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TC11 MARKETING SCIENCE CONFERENCE – 2011 4 - Remedying Reverse Self-control Effect of Hyperopic Consumers on Vicious Avoidance Yi-Yun Shang, National Taipei University, 67, Sec.3, Ming-shen E. Rd., Taipei, 104, Taiwan - ROC, peeressann@hotmail.com, Kuen-Hung Tsai The purpose of this study was to remedy reverse self-control of hyperopic consumption and encourage hyperopic consumers to indulge themselves. We examine the behavioral effect of hyperopic consumers on vicious avoidance through the perspective of emotional accounting and the reinforcement theory to remedy hyperopic consumption and achieve behavioral reshaping. Findings – The study results show that positive emotional accounting induces hyperopic consumers to start mental operations before decision-making, which gives them a “Righteous Reason” to choose vice and generates the “Laundering Effect”, which helps hyperopic consumers alleviate the guilt of choosing vice and obtain the rationality and legitimacy of such choices. This makes hyperopic consumers brave enough to choose vice (indulgence) and realizes the aim of remedying the reverse self-control of hyperopic consumers. Implications – The study found that implementing remediation after consumers already have a basic plan is more effective than implementing one before consumers have developed a shopping concept. Give a righteous reason to hyperopic consumers to choose vice: to provide righteous reasons help hyperopic consumers alleviate their feelings of guilt over choosing vice, thereby changing their purchase decisions to more luxurious and hedonistic ones and improving customer satisfaction while bringing more benefits to firms. Originality/value-This study was to expanding the application of the operational conditioning theory into the study of consumer behaviors with the intention of shaping behaviors by remedying the reverse selfcontrol problem of hyperopic consumers, helping hyperopic consumers bravely unfetter themselves and expanding the application of the operational conditioning theory. ■ TC11 Champions Center I Advertising Strategy Contributed Session Chair: Sabita Mahapatra, Assitant Professor, Indian Institute of Management, Pitampur, Rau, Indore, MP, 453331, India, sabita@iimidr.ac.in 1 - The Impact of Advertising on Brand Trial in Experience Good Markets Raimund Bau, RWTH, Moritz-Sommer-Str 4, Duesseldorf, Germany, raimund.bau@rwth-aachen.de “Draw new consumers to the brand” is a popular line in brand manager’s target setting dialogues in FMCG markets. Generally, advertising is considered a tool to accomplish this. Consequently, leading consumer good firms employ ad-hoc market research tools to ensure that advertising has a “shift” effect, which is essentially the transfer of non-buyers into the pool of buyers. Especially in experience goods markets a distinction between two types of consumers has to made: those who have tried the brand before and those who have no experience with the brand. Consumers of the latter group face a distinctively different situation than the former group when considering to buy the brand in question. They have higher levels of insecurity regarding brand attributes which are unobservable prior to the purchase. Hence, many practitioners believe that advertising can overcome brand trial aversion. We use more than 7 years of household panel data on two categories of durable fast moving consumer goods to estimate a random parameter logit model. Upon estimation we test hypotheses on if and how advertising shifts the demand curve of consumers by impacting the disutility associated with brand trial. We find evidence that advertising is effective in lowering the disulitity of the risk associated with a trial purchase. In order to draw managerial implications from this insight we simulate the financial impact of advertising investments compared to a couponing strategy using a realistic cost and revenue scenario for firms in both markets. 2 - Advertising during Recession: Role of Industry Characteristics, Strategy Type, and Market Orientation Peren Ozturan, PhD Candidate, Koç University, Rumelifeneri Yolu CASE Sariyer, Istanbul, Turkey, pozturan@ku.edu.tr, Aysegul Ozsomer Past research has shown that countercyclical (vs. procyclical) advertising spending leads to increase in organizational performance (Tellis and Tellis 2009). Although the consequences of cyclical advertising have been investigated to some extent, we lack knowledge on its antecedents. That is, why and under what circumstances are some firms more likely to respond to economic recessions by changing their advertising spending and what are the performance consequences of doing so? Specifically, the authors examine role of industry characteristics (level of competition and turbulence), business strategy type and market orientation as potential antecedents of the advertising spending-performance relationship. The predictions are built on two alternative schools of thought i.e. the Structure-Conduct-Performance paradigm (Bain 1951), positing that firm conduct is determined by the environment of the firm and Contingency Theory (Chandler 1962), asserting that managerial perceptions of an environment vary; therefore firms operating in the same environment end up implementing different strategies which lead to different performance goals. According to this latter perspective, business strategy types (Miles and Snow 1978) that treat strategic orientation as a planned pattern of organizational adaptation to the perceived environment and market orientation (Kohli and Jaworski 1990) which 24 refers to businesses’ externally oriented intelligence-related activities and responsiveness simultaneously determine firm conduct and performance (Matsuno and Mentzer 2000). The hypotheses are tested over cross-sectional data collected from Turkey’s largest manufacturing companies, controlling for a number of factors such as firm performance prior to recession, and changes in real prices and wages. 