Kersi D. Antia, Mark Bergen and Shantanu Dutta

ABSTRACT

In recent years, a growing problem has become the bane of brand owners and
the scourge of successful supply chains. In fact, gray markets -- in which a
firm's products are sold or resold through unauthorized dealers -- have become
so prevalent that one trade publication called them a "disease to be eradicated."1
In response to this increasing threat, manufacturers in a variety of industries
have been waging a pitched battle against gray market sales around the world.

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Kersi D. Antia, Mark E. Bergen, Shantanu Dutta, & Robert J. Fisher

ABSTRACT

Gray market activity has become increasingly prevalent. The prevailing wisdom in marketing is to use more severe enforcement to deter gray marketing. However, the certainty and speed of enforcement may also have a bearing on the incidence of violations. This article examines whether and how enforcement deters gray marketing. The results from a field survey of manufacturers and an experimental design suggest that, by itself, enforcement severity has no impact. Deterrence results only when the multiple facets of enforcement are used in combination.

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SUDHA MANI, KERSI D. ANTIA, and ARIC RINDFLEISCH

ABSTRACT

Over the last two decades, strategy researchers have sought to understand the ownership
structure of firms' foreign direct investments (FDI) as reflected in entry mode and equity level.
However, prior FDI research has ignored the interrelated nature of these key FDI decisions. In
addition, prior research does not fully account for the fact that individual ownership structure
decisions occur within the context of a firm's broader FDI portfolio, and thus reflect a wide
and frequently unobserved range of parent firm and host nation effects. Our research seeks to
address both of these limitations. Using a rich dataset of 4,459 subsidiaries established by 858
Japanese firms across 38 countries over a 9-year period, we specify a conditional bivariate, crossclassified
multilevel model of FDI ownership structure. Our model enables the joint estimation of
entry mode and equity level, accounts for the portfolio nature of FDI, and compares the relative
predictive power of transaction cost- and experience-based explanatory variables across both
facets of ownership structure. Copyright 2007 John Wiley & Sons, Ltd.

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ROBERT J. FISHER, MARK VANDENBOSCH, KERSI D. ANTIA

ABSTRACT

The research examines viewers' actual responses to four televised fundraising drives by a public television station over a two-year period. The 584 pledge breaks we studied contain 4,868 individual appeals that were decomposed into two underlying dimensions based on the empathy-helping hypothesis: the appeal beneficiary (self versus other) and emotional valence (positive versus negative). We find that the most effective fundraising appeals communicate the benefits to others rather than to the self, and evoke negative rather than positive emotions. Appeals that emphasize benefits to the self significantly reduce the number of calls to the station, particularly when they have a positive emotional valence.

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Joann Peck & Terry L Childers

ABSTRACT

This research details the development of the "Need for Touch" (NFT) scale designed to measure individual differences in preference for haptic (touch) information. The 12-item NFT scale consists of autotelic and instrumental dimensions. Results are reported that support the scale's hypothesized internal structure as well as its reliability, convergent, discriminant, and nomological validity. Individual differences in chronic accessibility to haptic information across groups varying in NFT were also found in two experiments. Additionally, NFT moderated the relationship between direct experience and confidence in judgment.

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Joann Peck & Jennifer Wiggins

ABSTRACT

Prior research has assumed that touch has a persuasive effect only if it provides attribute or structural information about a product. Under this view, the role of touch as a persuasive tool is limited. The main purpose of this research is to investigate the persuasive influence of touch as an affective tool in the absence of useful product-related information. The authors find that for people who are motivated to touch because it is fun or interesting, a communication that incorporates touch leads to increased affective response and increased persuasion, particularly when the touch provides neutral or positive sensory feedback. People who are not motivated to touch for fun will also be persuaded by a communication that incorporates touch when they are able to make sense of how the touch is related to the message. The authors explore the effectiveness of different types of touch in generating an affective response, and they replicate the effects on attitudes and behavior in a real-world setting. This research suggests that the marketing implications of touch are more substantial than previously believed. The authors present research implications for direct marketing, product packaging, point-of-purchase displays, and print advertising.

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Qing Liu, Angela Dean, David Bakken, and Greg M. Allenby

Abstract

Research in marketing, and business in general, involves understanding when effect-sizes are expected to be large and when they are expected to be small. An example is the level-effect in marketing, where the effect of product attributes on utility is positively related to the number of levels present among choice alternatives. Knowing the contexts in which consumers are sensitive to the levels of attributes is an important aspect of merchandising, selling and promotion. In this paper, we propose efficient methods of learning about contextual factors that influence consumer preference and sensitivities within the context of a hierarchical Bayes model. A design criterion is developed for hierarchical linear models, and validated in a study of the "level-effect" in conjoint analysis using a national sample of respondents. Extensions to other model structures are discussed.

