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

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FC10 ■ FC10 Founders IV Segmentation Contributed Session Chair: David Norton, University of South Carolina, 1705 College St., Columbia, SC, 29205, United States of America, david.norton@grad.moore.sc.edu 1 - Loyalty to Service Providers in the Very Short Run and in the Very Long Run: The Impact of Ageing and Cohort Gilles Laurent, HEC Paris, 1, Rue de la Libération, Paris, France, laurent@hec.fr, Raphaëlle Lambert-Pandraud Older consumers, an important economic target, have been shown to be more brand loyal in various product categories. We investigate whether similarly higher loyalty may be observed for an important service: radio listening, a service with no barriers to switching. We model different aspects of loyalty to radio. We find evidence of higher loyalty in the very short run: Compared to younger users, older persons are more loyal to the service currently provided by a specific radio station, and therefore (i) they listen to it more often and (ii) they listen to it longer on each occasion. We also find evidence of loyalty in the very long run, by comparing radios that existed before 1981 (date of a major liberalization of French radio stations) and radios created after that date. Compared to users belonging to recent cohorts, persons belonging to older cohorts are more likely to listen to the long-established stations that were broadcasting before 1981. Finally, we also find that compared to younger users, older persons are less willing to change for new technologies and therefore tend to use long-established technologies to listen to radio stations, rather than using new ones such as computers, phones, etc. Overall, some of these age differences result from cohort effects, rather than from ageing effects. 2 - The Dynamics of Brand Preferences Along Consumers’ Life Paths Tingting Fan, New York University, 40 West 4th Street, Room 921, New York, NY, 10012, United States of America, tfan@stern.nyu.edu, Peter Golder Brands are embedded in our lives. People use brands to build self identities (e.g., Escalas and Bettman 2003), communicate their types to others (e.g., Kuksov 2007), and reflect their social ties to their families and communities (e.g., Berger and Heath 2007; Muniz and O’Guinn 2001). However, current studies only present a static view. Little is known about whether and how brand preferences change as consumers’ lives change. For example, does a young consumer prefer different brands soon after leaving home, starting a relationship, or hunting for a job? If so, what kind of brands does he prefer at each stage of his life path? We track 445 college students’ brand preferences and their life paths from the beginning of their freshman year until the end of their junior year. These three years are interesting and unique because college students experience important changes in their lives, e.g., leaving family, moving to college, beginning to date. It allows us to examine whether these young consumers prefer different brands as their lives change. An analysis of this unique dataset reveals interesting dynamics of brand preferences along consumers’ life paths. We found that these young consumers’ brand preferences diverge at the beginning of college, converge after three months of college, and then diverge again after another three months of college. We also explore how brand preferences differ across four different types of lifestyles, i.e., Workaholic, Social Butterfly, Entertainment Lover, and Sluggard. Our longitudinal study not only fills a gap in the literature of branding but also helps brand managers to understand how consumers build their relationships with brands. 3 - Limited Editions: When Snobs Behave Like Conformists and Conformists Behave Like Snobs Sergio Moccia, Doctoral Student, University of Mainz, Jakob Welder-Weg 9, Mainz, 55099, Germany, moccia@marketing-science.de, Oliver Heil Limited editions have become a household term in marketing. It appears that they amount to an instrument allowing marketers to signal a product’s exclusivity or uniqueness – thus enhancing the product’s perceived value and, subsequently, increasing consumers’ willingness to pay. These days, limited editions can be found in a vast number of product categories, ranging from luxury items to FMCGs. It is taken for granted that limited editions are preferred by consumers with a rather high need for uniqueness, often called snobs. Importantly, however, it can be observed that there is a strong preference for limited editions among people regardless their affection for the unique and special. We hypothesize that limited editions not only signal exclusivity but also popularity, since many consumers have a seemingly increasing liking for unique goods. As a result, even people with rather low need for uniqueness, often called conformists, have a surprisingly sizeable preference for limited editions. Thus, we argue that, although snobs and conformists constitute two different segments; we believe that there are unique circumstances uniting snobs and conformists in one same segment. We conjecture