3 - A Study on the Effectiveness of Emotional Versus Rational Appeals on Consumer of Eastern India Sabita Mahapatra, Assitant Professor, Indian Institute of Management, Pitampur, Rau, Indore, MP, 453331, India, sabita@iimidr.ac.in The prerequisite of a successful advertisement message is exposure and interpret of ad message in the way the advertiser wants. The message’s impact depends not only upon what is said but also on how it is said. There is a slow down in advertising, and worse still, the relevance of mass media advertising is coming under scrutiny like never before due to other non conventional medias. Besides memorability consumer response to ad is considered as the most important parameter to measure effectiveness. The present study tries to find out the effectiveness of emotional versus rational appeals used in TV ads on the consumers of eastern parts of India. The finding of the study emphatically proved that the emotional appeals used in TV ads had positive effect on consumers for established product even if they are expensive, also for new and less expensive product category. Though for new expensive product category emotional appeals does not play that dominating role for respondents from various demographic and psychographics segment. The investment in TV ads is of gigantic proportion. Such mammoth investments must be justified. The present study hopes to provide direction to the advertising agencies in the matter of allocation of and development of ad message. The finding from the present study hopes to provide a cue to agency people as well as creative departments in the agencies for a proper mix of appeals taking in to consideration various stages and category of products along with demographic and psychographics of the audience targeted. ■ TC12 Champions Center II Brand Equity Contributed Session Chair: U.N. Umesh, Professor, Washington State University, Classroom (VCLS) 308S, 14204 NE Salmon Creek Avenue, Vancouver, WA, 98686- 9600, United States of America, umesh@vancouver.wsu.edu 1 - Improving the Image of Countries, Cities and Tourist Destinations, Using Media and Branding Strategies Eduardo Oliveira, Research Assistant, University of Minho, Rua Comandante Luis Pinto Silva 47 6∫ Es, Povoa de Lanhoso, 4830-535, Portugal, eduardo.hsoliveira@gmail.com Countries, states, regions, cities and tourist destinations face increasing competition when they try to attract tourists, inhabitants, investments. Marketing is a universal and dynamic process that can be applied to developing, promoting and improve the image of entities, including products, services, places, personalities, properties, causes, and information. In the case of marketing or branding places, as countries, cities or destinations, informal marketing tasks and more evaluated communications channels has gone on for centuries. The place managers have to be able to develop their selfpromotion strategies to reach the marketing level of the capital and human resources. A clear definition of place branding, developed in a consistent and cooperative way with stakeholders and as a product of a network between local, regional and national stakeholders, can promote the production base, increasing the touristic and human resource flows. The current literature offers an extensive discourse in the field of crisis in general and the role of the marketing, branding and media strategies during crisis in particular. The challenge to the place marketers, place marketing researchers and decision makers are pro-active management approaches, in an ethically and environmentally sustainable perspective with creative media strategies. All these “place stakeholders” needs to find the best strategies, with inspiration and innovation to minimize the consequence caused by an unstable financial system, the economic instability and the natural events in the place’s image and in the decrease in the flow of people and capital. 2 - Competitive Advantage through Internal Branding Constituents: Developing Critical Component Framework Anurag Kansal, Doctoral Student, Indian Institute of Management, Indore, IIM I, Indore, Indore, MP, India, f07anuragk@iimidr.ac.in, Prem Dewani Increasing Globalization and advent of main stream consumerism has led to a saturated market place resulting in paucity of available external resources. This has forced marketers to look inwards for attaining a competitive edge in an increasing cut-throat marketplace. While a lot of research has been conducted in both external and internal branding processes, this paper aims to provide the marketer with a comprehensive framework that not just enhances the use of internal marketing and helps him gain significant competitive advantage, but also helps in identifying various critical components and cogs that are responsible for creation and implementation of an effective Internal Branding process. It uses Focus Group Discussions to compile a list of factors, and follows up with a survey of 238 respondents and culminates with a series of Expert Interviews. Major findings included the significant role of employee perception in the successful implementation of Internal Branding process, and a list of seven significant factors that are integral to the critical component framework. A strong link between the Internal Brand and the external corporate identity was also found in the analysis. The findings and the critical component framework that has
