2012 INFORMS Marketing Science Conference June 7

shift in the demand curve. Most of the explanations proposed for this phenomenon
are based on competitive interactions among firms. I focus on consumer-level insights
that could provide a rationale for a countercyclical pricing scheme. I show
theoretically that the optimal pricing scheme for a seasonal product could be
countercyclical due to consumer heterogeneity with respect to seasonal shifts in
demand. The monopolist then makes use of this heterogeneity to sell only to the
higher valuation segment during low season. I also provide empirical support for this
theory using two different datasets of canned soup sales. Using a store-level aggregate
sales dataset, I provide evidence against alternative explanations and I document that
the demand appears to become more price inelastic during high season. I show that
this finding can be explained by the existence of a break in the demand curve due to
presence of different consumer segments. On a different dataset of consumer-level
purchases, I show that the fit of a purchase incidence model improves when it allows
for consumer segments that differ in their valuations across seasons. The estimates
obtained for segment specific product valuations are in line with the predictions of
the proposed model.
2 - A Structural Model for a “Name Your Own Price” Mechanism with a
Fixed Price Option
Kerem Yener Toklu, Rice University, 6100 Main St, Houston, TX,
United States of America, kt3@rice.edu
This paper provides an empirical analysis for a version of the “Name Your Own Price”
mechanism used in an online marketplace where buyers also have the option to
purchase the item at a fixed price determined by the seller. This particular sale type
with the additional fixed price feature has not been paid much attention in the
literature. Structural econometric techniques are employed to estimate the
distribution of buyers’ valuations which is then used to find the optimal fixed price
for the seller and quantify the value of information. First, a decision theoretic model
is used and the optimal buying strategy is characterized. A nonparametric method is
then proposed to estimate the distribution of values. To generalize the model for
different buying strategies a behavioral model is also considered under weaker
assumptions and parametric estimation is used to capture a number of sale and item
covariates. Calibrated models are then used to run counterfactual simulations to find
revenue maximizing fixed prices for sellers. Aside from characterizing buyer behavior
and optimal selling strategies, the paper also studies the information asymmetry
between sellers and buyers, and provides a way to quantify the value of information.
It is prevalent in online market places that the quality of the item being sold may not
be reflected perfectly on the sale webpage which raises an information asymmetry
between sellers and buyers. The uncertainty in the quality of the item directly
influences the value of buyers, and knowing this, sellers reveal information using
different channels on the webpage. Amount of this information is used as a variable
and simulations are run to measure the effect of information asymmetry on sale
prices and quantify the value of information for buyers.
3 - Framing Effects and Consumers’ Reactions to Corporate
Social Responsibility
Carmelo J. Leon, Department of Applied Economic Analysis,
University of Las Palmas de Gran Canaria, C/Juan de Quesada, n∫ 30,
Las Palmas de Gran Canaria, Spain, cleon@daea.ulpgc.es,
Jorge Araña, Christine Eckert
Corporate social responsibility (CSR) might raise different reactions across consumers
depending on the way they are framed in their marketing and selling process. In this
paper we focus on the effects of alternative frames for CSR measures. Whereas
previous research only focused on single evaluations of each CSR policy separately
and thus ignored potential trade-offs consumers face when deciding between
different CSR-policies companies offer, we utilize discrete choice experiments (DCE)
that more realistically picture consumers’ every-day choices. Subjects were presented
with alternative profiles of CSR measures and were divided into two treatments that
varied according to the definition of the status quo alternative and the valuation
question. The design of the experiments allowed us to compare the willingness to pay
(WTP) a higher price for a product undertaking CSR measures and the willingness to
accept (WTA) a lower price for a product with a lower CSR profile. By disentangling
the effects of differences in choice uncertainty (i.e. choice scale) and preferences
between the two scenarios, we are able to show that the WTA/WTP gap exists only
for some CSR policies but doesn’t show up for others. Our results further
demonstrate that measures for WTA and WTP are significantly more dispersed in
choice experiments with joint evaluations of different CSR policies than in single
evaluation – which is likely to be caused by the availability of reference alternatives
consumers use to form preferences in the former situation.
4 - Pricing and Willingness-to-pay Estimation in B2B Markets
Neil Biehn, Senior Director, PROS Pricing, 3100 Main Street, Houston,
TX, 77002, United States of America, nbiehn@prospricing.com
There has been considerable research, as well as the application of various marketing
techniques, to capture consumers’ Willingness-to-Pay. In this talk, we discuss why
many of the common techniques are difficult to implement in a B2B environment.
We will also explore a more data driven approach to capturing the Willingness-to-Pay
of a B2B customer and present results from its implementation.