that this is most often the case when consumers face excess demand, since excess demand may signal both exclusivity (preferred by snobs) and popularity (preferred by conformists). To test our conjectures we use an experimental design in which we manipulate uniqueness, popularity and excess demand and control for quality and value perception. Our preliminary data confirm our conjectures. MARKETING SCIENCE CONFERENCE – 2011 58 4 - One Size Fits Others: The Role of Label Ambiguity in Targeting Diverse Consumer Segments David Norton, University of South Carolina, 1705 College St., Columbia, SC, 29205, United States of America, david.norton@grad.moore.sc.edu, Randy Rose, Caglar Irmak Marketers often use product labels to target multiple segments of consumers with a single product. For instance, Calvin Klein’s fragrance CK1 is marketed as “unisex”, targeting both men and women. APG’s Snuggie is labeled as “one size fits all” where the same blanket can accommodate a range of adult body types. Such all-inclusive labels highlight the “all-fitting” aspect of the product, thereby resulting in the expansion of the potential customer pool. However, we argue in this research that marketers may unintentionally be driving customers away with their omnibus labeling practices because all-inclusive labels communicate to customers that the product is likely to fit not only them but also all sorts of other consumers who may not be like them. Since previous research has shown that consumers avoid products or behaviors associated with dissociative reference groups, or groups with whom they want to avoid being confused (Berger and Heath 2007, 2008; Simmel 1904/1957; White and Dahl 2006, 2007), we contend that all-inclusive product labels remind consumers about other consumer groups with whom they do not want to be associated. We focus on this effect of target market specificity or generality on consumer reactions to such products and develop a counter-intuitive argument that leaving the target market of the product ambiguous may actually benefit marketers. A field study helps develop a sensitivity analysis such that we can begin to see the potential financial impact of unintentionally driving consumers away with such labeling practices. ■ FC11 Champions Center I Salesforce II Contributed Session Chair: Steven Lu, University of Sydney, CNR Codrington and Rose Streets, Sydney, Australia, steven.lu@sydney.edu.au 1 - Integrated Versus Specialized Salesforce: When Hunting-farming is Harming Ying Yang, University of Houston, 4800 Calhoun Rd, Houston, TX, 77204, United States of America, yyang24@uh.edu, Niladri Syam, James Hess An important aspect of salesforce structure, for firms which sell to both new and existing customers, is whether to have two specialized salesforces focusing on new and existing customers separately or an integrated salesforce selling to both. As opposed to the cost-based rationales in the trade press, we advance a novel information-based rationale for the above. Our key insight is that an integrated salesforce allows the firm to better exploit information about the selling environment than a specialized salesforce. Since the customer’s likelihood of purchase involves both its interaction with the specific salesperson and its happiness with the firm’s product, the sales response function has both an agent-specific term and a firmspecific term. Because in an integrated salesforce the same agent sells to both new and existing customers, the effect of the agent-specific term can be filtered out, and information about the firm-specific term can be learnt. The known firm-specific information can be profitably exploited in the future. This is not possible with a specialized salesforce. However the integrated salesforce faces a task-conflict problem. The trade off of the information-extracting power with the task-conflict problem determines whether the firm will prefer an integrated or a specialized salesforce. In selling environments with low firm-specific uncertainty, the task-conflict problems outweigh the information extraction benefits and the firm will prefer a specialized salesforce. When the firm-specific uncertainty is high the information extraction benefit dominates the task-conflict problems and the firm prefers an integrated salesforce. We experimentally test our findings in the laboratory. 2 - Individual-based or Group-based Tournaments? An Experimental Study Hua Chen, University of Houston, Department of Marketing & Entrepreneursh, 334 Melcher Hall, Houston, TX, 77204, United States of America, hchen26@uh.edu, Noah Lim, Michael Ahearne This research examines whether sales managers should design sales tournaments where salespeople compete individually or in teams. Our economic model shows that salespeople will expend higher effort when they compete individually. We test this prediction using economic experiments and find that surprisingly, the prediction does not hold for subjects who have engaged in social interactions before the experiment. We show that the pattern of experimental results can be better explained by a behavioral economics model that captures social preferences among salespeople.