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Qing Liu, Thomas Otter, and Greg M. Allenby

Abstract

The use of adaptive designs in conjoint analysis has been shown to lead to an endogeneity bias in part-worth estimates using sampling experiments. In this paper, we re-examine the endogeneity issue in light of the likelihood principle. The likelihood principle asserts that all relevant information in the data about model parameters is contained in the likelihood function. We show that, once the data are collected, adhering to the likelihood principle leads to analysis where endogeneity becomes ignorable for estimation. The likelihood principle is implicit to Bayesian analysis, and discussion is offered for detecting and dealing with endogeneity bias in marketing.

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SUDHA MANI, KERSI D. ANTIA, and ARIC RINDFLEISCH

Abstract

Over the last two decades, strategy researchers have sought to understand the ownership
structure of firms' foreign direct investments (FDI) as reflected in entry mode and equity level.
However, prior FDI research has ignored the interrelated nature of these key FDI decisions. In
addition, prior research does not fully account for the fact that individual ownership structure
decisions occur within the context of a firm's broader FDI portfolio, and thus reflect a wide
and frequently unobserved range of parent firm and host nation effects. Our research seeks to
address both of these limitations. Using a rich dataset of 4,459 subsidiaries established by 858
Japanese firms across 38 countries over a 9-year period, we specify a conditional bivariate, crossclassified
multilevel model of FDI ownership structure. Our model enables the joint estimation of
entry mode and equity level, accounts for the portfolio nature of FDI, and compares the relative
predictive power of transaction cost- and experience-based explanatory variables across both
facets of ownership structure.

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Jan B. Heide

Abstract

This article examines the phenomenon of plural governance, a firm's simultaneous use of market contracting and vertical integration for the same basic transaction. The author studies two particular aspects of plural governance, namely the conditions that motivate firms to deploy plural governance and the manner in which one governance form influences the other when the two coexist in a joint structure. Drawing on agency theory and information economics, the author develops a set of research hypotheses and tests them empirically in the context of industrial purchasing decisions. The results suggest that the plural governance phenomenon can be understood from the perspective of solving information asymmetry problems between buyers and suppliers. The author discusses the implications of a "make and buy" approach to extant theory of interfirm governance, relationship management, and marketing strategy in business-to-business settings.

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JAN B. HEIDE, KENNETH H.WATHNE, and AKSEL I. ROKKAN

Abstract

This article examines the effects of monitoring on interfirm
relationships. Whereas some research suggests that monitoring can
serve as a control mechanism that reduces exchange partner
opportunism, there is also evidence showing that monitoring can actually
promote such behavior. The authors propose that the actual effect of
monitoring depends on (1) the form of monitoring used (output versus
behavior) and (2) the context in which monitoring takes place. With
regard to the form of monitoring, the results from a longitudinal field
study of buyer-supplier relationships show that output monitoring
decreases partner opportunism, as transaction cost and agency theory
predict, whereas behavior monitoring, which is a more obtrusive form of
control, increases partner opportunism. With regard to the context, the
authors find that informal relationship elements in the form of microlevel
social contracts serve as buffers that both enhance the effects of output
monitoring and permit behavior monitoring to suppress opportunism in
the first place.

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Anocha Aribarg and Neeraj Arora

Abstract

Firms often carry a portfolio of multiple brands within a product category to target different quality
tiers in the market. Furthermore, to satisfy heterogeneous consumer preferences within each quality
tier, these firms also offer several variants for each brand. A natural outcome of this practice is
inter-brand variant overlap which could occur across tiers or within a tier. In this paper, we show
that across-tier variant overlap is likely to diminish the preference of an upper-tier brand and
enhance the preference of a lower-tier brand. We also find that variant overlap within a tier is likely
to increase preferences of a brand belonging to the tier. Such variant overlap effects have important
brand portfolio management implications for a multi-brand firm. Specifically, under certain
conditions, we demonstrate that such a firm can enhance its portfolio profit by pruning its variants to
reduce variant overlap. Because our paper relies on aggregate data, future research should
investigate variant overlap at the individual level using panel or experimental data.

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Neeraj Arora, Anocha Aribarg

Abstract

Large firms implement brand portfolio promotions (BPP) that promote multiple brands to
targeted consumers at discrete points in time. Such programs possess unique properties that
require a novel model to assess their effectiveness. The authors propose a model that captures the
magnitude and shape of the BPP effect for each brand in the portfolio, accounts for diminishing
returns of brand exposure, and incorporates inter-temporal effect of BPPs. The model is shown to
be general enough to apply to any discrete promotion where the carry-over effect duration is
unknown. Several model-based metrics that allow an objective comparison of ROI from a BPP
versus other forms of promotion are presented. Results suggest that a BPP, when contrasted to
feature, leads to higher sales lift per household for some of the brands. The authors develop an
optimal exposure allocation procedure based on the proposed model that informs a) which
assortments of brands to promote across multiple BPPs and b) the exposure level for each brand.

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David A. Schweidel*, Peter S. Fader, Eric T. Bradlow

ABSTRACT

Two widely recognized components, central to the calculation of customer value, are acquisition and retention propensities. However, while extant research has incorporated such components into different types of models, limited work has investigated the kinds of associations that may exist between them. In this research, we focus on the relationship between a prospective customer's time until acquisition of a particular service and the subsequent duration for which he retains it, and examine the implications of this relationship on the value of prospects and customers.

