Search

A robust finding in the escalation literature, termed as the preference effect, is that involvement in the period 1 initial project assessment decision increases the tendency for decision makers to stick with a losing course of action during the period 2 project reassessment decision. The proposed solution is to bring in a new decision maker in period 2. Across multiple studies, we show that providing period 1 information in real options format increases the tendency for decision makers to view period 2 focal event information as both more negative and more important. Consequently, such decision makers exhibit less escalation in period 2, i.e., exhibit behavior opposite to the preference effect. This suggests that, in real option contexts, not only do we not need to bring in a new decision maker, but also (counterintuitively) it is beneficial to retain the same decision maker in situations where escalation is likely to occur. Keywords: real options * focal events * escalation of commitment * judgment and decision making, 1. Introduction Firms periodically reassess the potential value of a project as new information is obtained. Such reassessment provides the firm the opportunity, but not the obligation, to expand, modify, [...]

We study three ways firms can communicate about their brands--paid media (advertising), earned media (word of mouth and online social media), and owned media (brand websites and other owned content)--and [...]

In search advertising, brand names are often purchased as keywords by the brand owner or a competitor. We aim to understand the strategic benefits and costs of a firm buying [...]

In today's multibrand, multichannel marketplace, optimal channel design involves issues such as distribution intensity, channel exclusivity, vertical and horizontal coordination, and online--offline mixed structures. We investigate how a firm's choice in these design issues affects its profitability under varying levels of brand and outlet differentiation. Our spatial model explicitly captures heterogeneous consumer preference for brand position, store location, and outlet type, under various consumer behavior assumptions. We apply this same underlying model to 10 different channel structures, deriving associated demand functions and equilibrium solutions. We perform a meta-analysis over the entire set of results to estimate a general model that summarizes the linkages among the factors shaping optimal channel structure decisions in a multibrand, multioutlet market. This general model efficiently describes the complex interactions of channel characteristics with industry structure and consumer characteristics, providing new findings as well as greater clarity to some results in the literature. A predictive analysis applied to additional channel structures exhibits strong generalizability in qualitative findings. Key words: channel coordination; channel structure; demand formulation; multichannel pricing; product line pricing History: Received March 5, 2010; accepted November 9, 2012, by Pradeep Chintagunta, marketing. Published online in Articles in Advance April 4, 2013., 1. Introduction Major channel structure decisions, although made infrequently, represent important strategic moves. For example, Gateway, a major U.S. personal computer (PC) maker, closed all 188 of its retail stores [...]

Marketing Science is in a great competitive position with a strong editorial board and infrastructure support. This editorial summarizes the state of the journal as perceived by its stakeholders. They [...]

Each year in the postsecondary education industry, schools offer admission to nearly 3 million new students and scholarships totaling nearly $100 billion. This is a large, understudied targeted marketing and [...]

In their 2012 article, Albuquerque and Bronnenberg (hereafter, AB) develop an empirical model of the automobile market by specifically accounting for consumer, dealer, and manufacturer behavior. This is a provocative [...]

This foreword and the subsequent four invited articles were commissioned by Eric T. Bradlow while Editor-in-Chief of Marketing Science. The foreword was written in four parts; each part covers a [...]

Drawing from transaction cost economics (TCE), the knowledge-based view (KBV), and real options theory (ROT), we propose that the general alliance experience of alliance partner firms moderates the impact of market uncertainty and alliance-specific uncertainty on the benefits and costs of the two marketing alliance governance modes, i.e., non-equity alliances and joint ventures. Based on our systematic study of 18,616 marketing alliances occurring in 48 industries across 164 countries between 1992 and 2008, we find general alliance experience significantly moderates firms' marketing alliance governance mode choices. Our framework reconciles some contradictory empirical results in the interfirm relationship governance structure literature by emphasizing the moderating role of partner firms' general alliance experience. Specifically, when alliances can be characterized has having a large cultural distance between the partners or having a market with a broad geographic scope, it seems that TCE predictions regarding the marketing alliance governance mode choice hold for inexperienced firms while KBV and ROT predictions hold for experienced firms. In addition, by incorporating key aspects of all three theories, our proposed framework has the potential to provide deeper insights into the role of alliance experience and uncertainty in firms' marketing alliance governance mode choices. Keywords Alliance governance mode * Alliance experience * Knowledge-based view. Real options theory * Transaction cost economics, Introduction Interorganizational marketing collaborations play an important role in today's global marketplace and thus have been identified as a key component of marketing strategy (Fang et al. 2008). One such [...]

Firms collaborate to develop and deliver new products. These collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance. In same-function alliances, partnering firms have similar competencies, whereas in cross-function alliances, partners have very different competencies. On examining managers' view of these alliances, we find that, on average, same-function alliances are expected to perform better than cross-function alliances, holding fixed the level of inputs. A game-theoretic analysis shows that this apprehension about cross-function alliances is consistent with a Pare to-inferior equilibrium. A Pareto-superior equilibrium, however, suggests that partners in cross-function alliances may invest more in their alliances than those in same-function alliances. It is also often believed that increasing the number of partnering firms is not conducive for collaborative effort. Our analysis shows that this belief is correct for same-function alliances, but not for cross-function alliances. We test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms. The experimental results lend support for the Pareto-superior equilibrium. Partners in cross-function alliances invested more than their counterparts in same-function alliances, and this difference in investment levels increased with the number of partnering firms. We extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance. Though such learning increases the resources committed by alliance partners in the learning phase, it decreases investment in the subsequent competition and also dampens the overall investment across the two stages. In addition, an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance. Key words: alliance structure; experimental economics; game theory; new product development; organizational learning History: Received April 11, 2008; accepted July 31, 2009, by Olav Sorenson, organizations and social networks. Published online in Articles in Advance November 25, 2009., 1. Introduction Many firms rely on interfirm collaborations rather than internal processes to develop and market products. Such collaborations allow firms to gain access to complementary resources that they need [...]