3 - Investigating Salespeople Turnover in a Dynamic Structural Framework Steven Lu, University of Sydney, CNR Codrington and Rose Streets, Sydney, Australia, steven.lu@sydney.edu.au, Ranjit Voola Understanding the salespeople’s turnover process is critical in effective sales force management. However, to our knowledge there are no studies structurally modelling salespeople turnover. We develop a dynamic model to capture salespeople’s turnover decisions. Not surprisingly, sales force turnover, has been an important area of study in marketing research. Various antecedents to sales force turnover have been examined. In a meta-analysis of sales force turnover research, Lucas, Parasuraman, Davis and Enis (1987) highlight that sales force turnover is very difficult to forecast and suggest that a more comprehensive understanding of turnovers will allow for understanding cost reduction, better recruiting, job design and general management practices. Our goal in this study is to provide an assessment of the antecedents of sales force turnover through structural dynamically modelling sales force turnover. Through the dynamic modelling, we also intend to contribute to the theoretical understanding of sales force turnover, by generating insights into the process of learning about person-job fit, performance and demographics and its impact on sales force turnover. Over time, sales people will learn about cognitive skills and capabilities required to do the job, which influence who they feel about good fit. ■ FC12 Champions Center II Word of Mouth and Marketing Strategy Contributed Session Chair: Yogesh Joshi, Assistant Professor, University of Maryland, 3301 Van Munching Hall, Robert H. Smith School of Business, College Park, MD, 20814, United States of America, yjoshi@rhsmith.umd.edu 1 - Impact of Company Announcements on the Evolution of Online Word-of-mouth Omer Topaloglu, PhD Student of Marketing, Texas Tech University, Rawls College of Business Texas Tech Unv, MS 2101, Lubbock, TX, United States of America, omer.topaloglu@ttu.edu, Piyush Kumar, Dennis Arnett, Mayukh Dass Marketing and strategy literature present several studies on the relationship between corporate communications and market response. However, the interaction between corporate communications and consumers’ reactions manifested as electronic wordof-mouth (eWOM) remains to be studied. Although the importance of eWOM as an antecedent of product sales, product awareness, buying intentions, subsequent reviews, and reliability of retailers has been widely explored, how companies tailor their marketing strategies to influence eWOM continues to be a challenge. In this paper, we investigate the effects of company announcements on the dynamics of eWOM associated with a new product. Specifically, we examine how eWOM evolution in terms of its content, quantity, quality, and valence is affected by different types of announcements by the firms and their competitors. We draw implications from our results for managing the interaction between corporate communications and social media. 2 - Antecedents and Consequences of Pre-release C2C Buzz Evolution: A Functional Analysis Guiyang Xiong, Assistant Professor, University of Georgia, 148 Brooks Hall, Department of Marketing and Distribution, Athens, GA, 30606, United States of America, gyxiong@uga.edu, Sundar Bharadwaj This study focuses on the evolution pattern of online Customer-to-Customer (C2C) buzz over time prior to the launches of new products, or pre-release C2C buzz. Using functional data analysis method, we observe significant heterogeneity in pre-release C2C buzz evolution pattern across products. We also explore the underlying features and investigate the antecedents of the variability in pre-release C2C buzz evolution patterns, especially firm strategic behaviors such as Business-to-Business (B2B) relationships and advertising. Moreover, we demonstrate how pre-release C2C buzz evolution patterns influence new product success (sales and changes in firm stock market valuations upon new product introductions), as well as how this impact is complemented by traditional media and other firm controllable factors. The findings provide unique insights into how firms can strategically influence pre-release C2C buzz to enhance new product performance. 3 - Underpromising and Overdelivering - Competitive Implications of Word of Mouth Yogesh Joshi, Assistant Professor, University of Maryland, 3301 Van Munching Hall, Robert H. Smith School of Business, College Park, MD, 20814, United States of America, yjoshi@rhsmith.umd.edu, Andrés Musalem Companies are routinely offered the advice that when it comes to meeting customer expectations, they are better off if they under-promise and over-deliver. By doing so, customers are delighted and spread positive word of mouth about the company. This argument, while sound at times, comes with two caveats. First, by under-promising, companies may actually discourage customers from initially trying out their product or service. Second, the benefit from delight may be moderated by degree to which MARKETING SCIENCE CONFERENCE – 2011 FC13 59 subsequent customers value customer feedback vis-a-vis their own beliefs about the product or service in their purchase decision. In this paper, we