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FB02 MARKETING SCIENCE CONFERENCE – 2011 2 - Optimal Dynamic Pricing Strategies: Consumer Cross-category Incidence/Purchase Quantity Decisions Sri Devi Duvvuri, Assistant Professor, University at Buffalo, Marketing, School of Management, 215F Jacobs Management Center, Buffalo, NY, 14260, United States of America, sduvvuri@buffalo.edu, Praveen Kopalle The objective of this research is to determine optimal pricing policies from a retailer’s perspective by taking into consideration the dynamics of consumers’ purchase behavior across categories. While research on category management focuses on developing pricing strategies within a category, our approach involves both withinand cross-category interactions. In the consumer demand model, we investigate the effects of including the quantity purchased on estimation and specification of multivariate choice models. Specifically, we estimate a Hierarchical Bayes econometric specification of a multivariate tobit model. A multivariate tobit model simultaneously accounts for purchase incidence and quantity decisions of consumers across multiple categories. The model will be estimated using Markov Chain Monte Carlo (MCMC) methods such as Gibbs Sampling and Metropolis-Hastings Algorithm. Scanner data for different categories are used for estimation. Using the estimated parameters, we develop profit-maximizing dynamic pricing policies over time for the various brands across the two categories. 3 - Market Delineation Strategies in Consumer Goods Market Sebastian Gabel, Doctoral Student, RWTH Aachen, Virchowstr. 2, Aachen, 52066, Germany, sebastian.gabel@rwth-aachen.de, Raimund Bau The term market delineation is closely associated with anti-trust research and adjacent literature. Yet, knowledge of the relevant products in a market is of great importance for marketing practitioners and researchers as well. In clearly differentiated markets with small number of alternatives, marketing research and practice can easily incorporate all alternatives into models and competitor strategies. Problem arise when potential markets carry several thousand SKUs that (a) cannot be consolidated on a small set of properties and (b) exhibit parallel product usage as well as full substitution patterns. In these markets practitioners often use heuristics, such as product market shares, to reduce their field of attention to a feasible set of products. However, heuristics may lead to misguided management decisions. For researchers using discrete choice models market delineation is of great importance if the model estimation becomes computationally intensive due to a large number of alternatives. Popular sampling strategies might not fully reflect consumer substitution patterns of a particular firm’s products. Using a market simulation we evaluate how different delineation strategies make it possible to reach both the practitioner’s and researcher’s goals. We evaluate 1) Management heuristics based on aggregate data, 2) Advanced descriptive individual-level data, 3) Causal time series analysis and 4) Random sampling. Based on choice sets derived in each approach we analyze potential bias in parameter estimates and elasticities in an aggregate logit model. A comparison demonstrates which strategy yields best results under given circumstances. Finally, the benefits of using the results of this simulation study will be illustrated in an analysis of a German food market. 4 - The Influence of Willingness-to-pay on Consumer’s Cross Category Purchase Behavior Kamer Toker-Yildiz, PhD Student, University at Buffalo, Marketing, School of Management, 215 Jacobs Management Center, Buffalo, NY, 14260, United States of America, ktyildiz@buffalo.edu, Sri Devi Duvvuri, Minakshi Trivedi Consumer’s cross-category purchase behavior has been investigated by marketing researchers due to its important managerial and theoretical implications. This stream of studies have shown that incorporating cross category effects allows a better understanding of consumer’s purchase behavior. For a typical shopping trip, consumers are likely to make multiple purchases and their purchase decisions depend on various observed and unobserved factors. In addition to studying the effects of observable variables (e.g., marketing mix), recent research has also documented modeling efforts that also estimate the effects of unobservable factors. In this study, we propose a cross-category model that allows us to measure how consumer’s willingness-to-pay influences his actual purchase decision in a multi-category decision making framework. It is important to note that willingness-to-pay is a multidimensional variable and unobservable to the researcher. We build a multivariate tobit model to accommodate both cross-category purchase behavior and the willingness-to-pay construct. We use hierarchical Bayesian inference to estimate a heterogeneous specification of our model. We use scanner panel data for organic and conventional product types across multiple categories. Interestingly, we use survey data from the households in the panel to further investigate and validate our findings. 