2012 INFORMS Marketing Science Conference June 7

address a target group. i.e., should an advertising channel, such as search engine
advertising, be integrated in the existing advertising planning? Which synergy effects
will take place in that case with traditional media, such as TV? In this approach pre
and post campaign survey data are used to measure the impact and synergy of TV,
online and search engine adverting on four marketing metrics simultaneously. In
doing so, it is accounted for the connectivity of the cognitive, affective and conative
dimensions of advertising effectiveness, which might occur due to unmeasured
variables that jointly influence advertising effectiveness. The results show that next to
TV advertising also search engine advertising has significant effects on marketing
metrics. Additionally, online advertising enhances the impact of TV advertising and
search engine advertising enlarges the effectiveness of TV and online advertising.
Thus, depending on the context managers should consider the inclusion of online
and search engine advertising as marketing tool.
4 - Viral Videos: The Dynamics of Online Video Advertising Campaigns
Anita Elberse, Associate Professor, Harvard Business School, Soldiers
Field, Boston, MA, 02163, United States of America,
aelberse@hbs.edu, Clarence Lee, Lingling Zhang
Firms increasingly promote their products using advertisements posted on online
video-sharing sites such as YouTube. There, web users often redistribute these
“advertiser-seeded” advertisements, either in their original form or as altered,
derivative works. Such user-generated “viral” placements can significantly enhance
the true number of an advertising campaign’s impressions – in fact, across our data
for movie and video game trailers, the number of views generated by viral
placements is eight times greater than the number of views for the original
“advertiser-seeded” placements. In this study, in order to help advertisers understand
how their online video advertisements spread, we investigate the dynamics of viral
video campaigns, modeling the accumulation of advertiser-seeded and user-generated
views as two interrelated processes. We find that several instruments under the
control of advertisers – notably the intensity, timing, and coverage of original video
placements – influence the extent to which campaigns benefit from user-generated
content. Our results suggest that, with the right strategy, advertisers can substantially
and inexpensively increase the number of impressions that their online video
campaigns yield.
■ TA04
Legends Ballroom V
Bayesian Econometrics I: Methods & Application
Contributed Session
Chair: Keyvan Dehmamy, Goethe University Frankfurt, Grüneburgplatz 1,
Frankfurt a.M., 60323, Germany, dehmamy@wiwi.uni-frankfurt.de
1 - Dyadic Patent Citation and Firm Performance
Yantao Wang, Marketing Department, Kellogg School of Management,
2001 Sheridan Rd, Evanston, IL, 60208,
United States of America, yantao-wang@kellogg.northwestern.edu,
Sha Yang, Yi Qian
Firms in an industry are likely to interact with each other in different ways. Because
of these interactions, one firm’s performance is not independent from the influence of
other firms. One important form of firm interaction is patent citation. Dyadic patent
citation reflects firm interaction in the form of innovative interdependence between
two firms and the diffusion of knowledge among firms. Therefore, the first goal of
this paper is to use annual information on the number of patents firm i (sender) cites
from firm j (receiver) to measure knowledge interdependence, and to explain the
interdependence by the dyad –specific characteristics of the two firms, the
characteristics of the sender and the receiver, and latent dyad-, sender-, and receiverspecific
factors. Knowledge diffusion can have important implications on the
invention of new products, which in turn impacts the firm’s performance. Therefore,
our second goal in this paper is to predict firm performance using firm’s sensitivity to
its role as a sender as well as a receiver in the citation process while controlling for
other time-varying characteristics of the firm. We build a two-step econometric model
to simultaneously estimate the citation and performance equations using Bayesian
MCMC method that also accounts for firm heterogeneity.
2 - Dyadic Choice and Compromise Effects: Implications for
Decision Optimality
Lin Bao, PhD Student, University of Wisconsin-Madison, 4181
Grainger Hall, 975 University Ave, Madison, WI, 53706,
United States of America, bao1@wisc.edu, Neeraj Arora, Qing Liu
The compromise effect has been extensively studied in the marketing literature (e.g.
