences, brand choice, and market share. Individual demand or usage rates have been considered exogenous. This paper presents a concept evaluation model which considers the effects of a new product on both market share and demand for the product class. A conceptual framework for the relationship between new product entries and product class demand is presented and then formulated into a mathematical model. An empirical application of the model illustrates some of the possible methods for model estimation and testing.
A Market Response Model for Coupon Promotions
Authors: Neslin Scott A.
Published: October 2008

An econometric market response model for measuring the effect of coupon promotions upon market share is developed and estimated. In addition to the brand's own couponing efforts, the model takes into account retailer promotions for the brand as well as competitive couponing activity. The model is multi-equation, simultaneous, and is estimated using scanner panel data. Results indicate that coupons have a pronounced effect upon market share, although the effect varies from brand to brand and may not be strong enough for some brands for couponing to be profitable in the short term.