This paper extends the theoretical literature on firms' optimal information strategies to the situation when firm's management attention capacity to process available data is scarce. In this case, a firm's optimal market intelligence strategy must trade off learning a little about a broad range of markets (a broad strategy) with gaining a very deep understanding of one or a few markets (a focused strategy). This trade-off is not present when data are scarce, an assumption made in most of the existing literature on optimal information search strategies. However, in data-rich environments, which are of increasing relevance given technology changes, we show a focused market intelligence strategy is always best when managers need to process a substantial amount of data before beginning to gain insights; i.e., there are increasing returns to attention. Interestingly, this focused strategy can also be best with decreasing returns to attention when (a) managers are sufficiently efficient in processing the available data and (b) managers have sufficiently strong initial priors on the unknown market parameters. We show a broad market intelligence strategy is only optimal when new data points are sufficiently redundant, i.e., when the learning rate is sufficiently decreasing with the allocation of more attention. Our results also indicate that advances in information technology can account for the pressure on firms to become more focused and that competition increases the likelihood of a focused strategy. Competition can lead to asymmetric outcomes where firms focus on different markets. Finally, we note that a focused market intelligence strategy, and thus an asymmetric allocation of attention, does not require a priori differences between firms, markets, or market-specific core capabilities. Consequently, a focused market intelligence strategy can result in market-specific core competencies and produce firm differences from equivalent starting conditions. Key words: information acquisition strategy; marketing strategy; market planning; scarce attention; depth versus breadth of information; Bayesian equilibrium History: Received June 10, 2007; accepted November 17, 2008, by Jagmohan S. Raju, marketing. Published online in Articles in Advance February 19, 2009., 1. Introduction The precursor for developing a sound marketing strategy and plan is a good situational analysis. Such an analysis requires the firm to collect and analyze relevant market data. [...]

This paper investigates the effect of product substitutability on Nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer, which may be [...]

The goal of this brief note is to provide the reader with an appreciation of how this paper was initially conceived, to state what I think are the paper s [...]

For many consumers who use loans to acquire an expensive durable such as a car, the market value of their current (used) durable is less than the outstanding loan amount. [...]

Introduction Imagine two consumers, A and B, with identical tastes. They walk into hotel X for the first time with identical initial beliefs and receive identical service. Next, imagine that [...]

Abstract This paper provides an introduction to this Special Issue by a) providing a framework for evaluating the potential and actual success of marketing management support systems (MMSS), and b) [...]

Two strategic pricing policies including price leadership and product line pricing are evaluated to determine the most effective pricing strategies for channel members. The issue of vertical strategic interaction is recognized as a vital issue in channel pricing methods. Results reveal that firms may not always benefit from utilizing information on competitors but may gain from sharing particular types of information with channel partners while restricting access to others.

Two empirical generalizations are recorded, namely, that demand returns to R&D spending depend on a firm's ability and motivation to maximize the R&D investment and that a firm obtains excess returns from a strategic action when it has the ability and motivation to use this asset to its advantage. A study that examines the five key issues that must be addressed before gaining confidence in the obtained strategic generalization is imperative to yield valid empirical generalizations on the effects of strategic actions on firm performance. The PIMS database aids the researcher in analyzing these issues.

Market share can create market power manifested by lower average costs, depending upon a firm's competitive environment. A study estimating three average cost equations using PIMS (Profit Impact of Marketing Strategies) data and controlling for alternative explanations concluded that increased market share levels can adversely affect firms that are neither motivated nor able to gain market power. High market share can reduce costs and produce profits.

The effect of market share on profits was studied by testing a model of how market share affects total revenue and total cost. The results indicated that no additional market power benefits were derived by organizations with high market shares unless they operated in environments with a limited amount of buyer power. Price and cost were primarily influenced by environmental factors and variations in market share. A steady increase in market share was not always related to increasing profits.

In June of 2004, this committee unanimously and enthusiastically recommended to the INFORMS Publications Committee that Prof. Steven M. Shugan be reappointed as Editor in Chief for Marketing Science. The [...]

On October 4, 2001, this committee recommended to the INFORMS Publication Committee that Dr. Steven M. Shugan of the University of Florida be appointed Editor-in-Chief of Marketing Science for a [...]

How and why a seller has to formulate a discount pricing format are examined in situations in which the pricing structure does not affect consumer demand. The case shown is suited for the seller who has a product that does not equal a main component of the purchaser's final product. The case is also ideal for situations where product demand is assumed or where the product price is just one of many elements considered when making a buying decision.

Abstract A commonly held belief has grocery and mass merchandise retailers gaining power relative to the upstream consumer package goods manufacturers. One of the major justifications for this belief is [...]