44 ■ FB02 Legends Ballroom II UGC-II (Quest for Comprehension and Integration) Cluster: Internet and Interactive Marketing Invited Session Chair: Manish Tripathi, Emory University, Atlanta, GA, United States of America, manish_tripathi@bus.emory.edu 1 - Listening in on Online Conversations: Measuring Consumer Sentiment with Social Media David Schweidel, University of Wisconsin, Wisconsin School of Business, Madison, WI, United States of America, dschweidel@bus.wisc.edu, Wendy W. Moe Businesses are increasingly turning to social media as a listening tool in an effort to gain insights into how consumers perceive their brand. Some recent research has examined the predictive ability of both the volume of social media contributions and the sentiment expressed therein. Much of this work, however, focuses either on comments contributed to a single online venue or on a simple aggregation of comments across venues and domains (e.g., total number of contributions across venues or average sentiment expressed across all venues). In this research, we probe the differences in sentiment that manifest across multiple types of venues, including blogs, forums and social networks. We also investigate differences in sentiment that may exist between contributors with and without direct experience. To this end, we model the posted online sentiment pertaining to a single brand across all social media venues. Our analysis reveals notable differences across venues and time in the sentiment that contributors express, suggesting that measures of social media will depend on the source from which they are gathered. By controlling for the effects of venue, domain, experience and other factors, we proposed an adjusted online sentiment metric that represents underlying consumer sentiment better than metrics based on contributions to a single online venue or a simple aggregation of all online contributions. 2 - Social Tag Maps: A New Approach for Understanding Brand Association Networks Hyoryung Nam, University of Maryland, College Park, MD, United States of America, Hnam@rhsmith.umd.edu We present a novel technique for inferring consumers’ brand associative networks using data from social tags. Social tags are a manifestation of a consumer’s mental representation of a particular product, brand or firm; and hence provide a rich source of information for assessing how consumers think and conceive different products and brands individually as well as related to each other. Given the massive rise in user generated content in the recent years, many websites provide such information in a readily accessible manner. Marketers have much to gain from processing this information to understand the revealed rather than stated preferences of consumers for their products and brands. We demonstrate that the social tag maps have significant benefits for understanding brand associations as compared to conventional techniques such as metaphor elicitation techniques or brand concept maps. In particular, social tags provide a unique ability to obtain information about dynamic evolution of brand associations and competitive associative maps. 3 - The Quest for Content: The Role of User Generated Links in Online Content Shachar Reichman, Tel-Aviv University, Israel, sr@post.tau.ac.il, Jacob Goldenberg, Gal Oestreicher Online content is often presented as a product network, where nodes are product pages linked by hyperlinks (e.g., books on Amazon.com). These links are often generated by collaborative filtering algorithms and are based on aggregated data. Recently, websites have begun to offer social networks and user generated links alongside the product network, creating a dual network structure. We focus on the role of this dual network structure and specifically of the user generated links in facilitating content exploration. We first analyze the YouTube.com dual network and show that user pages have unique structural properties (e.g. high betweenness centrality) and act as better content brokers in the dual network. Next, we create a synthetic dual network and show that random rewiring of the product network cannot replicate the brokering effect of the user generated links of the real world dual network. We conduct five internet experiments to study the effect of different structures on the efficiency of the exploration process (time to desirable outcome), and effectiveness (average product rating and overall satisfaction). Our first two experiments show that the dual network structure leads to faster access to “good” content and to overall higher satisfaction. We subsequently extend the experiments to include dynamic structures, in which the underlying site structure changes as a function of time and in response to participants’ satisfaction. Our findings suggest that using a dynamic mechanism leads to an increase in consumers’ ratings of the products as well as to higher overall satisfaction.