Simonson 1989, Kivetz et al 2004). Its basic premise is that individuals are more
likely to choose an intermediate option versus an extreme option. In this research we
study how the compromise effect manifests itself in dyadic choices. In particular we
investigate two questions: 1) Do dyads exhibit enhanced compromise effects than
individuals? 2) Do such dyadic compromise effects enhance the likelihood that a suboptimal
decision will be made by a dyad? At a theoretical level, an investigation of
dyadic compromise effect is of interest because extant research on group polarization
(Myers and Lamm 1976) suggests that groups are more likely to choose the extreme
options. In contrast, evidence also exists that dyads with divergent preferences tend
to negotiate and settle on an intermediate option (Menasco and Curry 1989). Also, it
is known that the perception of being evaluated by group members enhances
individual susceptibility to the compromise effect (Simonson 1989). In this research
we develop a dyadic choice model that incorporates individual and dyad level
compromise effects. Heterogeneity in compromise effects is captured using Bayesian
MARKETING SCIENCE CONFERENCE – 2011 TA05
3
methods. A series of experiments are conducted to empirically test the model. Our
initial results demonstrate that dyads indeed exhibit enhanced compromise effects
than individuals. An adaptive study design customized for individual member
preferences will be used to demonstrate that dyadic compromise effects enhance the
likelihood of suboptimal decisions made by dyads. We link our findings to product
design, dyadic welfare and decision quality of groups. We suggest tactics groups can
adopt to minimize suboptimal choice decisions.
3 - Choice from Simulated Store Shelves - How Similar are Two
Identical SKUs?
Keyvan Dehmamy, Goethe University Frankfurt, Grüneburgplatz 1,
Frankfurt a.M., 60323, Germany, dehmamy@wiwi.uni-frankfurt.de,
Thomas Otter
Multiple facings of identical SKUs are the rule in commercial retailing and the
available shelf space that determines the number of facings of a particular offering is
scarce and expensive. Recently, various commercial market researchers have
attempted to experimentally study the effect of the number of facings on the demand
for individual SKUs. The basic idea is to conduct choice experiments where the choice
sets vary the number of facings of individual offerings as an additional factor. We take
this data as an opportunity to investigate primitive aspects of choice behavior. For
example, we measure the degree of similarity competition b/w multiple facings of the
same SKU and across different SKUs and the joint effect of satiation and similarity on
the chosen quantities. At this point we are not concerned with the external validity
of these experiments but interested in learning about fundamental aspects of choice
behavior.
■ TA05
Legends Ballroom VI
New Product I: Introduction
Contributed Session
Chair: Michael Cohen, Assistant Professor in Residence, University of
Connecticut, 1376 Storrs Road Unit 4021, Storrs, CT, 06269-4021,
United States of America, michael.cohen@uconn.edu
1 - Observational Learning and Networking Externality
in Decision-making
Dongling Huang, Rensselaer Polytechnic Institute, 110 8th Street,
Pitts., Troy, NY, 12180, United States of America, huangd3@rpi.edu,
Yuanping Ying, Andrei Strijnev
We investigate the early momentum of new product release. When making a
purchase decision, consumers often turn to two different sources of information:
consumer word-of-mouth communications and other consumers’ purchase behavior.
A third important non-infomational factor consumers may also consider is the fact
that the number of existing users of a product may bring additional social or other
functional benefits. In reality, the following three factors may all be in play:
information sharing, observational learning, and network externalities. We attempt to
account for all three factors in the consumer’s decision making process using movie
sales data. Specifically, we propose a simple yet effective identification approach to
separating the effects of observational learning and network externalities, while
controlling for word-of-month. We condition our analysis on movie quality and
opening momentum. Using our identification scheme, we find that both
observational learning and network externalities have a considerable impact on
consumers’ movie going decisions. In particular, network externalities have a stronger
effect than observational learning.
2 - Optimizing the Three Dimensions of New FMCG’s Market Success by
Means of the Marketing Mix
Tilo Halaszovich, Assistant Professor, University of Bremen,
Hochschulring 4, Bremen, 28359, Germany,
tilo.halaszovich@uni-bremen.de, Christoph Burmann
“Innovate or die”, as stated by Robert G. Cooper since the 1980s, seems to become
“innovate and die” in light of new products failing at an alarming rate of up to 80%
in most FMCG markets. Therefore, in today’s marketplaces the firm’s ability to
commercialize new products successfully is a central success factor. The disproportion
between their importance and missing success can partly be attributed to a lack of
knowledge concerning the influence of the marketing mix instruments on the
outcome of new FMCG launches. Market performance of a new product is thereby a
three dimensional construct including the product’s value share and its ability to
generate customer satisfaction as well as customer acceptance. Given the fact that
these three dimensions are closely connected with each other, understanding the
marketing mix influence on the new FMCG’s market success requires simultaneous
control for each success dimension and their interactions. Therefore, the authors
develop a dynamic structural equation model which allows measuring the marketing
mix impact in a holistic structure. The model is fitted to a sample of new FMCG
launches in laundry and home-care markets in Germany and based on scanner-panel
data. The results of the model reveal the interactions between all three measures and
how they are influenced by the marketing mix in different ways. Combining these
findings, an optimization of the whole marketing mix is possible throughout the
introduction phase of new FMCG products.