Conference Sessions - Jesse H. Jones Graduate School of ...

2 - The Impact of Consulting on Buying Behavior - The Case of Attention
Behavior
Nicolas Bourbonus, Frankfurt School of Finance & Management,
Sonnemannstrafle 9-11, Frankfurt am Main, 60314, Germany,
n.bourbonus@frankfurt-school.de, Dominik Georgi, Olaf Stotz
For many customers, the service of consulting is a main criterion for selecting the
right bank and the optimization of its investment decisions. By employing a
consulting service, private investors hope to be able to make decisions on a more
rational basis and to cut down on behavioral inefficiencies, such as ‘attention’. The
attention simplifies the buying behavior of the investor such that the investor doesn’t
have to select the right share from thousands, but rather takes a targeted look at
shares for purchases that have earned his attention shortly before the purchase. For
the shares that have earned his attention, the investor then selects those that are
fitting for him. From an economical standpoint, these are attention-conducted buying
decisions for the investor and are not generally of advantage and have often a
negative effect on the performance. The goal of this study is to enhance the previous
state of research systematically by first examining for which of the three private
investors groups (“without consulting influence,” “mid-range consulting influence”
and “strong consulting influence”) the behavior inefficiency attention occurs and by
then determining for which of these three investor groups the attention behavior is
especially strong. We empirically examine our hypotheses with regressions. Our
examination is based on customer and transaction and market data. The research
contribution of the study is as follows: The study confirms the influence of attention
for the three investor groups “without consulting influence,” “mid-range consulting
influence” and “strong consulting influence”. The study present that the attention
behavior increases as the consulting influence increases.
3 - Wedded Bliss or Tainted Love?: Stock Market Reactions to the
Introduction of Co-branded Products
Zixia(Summer) Cao, Doctoral Student, Texas A&M University, 220
Wehner Building, Department of Marketing, College Station, TX,
77840-4112, United States of America, czixia@mays.tamu.edu,
Alina Sorescu
Co-branding, or the practice of using two established brand names on the same
product, is a commonly used marketing tool. However, there is little, if any evidence
in academic research supporting the view that co-branded products are wise
investments for their parent firms. Whether financial rewards accrue to the
manufacturer of co-branded products (e.g., the primary brand parent) or to the
partner firm that lends its brand to the co-branded product (e.g., the secondary brand
parent), and how these rewards may differ depending on the characteristics of the cobranded
product itself are yet unanswered questions. Using a large dataset of cobranded
products from the consumer packaged goods industry, we find that
announcements of co-branding products are indeed greeted, on average, with positive
abnormal returns, above and beyond what the same firms garner from non cobranded
innovations, but the magnitude of these returns does vary by the position of
the firm in the alliance as well as the characteristics of the co-branded products. We
also find that in the short term, the manufacturer of the primary brand gains
significantly more from endorsement than from other types of co-branding, but the
parent firm of the secondary brand gains most from composite branding. Both
partner firms benefit from prior co-branding experience and co-branding with
complementary brands. In contrast, innovative co-branded products and products
relying on exclusive provisions of secondary brands only benefit the parent firms of
the primary brand. The insights from this research offer clear and actionable
managerial guidelines for selecting co-branding partnerships that can lead to positive
financial returns in both the short and long term.
4 - The Value of a Global Brand: Is Perception Reality?
Michael Sorell, Research Associate, IMD, Chemin de Bellerive 23,
P.O.Box 915, Lausanne, Switzerland, michael.sorell@imd.ch,
Arturo Bris, Willem Smit
The Global Brand possesses an aura of excellence and is perceived as superior in the
eyes of many consumers. Does the Global Brand uphold that promise in financial
terms to firms as well? This paper analyzes the operating, financial, and market
performance of firms included in Interbrand’s 100 Global Brands during the period
2000-2008. The market valuation of intangibles – in particular of brands – has been
extensively studied in the literature. These intangibles (brand, intellectual property,
employee satisfaction) are inherently valuable. However, only certain firms in an
industry implement a Global Brand strategy, so our hypothesis is that any advantage
of such strategy has to be eliminated in equilibrium. Our results, based on pairs of
Global Brand firms matched with non-global brand peers, confirm that Global Brands
do not earn significantly higher stock returns. They have larger marketing and R&D
expenses. However, their EBIT margins are overall higher, suggesting that global
brand firms are priced higher because of their better acceptance among consumers.