4 - A Framework for Unifying Differentiated User-generated Content: What I Say, Where I Go, and What I Think Manish Tripathi, Emory University, Atlanta, GA, United States of America, manish_tripathi@bus.emory.edu, Ashish Sood The authors present a comprehensive quantitative model that links multiple types of User-Generated Content (UGC). Typical uses for UGC include announcements, reviews, and geographical-based tracking. The authors employ a novel data set that combines regional data from Twitter (announcements), Yelp (reviews), and Gowalla (geographic) to provide insights on the interaction between these forms of UGC, as well as the path of information flow across these types of UGC. In addition, the authors examine how category and consumer characteristics moderate differentiated UGC interactions. Finally, the research provides insights for the growing industry trend of UGC consolidation. ■ FB03 Legends Ballroom III Internet Relationship Contributed Session Chair: Ingrid Poncin, Professor, SKEMA - Université Lille Nord de France, Avenue Willy Brandt, Lille, 59777, France, ingrid.poncin@skema.edu 1 - How Websites Can Create Trust: The Mechanisms that Build Initial Trust in E-Commerce Environments Paul Driessen, Radboud University Nijmegen, Institute for Management Research, P.O. Box 9108, Nijmegen, 6500 HK, Netherlands, p.driessen@fm.ru.nl, Marcel van Birgelen, Eric Rongen Previous studies about online trust have identified website features that increase trust that potential customers have in an e-commerce vendor, but have failed to produce many insights into the mechanisms behind these effects. The objective of this study is to explain why some website features help to build initial online trust. The authors apply findings from relationship management literature in an online context and propose four dimensions of perceived trustworthiness which determine initial online trust: competence, benevolence, credibility and problem-solving ability. They conduct an online experiment using a 2x2x2 design to manipulate three website features: graphic appeal, a security element and a community element. In the experiment, 204 subjects visited one of eight versions of a fictitious website offering holiday villas. The results show that graphic appeal has a significant positive effect on competence, benevolence and problem solving ability. The presence of a security element has a significant positive effect on competence, credibility and problem solving ability. The presence of a community element has a significant positive effect on benevolence, credibility and problem solving ability. Significant interaction effects between graphic appeal and the presence of a security element are found that show that an improvement in graphic appeal will have a positive effect only when a security element is present. Further analysis shows that trustworthiness dimensions fully mediate the relationships between website features and initial online trust. This demonstrates that trustworthiness dimensions are crucial in understanding the online trust building process. 2 - The Quality of Electronic Customer-to-customer Interaction: Classification and Consequences Moritz Mink, Frankfurt-School of Finance & Management, Sonnemannstrasse 9-11, Frankfurt, 60314, Germany, m.mink@fs.de, Dominik Georgi The quality of electronic customer-to-customer interaction (eCCIq) becomes crucial, either in innovative business models that are intentionally built on such eCCI occurring completely on purpose (e.g., Ebay, Facebook) or at least for providers that are embedding web 2.0 and social media techniques in their service offering (e.g., Fidor Bank AG). This drives us to focus on the conceptualization and operationalization of eCCIq as well as on its impact on some of service marketing’s key concepts. To make it more tangible in a first step we review related concepts and constructs such as C2C relationships, CCI, service quality and especially e-service quality. Further related topics are the concept of customer experience and motivation theory. From these reference points we deduct twelve factors that constitute the domain of eCCIq: tangibles, reliability, responsiveness, empathy, (quality of) content, quantity, positivity, trust, security, privacy, social benefit, and entertainment. Subsequently we give an integrated classification of eCCIq aftermath along a very generic specification of the service profit chain. Our study describes the first step to eliminate one most likely reason for eCCI having received so little scholarly attention: The feeling that their management lies outside the direct control of the business. The next logical step is an empirical conceptualization and operationalization of the eCCIq construct. Results will be presented at the conference. Thereby firms will be enabled to more selectively influence eCCIq. MARKETING SCIENCE CONFERENCE – 2011 FB04 45 3 - Video Ads Virality Thales Teixeira, Assistant Professor, Harvard Business School, Morgan 165, Soldiers Filed Rd, Boston, MA, 02163, United States of America, tteixeira@hbs.edu Viral ads are videos placed and shared online. To be successful substitutes of paid media (e.g. TV), viral ads need to generate millions of views, to justify this ‘earned media’ approach to advertising. Consumers opt-in to viewing because the ads provide some utility as opposed to the traditional model in which media content provides the majority of utility and viewers choose which ads to view in an opt-out manner. This research looks at properties of highly successful viral video ads inducing opt-in from two sources of utility: content and social utility. It disentangles the role of the creative, measured by utility of content, from that of the sharer’s social inclinations, in the popular domain of humorous ads. Utility from humor is assessed via feelings of joy evoked during viewing while the viewer’s inclination towards sharing the ad is assessed by psychological traits. In a lab we expose subjects to viral ads, allowing them to freely view and share ads with their acquaintances. In the process, we measure their momentary feelings of joy via facial expressions analysis and use this to calibrate a sequential dynamic model of (1) viewership, (2) sharing incidence and (3) frequency. We find that ads more likely to be fully viewed evoke increasing levels of joy over time, but those that are shared (given full viewing) tend to evoke this emotion in higher amounts towards the beginning and end. Regarding psychological traits, introvert viewers are more likely to watch ads fully, but the extroverts and socially self-centered (non others-directed) are more likely to share viral ads with their acquaintances. This is novel evidence that people who share ads online are not doing so altruistically, i.e. to please the receiver, but in order to benefit themselves. 4 - Avatar Identification on 3d Commercial Website: Gender Issues Ingrid Poncin, Professor, SKEMA - Université Lille Nord de France, Avenue Willy Brandt, Lille, 59777, France, ingrid.poncin@skema.edu, Marion Garnier New forms of e-commerce and notably three-dimensional (3D) commercial websites considerably change the way customers can shop online. Within this context, the crucial role of the avatar representing the consumer online has to be dealt with. Building on the literature on online gaming and metaverses, identification to the avatar was identified as a central basement of the immersion and online buying process. Three studies were conducted on a 3D shopping mall online. The first study led to identifying identification to the avatar as antecedent of immersion on the website and buying intentions. A qualitative study deepened those results by highlighting gender differences in the identity building process and the relationship between the consumer and his/her avatar. More specifically, three different ways of creating one’s avatar are observed: (1) representation and high similarity between the individual and the avatar, (2) representation of an improved or ideal self and (3) fanciful representation. Women seem to mainly represent themselves as they really are, or in some cases, an improved or ideal self, while men are more prone to an improved representation of themselves or to create a totally fanciful and imaginary character. This has a crucial implication on the shopping process of trying on and buying real products on the 3D shopping, mall as well as an implication on the relationship between the self and consumption. Finally, the third study focused - through a longitudinal quantitative approach - on the dynamic process of identification to the avatar and statistically confirmed this influence of gender. ■ FB04 Legends Ballroom V Dynamic Models II Contributed Session Chair: Roopa Choodamani, Modeling Director, DraftFCB, 633 N.St Clair, Chicago, IL, 60611, United States of America, roopa.choodamani@draftfcb.com 1 - Advertising Strategies by Multinational Firms Wiebke Schlabohm, University of Hamburg, Lehrstuhl Professor Gedenk, Welckerstr. 8, Hamburg, 20354, Germany, Wiebke.Schlabohm@wiso.uni-hamburg.de, Barbara Deleersnyder As firms globalize their businesses, they need to manage their advertising activities in an international market, and allocate funds across the home and foreign markets. Yet, little is known regarding how multinational advertising is managed, and what the implications are on global firm performance. This study empirically examines the patterns of advertising adjustments by multinational firms over time, both in the home and foreign markets, and determines the impact of alternative advertising strategies on global firm performance. For this purpose, data are gathered for a wide sample of 135 global advertising firms over several decades. For each firm, U.S. as well as worldwide advertising spending is examined, and subsequently linked to various firm performance measures (including stock prices and annual revenues). Our findings offer evidence that multinational firms behave myopically, and tend to favor their home market over more distant ones. In particular, firms increase their advertising significantly faster in the domestic market compared to advertising spending in foreign areas. Such behavior is more likely when firms are financially constrained. Moreover, when reducing international advertising budgets, companies tend to restrict budgets more in the foreign as opposed to their home markets. These advertising strategies are found to affect global firm performance. Our results should caution managers of multinational firms not to be trapped in such myopic advertising decisions, but develop strategies to reduce incentives to favor markets nearby. Key words: international, advertising, multinational, myopic marketing management,globalization.
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