explore whether and when should firms under-promise or over-promise their quality to their customers, when customers have imperfect information regarding such quality in the marketplace. We show that it is not always optimal for a firm to under-promise and over-deliver. Specifically, in a market with two equally matched competitors, underpromising can be sustained only if consumers sufficiently weigh both: i) their initial beliefs about the firm’s quality and ii) any word of mouth about the firm that is inconsistent with the initial quality promises. As these weights decrease, we find that no more than one firm can use an underpromising strategy and for sufficiently low weights both firms prefer to overpromise. Finally, as the true quality of the competitors increases, smaller weights on initial beliefs and positive word of mouth are required to sustain an underpromising strategy. ■ FC13 Champions Center III Financial Decision Making Contributed Session Chair: Carlos Lourenco, Assistant Professor, Rotterdam School of Management, Erasmus University Rotterdam, P.O. Box 1738, Rotterdam, 3000DR, Netherlands, carlosjslourenco@gmail.com 1 - What You Know, What You Do or Who You Know? A Model of Individual Investor Returns Thomas Gruca, Professor of Marketing, University of Iowa, S356 John Pappajohn Bus Bldg, The University of Iowa, Iowa City, IA, 52242-1994, United States of America, thomas-gruca@uiowa.edu, Sheila Goins Our focus is the behavior of non-professional investors. Economic changes mean that individuals have to take more responsibility for saving and investing. Most prior research on investor behavior involved concerns professionals (e.g. fund managers) or Wall Street analysts. A continuing stream of research suggests that social networks affect consumer decision making. The question examined in this study is: How do social ties affect behavior of non-professional investors? In addition to social ties, we examine the influences of a trader’s knowledge and market strategy in two electronic futures markets with different levels of uncertainty. Under low levels of uncertainty, individual forecast accuracy determines outcomes. As well, a trader can leverage the information reflected in market prices. Network structure and the accuracy of network information influence both intent to participate and actual market activity levels. Traders with large redundant networks had more accurate forecasts and traded more actively. However, social networks do not have a significant direct or indirect effect on outcomes. In markets with high levels of uncertainty, we find similar network effects on private knowledge and trading activity. However, market success was determined by an accurate knowledge rather than trading activity. Our unique dataset sheds light on the interplay of private information, market actions and social networks on the success of non-professional investors. Our findings imply that investor activity and knowledge is contingent upon accuracy of information in their network. This can prove hazardous to individual investors making investment decisions where their network informational accuracy can’t be know a priori. 2 - Investing for Retirement: The Moderating Effect of Fund Assortment Size on the 1/N Heuristic Jeff Inman, Frey Professor of Marketing, University of Pittsburgh, 356 Mervis Hall, Pittsburgh, PA, 15260, United States of America, jinman@katz.pitt.edu, Susan Broniarczyk, Mimi Morrin Does the number of funds offered in defined contribution plans such as 401(k)’s affect how many funds people choose to invest in or how they spread their dollars across their chosen funds? In this research, we examine the tendency to engage in the 1/n heuristic – investing one’s dollars evenly across all available investment options (Benartzi and Thaler 2001). We decompose this heuristic into its two underlying behavioral dimensions, the tendency to invest in all available funds and the tendency to spread the invested dollars evenly across the funds. We argue that, because choosing from a larger fund assortment size is cognitively depleting, increasing the fund assortment size will decrease the tendency to invest in all available funds (the first 1/n dimension), but increase the tendency to spread one’s dollars evenly among the chosen alternatives (the second 1/n dimension). Our thesis is supported across three experiments as well as in actual investment data obtained from a large financial services firm for actual mutual fund choices by new investors in defined contribution plans. Specifically, we consistently find that offering a larger fund assortment reduces the proportion of funds invested in but increases the tendency to spread one’s dollars more evenly among the chosen funds. Supporting our cognitive depletion argument, Study 1 shows that number of thoughts mediates this process, while Study 2 shows that time spent per fund chosen for investment mediates the process. Study 3 introduces a cognitive load condition, which attenuates the effects observed in the first two studies. Study 4 shows that the predicted effects obtain among actual investors in 401k plans using data for several thousand plan participants across hundreds of defined contribution plans.
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