Additionally, Global Brands sell more per unit of capital (asset turnover), thus
resulting in significantly higher return on operating assets. Global Brands take on less
debt than other firms because they base their performance on a highly valuable, yet
intangible asset, and we indeed confirm that the market-to-book ratio of GB is
significantly higher. However, we also show that GB do not display significant riskadjusted
excess returns.
MARKETING SCIENCE CONFERENCE – 2011 FB14
51
■ FB14
Champions Center VI
Pricing Research
Contributed Session
Chair: R. Mohan Pisharodi, Associate Professor of Marketing, Oakland
University, 414 Elliott Hall, School of Business Administration, Rochester,
MI, 48309, United States of America, pisharod@oakland.edu
1 - Service Refund as a Price Discrimination Mechanism
Zelin Zhang, PhD, University of Kansas, Lawrence, KS, 66045,
United States of America, zelinzh@ku.edu, Weishi Lim
The refund policy is commonly used in the service industry (such as airline, hotel and
ticket reservation) where the service provider adopts advance selling strategy.
Consumers can reserve the service during the advance selling period or make a
purchase during the spot selling period. For the consumers who reserve the service in
advance but finally cannot redeem it, the service provider may offer them an
opportunity to return the service by paying a refund charge. In this paper, we show
that in addition to the commonly perceived function of the return policy as a profit
driver, the return policy also serves as a price discrimination mechanism. More
specifically, we show that when there is no capacity constraint, an appropriately
chosen refund policy can help the seller maximize the profit by serving the dual
functions as a profit driver and as a price discrimination mechanism. However, as the
seller faces a more rigid capacity constraint, the role of the refund policy as a price
discrimination mechanism diminishes.
2 - Determinants of Gain and Loss Parameters in Store-level Data:
A Cross-category Analysis
Sebastian Oetzel, Goethe-University Frankfurt, Grüneburgplatz 1,
Frankfurt, 60323, Germany, oetzel@wiwi.uni-frankfurt.de,
Daniel Klapper
Reference price models have experienced broad empirical support, and researchers
have proposed many methods to infer the unobserved reference price. Their results
indicate that demand for a brand does not only depend on the brand’s price, but also
depends on the consumers’ behavior if they do more respond to losses (reference
price < price) or to gains (reference price > price). Typically the responses to gains
and losses are asymmetric. Under certain conditions researchers have found out, if
the effect of gains is higher than that of corresponding losses, the optimal pricing
policy is cyclical. In contrast, if the gain parameter is less than or equal to the loss
parameter, a constant price is optimal. Furthermore empirical results indicate that
gain and loss parameters seem to differ across brands, product categories, and retail
outlets. However, there is little research which examines the factors associated with
these observed differences. Using weekly store-level scanner data representing 34
product categories, the authors estimate store-specific gain and loss effects on the
basis of a structural sales response model and relate these parameters to a broad set of
category characteristics and store environment moderators (e. g. promotion depth
and frequency, number of brand varieties or private-label share). The results add
additional insights into the nature and structure of reference price effects and also
offer guidelines to retail and brand managers for the planning and evaluation of
optimal pricing policies.
3 - The Timing and Speed of New Product Price Landings
Carlos Hernandez Mireles, Erasmus University, Burg. Oudlaan 50,
Rotterdam, Netherlands, mireles@ese.eur.nl, Dennis Fok,
Philip Hans Franses
Many high-tech products and durable goods exhibit exactly one significant price cut
some time after their launch. We call this sudden transition from high to low prices
the price landing. In this chapter we present a new model that describes two
important features of price landings: their timing and their speed. Prior literature
suggests that prices might be driven by sales, product line pricing, competitor’s sales
or simply by time. We propose a model using mixture components that identifies
which of these explanations is the most likely trigger of price landings. We define
triggers as thresholds after which prices are significantly cut. In addition, price
landings might differ across products and therefore we model their heterogeneity
with a hierarchical structure that depends mainly on firm, product type and seasonal
effects. We estimate our model parameters applying Bayesian methodology and we
use a rich data containing the sales and prices of 1195 newly released video games. In
contrast with previous literature, we find that competition and time itself are the
main triggers of price landings while past sales and product line are less likely
triggers. Moreover, we find substantial heterogeneity in the timing and speed of price
landing across firms and product types.