een developed would help marketers to maintain a checklist during the planning, coordinating as well as the implementation process to achieve an effective internal brand. The paper attempts to provide both inside-out and outside-in perspective which allows for a more robust framework, as well as a strong base for the development and evolution of an effective communications strategy. 3 - Conceptualization and Development of Scale for Power of Brand in a Brand-consumer Relationship Roopika Raj, Doctoral Student, Indian Institute of Management, Ahmedabad, Dorm 2, Room 18, IIMA Old Campus, Vastrapur, Ahmedabad, 380015, India, roopika@iimahd.ernet.in, Abraham Koshy Marketers are developing understanding of measures of brand-consumer relationships like love, trust, commitment and attachment to develop strategic and tactical initiatives to ensure that consumers are satisfied with their brand. These measures have been borrowed from the interpersonal relationship literature. And the motivation for this lies in the recent understanding from research in the area of brand-consumer relationships that consumers form relationships with brands the same way they form relationships with each other in a social context with other humans. But research on interpersonal variable of power of brand in the brand consumer dyad has been neglected. The vast social psychology and organizational behavior literature indicates that power is at the heart of understanding the dynamics of social and personal relationships. The paper is an attempt to understand and conceptualize the nature of power of brand and its bases in a brand-consumer relationship context. A total of thirty in-depth interviews were conducted with customers about their relationships with brands to arrive at a typology of power bases of a brand: reinforcement power, customary power, expert power, positional power and associative power. Further it also helps to construct and develop a scale for measuring power of brand on the various bases identified through interviews. A consumer might attribute power to brand on more than one bases hence the scale would be an important tool for brand managers to measure the overall power attributed by consumers to their brand. 4 - Patent Data and Marketing Science U.N. Umesh, Professor, Washington State University, Classroom (VCLS) 308S, 14204 NE Salmon Creek Avenue, Vancouver, WA, 98686-9600, United States of America, umesh@vancouver.wsu.edu, Monte Shaffer There is a large amount of interest in conducting research on patents by academicians and industry analysts each year. The late Zvi Griliches (1990) had a vision to make patent data publicly available for academic researchers to utilize. He and his colleagues have made attempts to provide patent data in a useful form (Hall 2001). Although well-intentioned, academic practitioners are looking for much more from patent data than what these current ‘one-off’ datasets can offer, i.e., they are neither comprehensive nor contiguous. To meet the need for a data source that assists in conducting research efficiently, we propose to first identify what variables knowledgeable researchers in the field want in terms of form and structure. This step will be done by using a survey and in-depth interviews of the top researchers in the fields of marketing, economics, technology and related topics. We then propose to organize the data on millions of individual patents into relational tables based on all possible variables that we can parse from the USPTO’s machine-readable data already harvested from the public-domain source (USPTO). In addition, we propose to generate additional tables that will enable researchers to merge this dataset with external databases that deal with finance, economic-statistics, firm-level performance and valuation of patents. We finally propose to engineer a solution to make all of these new variables available to the academic community as well as the business community at the end of each future calendar year (ongoing: 2012, 2013, and so on). We discuss the importance of the project, solicit feedback and suggestions on what kind of data to include, and propose to write a Marketing Science data paper delineating the resulting data. ■ TC13 Champions Center III Quantifying the Profit Impact of Marketing III Cluster: Special Sessions Invited Session Chair: Xueming Luo, Eunice & James L. West Distinguished Professor of Marketing, The University of Texas at Arlington, Arlington, TX, United States of America, luoxm@uta.edu 1 - The Market Valuation of Company Initiated Customer Engagement Sander F. M. Beckers, University of Groningen, Groningen, Netherlands, S.F.M.Beckers@rug.nl, Jenny van Doorn, P.C. (Peter) Verhoef In the light of recent societal developments, for example with respect to information technology and associated popular new social media (e.g. Facebook and Twitter), customer engagement (i.e. non-transactional customer behavior, Van Doorn et al. 2010) has become a very important topic for companies (Verhoef, Reinartz and Krafft 2010). Noteworthy, customer engagement is seen as a ‘new perspective in customer management’ (Verhoef, Reinartz and Krafft 2010) and research on customer MARKETING SCIENCE