MARKETING SCIENCE CONFERENCE – 2011 TA15
9
■ TA15
Champions Center V
B2B: Relationships
Contributed Session
Chair: Alfred Zerres, Institute of Business-to-Business Marketing,
University of Muenster, Am Stadtgraben 13-15, Münster, 48143, Germany,
alfred.zerres@uni-muenster.de
1 - A Theory of Bargaining Costs and Price Terms in the Absence of
Relationship-specific Investments
Desmond (Ho-Fu) Lo, Assistant Professor, Santa Clara University,
500 El Camino Real, Santa Clara, CA, 95050,
United States of America, hlo@scu.edu, Giorgio Zanarone
Firms often bring pre-existing assets such as brand and market strength into joint
business ventures. We model a bargaining process and price terms in these ventures
as a tension between saving ex ante contract design costs and facing ex post
opportunism, in the shadow of judicial behavior. On the one hand, to save on design
costs, parties can leave price open for future negotiations and face ex post dilution in
their pre-existing assets through wasteful bargaining actions. On the other hand,
parties can go through the effort of fixing the contract price ex ante and thus prevent
opportunistic renegotiations through a credible threat of having the contract
reinstated by courts. We show that firms prefer to specify the contract terms ex ante
when the value of their pre-existing assets is high and the environment is not
complex. Our theory adds to Transaction Cost Economics (TCE) by (1) formalizing a
bargaining process that is observed in the real world and its effect, together with the
judicial principle of contract reinstatement, on price terms and (2) extending the TCE
rationale to settings where the assets brought into production are not relationshipspecific.
2 - Assessment of Purchasing Maturity in Small Business
Jeffery Adams, Assistant Professor, University of Houston-Downtown,
College of Business, 320 N Main St, Houston, TX, 77002,
United States of America, adamsjeff@uhd.edu, Ralph Kauffman
Relatively little research has been done on B-to-B buyer-supplier relationships in
small and medium size business, and perhaps even less has been done on how to
assess the level of purchasing development in such businesses. Successful marketing
relationships with these smaller firms can hinge on the ability of marketers to assess
the degree of purchasing maturity in such customers. “Purchasing maturity” can be
defined as the readiness and ability of customer firms to engage in more highly
developed complex and longer-term buyer-seller relationships. The primary objective
of this study is to develop a means that marketers can use to measure purchasing
maturity in particular small and medium size business customers or potential
customers. Using data collected from a cross-sectional sample of small and medium
size businesses in four NAICS sub-sectors, a measurement model is developed. Factor
analysis, Pearson correlation, and stepwise regression are used in development of the
model to identify factors that, to the degree that they are present, give indication of
the level or degree of purchasing maturity in a business. A scorecard is developed for
application of the model to individual firms. The scorecard can be used by both
marketers and customer management to assess the level of purchasing maturity that
exists in the buying firm. The primary contribution of this research is the
development of an additional tool for B-to-B marketers to assess the readiness of
existing or potential small and medium size customers to engage in higher-level
buyer-seller relationships and thereby increase the seller’s market potential.
3 - Integrative Negotiation Training: Enduring Effects of Asymmetrical
and Symmetrical Training
Alfred Zerres, Institute of Business-to-Business Marketing, University
of Muenster, Am Stadtgraben 13-15, Münster, 48143, Germany,
alfred.zerres@uni-muenster.de, Joachim Hüffmeier, Alexander
Freund, Klaus Backhaus
Almost every business deal in practice is shaped by negotiations as a dominant
transaction mechanism (Anderson/Narus/Narayandas, 2009; Thompson, 2009). Thus,
negotiation skills are crucial to ensure successful transactions for every business
marketing manager and companies consequentially try to improve their marketing
managers’ negotiation skills through respective training programs. As a consequence,
negotiation training has become a multi-billion dollar industry alone in the US. But
are these trainings worth their money? To address this question, we focus on two
gaps in the negotiation training literature. While research has shown that negotiation
training can successfully increase negotiation outcomes immediately after the
training, little is known about its effectiveness across time. Furthermore, in all
previous studies both conflicting parties were trained. From an applied perspective,
this may well be a problematic feature of the literature, as firms can hardly train both
parties in business negotiations. To address the related open questions, we conducted
an integrative negotiation training experiment with a total of 360 participants (180
dyads). We used a one-factorial design with training (no training, only seller trained,
only buyer trained, and both parties trained) as between- and three measurement
times as within-subjects factor (assessments before, immediately after, and 30 days
after the training). Results reveal that integrative negotiation training is not only
effective, but even increases in periods of non-practice. However, one-party
negotiation training was only successful if the trained party was the seller and failed if
the buyer received the training. This results pattern is discussed with respect to the
broader negotiation literature.