CONFERENCE – 2011 TC13 25 engagement is identified by the Marketing Science Institute (2010) as one of the priority research topics for the coming years. For companies, customer engagement can have both a bright and a dark side: For example, engaging customers in the cocreation of a new market offering can be the beginning of a success story, while a negative customer experience can easily reach tons of people through online wordof-mouth. Therefore, a growing number of firms pursue strategies to steer customer engagement and initiate customer engagement themselves (Verhoef, Reinartz and Krafft 2010). In this paper, we investigate the market valuation of firm’s initiatives to steer customer engagement. We apply the event study methodology, which has as benefits that it allows for isolation of the effect we are interested in and is a forward looking performance metric (Geyskens, Gielens, and Dekimpe 2002). We aim to assess the relative effectiveness of various types of customer engagement, such as customer co-creation and word-of-mouth. We also assess the impact of different contexts, such as different industries (e.g. business-to-consumer vs. business-tobusiness), and the type of offering (e.g. products vs. services). Initial empirical results show heterogeneity in the investors’ response to different types of customer engagement initiatives. 2 - Impact of Price Change on Profitability: Theory and Empirical Evidence Vinay Kanetkar, University of Guelph, Guelph, ON, Canada, vkanetka@uoguelph.ca How does one determine the effect of price changes on a firm’s profitability? In this paper, literature on this issue is reviewed. The econometric literature suggests that the effect of price on profitability is small but statistically significant. Alternative analytical and statistical models lead to novel approach to predict effect of price, variable cost and quantity changes on firm’s profitability. As a by-product of this work, it is possible to estimate price elasticity for a firm using publicly available income statements. 3 - The Value Relevance of Marketing Expenditures Min Chung Kim, Hong Kong Polytechnic University, Kowloon, Hong Kong - PRC, msmckim@polyu.edu.hk, Leigh McAlister Because firms do not publicly report marketing expenditure, most studies considering the link between firm value and marketing use advertising (which is publicly reported for many firms) as a proxy for marketing. We extend those studies in two ways. First, we broaden the proxy for marketing by considering both advertising and salesforce. Second, we offer an explanation for the fact that some studies linking advertising to firm value have found a positive relationship while others have found a negative relationship. The accounting literature suggests that the link to firm value for both unexpected salesforce expenditure and for unexpected advertising expenditure should be negative. We confirm the accounting-hypothesizedrelationship for salesforce expenditure, but find a contingent relationship for advertising expenditure. Firm value and unexpected advertising expenditure are negatively related for firms that advertise below the advertising response threshold, but they are positively related for firms that advertise above that threshold. Perhaps because this contingent relationship is hard for analysts to learn by observation of the stock market, analysts ignore value-relevant advertising expenditure information when they forecast firm value. 4 - Assortment Diversification in the Retail Industry: The Impact on Market-based and Accounting-based Performance Timo Sohl, University of St. Gallen, St. Gallen, Switzerland, timo.sohl@unisg.ch, Thomas Rudolph Over the last decades, many grocery retailers have increased their sales share accounted for by non-food products. Despite its high importance for retail firms, the literature has yet been scarce on describing performance implications of assortment diversification into food and non-food retailing. Based on the literature on market power advantages, we state that retail firms who diversify their assortments can benefit from an increasing sales-based market share. Furthermore, drawing from the resource-based view of diversification, we propose that merchandise management skills are capabilities that may be used successfully across different product lines within food or non-food assortments, but may be difficult to leverage across food and non-food assortments. Thus, while we predict a positive relationship between assortment diversification and market share, we hypothesize that the relationship between assortment diversification and profits has its optimum where an increasing marginal cost curve exceeds the marginal sales-based benefits curve. To test our hypotheses, we use a unique dataset of the world’s leading retailers’ assortment diversification behavior over thirteen years (from 1997 to 2009). Results show that retailers’ market share first decreases as they start to diversify their assortments and than increases at an increasingly higher level as they focus more heavily on assortment diversification. Conversely, we find the predicted inverted U-shaped relationship between assortment diversification and profits. Consequently, our findings indicate a trade-off between the maximization of accounting-based and market-based performance measures. Since increasing market share is an important objective of many marketing departments, our findings have important implications for academics and practitioners.
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