To accomplish these tasks, we utilize a bivariate timing model to capture the relationship between acquisition and retention. Using a split-hazard model, we link the acquisition and retention processes in two distinct yet complimentary ways. First, we use the Sarmonov family of bivariate distributions to allow for correlations in the observed acquisition and retention times within a customer; next, we allow for differences across customers using latent classes for the parameters that govern the two processes. We then provide a demonstration of how the proposed methodology can be used to calculate the discounted expected value of a subscription based on the time of acquisition, and discuss possible applications of the modeling framework to problems such as customer targeting and resource allocation.

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David A. Schweidel*, Peter S. Fader, Eric T. Bradlow

ABSTRACT

Service churn and retention rates remain central as constructs in marketing activities such as valuation of service subscribers and resource allocation. While extant approaches have been proposed to relate service churn to external factors such as reported satisfaction, marketing mix activities, and the like, managers often face situations in which the only information available is the duration for which subscribers have had service. In such cases, can they forecast service churn and understand the contributing factors, which may allow for subsequent intervention? The authors propose a framework to examine factors that may underlie service retention in a contractual setting. Specifically, they utilize a model of retention that takes into account: (1) duration dependence, (2) promotional effects, (3) subscriber heterogeneity, (4) cross-cohort effects, and (5) calendar-time effects (e.g., seasonality). The framework is then applied to subscription databases of seven services offered by a telecommunications provider, mirroring the format commonly used to forecast future service churn (and to make managerial decisions).

Across all seven services, the inclusion of promotional effects always improves the forecast accuracy of retention behavior, while including cross-cohort effects does not significantly improve it. In five of the services, customer eterogeneity, calendar-time effects, and duration dependence also contribute to improved forecasts. These results are then used to understand how the expected value of a subscription differs across model pecifications. They find considerable variation across model specifications, indicating that model misspecification can affect resource allocation decisions and other marketing efforts that are important to a firm.

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DAVID A. SCHWEIDEL, ERIC T. BRADLOW, and PATTI WILLIAMS*

ABSTRACT

This research presents a feature-based statistical model and subsequently explores the degree to which similarity perceptions between two advertisements can be decomposed and explained by a "weighted-andsummed" distance measure, computed on the advertisements' executional elements, after controlling for familiarity and viewers' attitudinal responses toward the advertisements. Furthermore, the authors obtain empirical findings in two major areas: First, variation in similarity ratings can be explained by the advertisements' features, a finding of potential importance for advertisement construction. Second, some, but not all, executional elements that have been shown (in the literature) to drive recall and persuasion are effective at driving perceptions of similarity. This is of practical importance because managers want their advertisements not only to be liked and remembered but also (possibly) to be perceived as similar (or dissimilar) to those for other products. In particular, an understanding of which items drive which constructs recall and persuasion, or similarity) can contribute to a more effective overall marketing strategy.

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Craig J. Thompson and Zeynep Arsel

ABSTRACT

This study introduces the concept of the hegemonic brandscape to analyze a particular nexus of marketplace dynamics. The cultural discourses that surround Starbucks and the servicescape structures that the so-called Starbucks revolution has established as the linchpins of a desirable coffee shop experience exert a systematic influence on the socio-cultural milieu of local coffee shops, regardless of whether these shops are positioned as countercultural havens or a third-place hangout for middle-class professionals. We identify two types of local coffee shop patron who use the anti-Starbucks discourse in different ways and who imbue qualitatively different kinds of personal, social, and moral significance to their coffee shop preferences. Local coffee shop culture also provides access to contextualized cultural capital that mitigates some expected class-based differences in consumers’ aesthetic tastes. We discuss the implications of this cultural conceptualization for prior research on consumer-brand relationships, brand image, and oppositional brand loyalty.

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Aksel I. Rokkan, Jan B. Heide, and Kenneth H. Wathne

ABSTRACT

Specific investments, which are tailored to a particular company or value-chain partner, are important components of firms’ marketing strategies. At the same time, extant theory also suggests that such investments pose considerable risk, as they put the receiver in a position to opportunistically exploit the investor. In this paper, we examine this "expropriation" scenario, but also consider whether specific investments, due to their specialized nature, under certain conditions may actually "bond" the receiver and reduce opportunism. These conditions have to do with a focal relationship’s time horizon (i.e., its extendedness) and its particular norms. Our key theoretical argument is that the effect of specific investments on opportunism will shift in a non-monotonic fashion over the range of these relationship conditions. We test our research hypotheses empirically through parallel analyses on each side of 198 matched buyer-supplier dyads. The empirical tests provide general support for our predictions, but also reveal differences between buyers and suppliers regarding the focal effects. The implications of our findings for marketing theory and practice are discussed.

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Nancy Wong, Aric Rindfleisch, and James Burroughs

ABSTRACT

Most measures of consumer behavior have been developed and employed in the United States. Thus, relatively little is known about the cross-cultural applicability of these measures. Using Richins and Dawson’s (1992) Material Values Scale (MVS) as an exemplar, this article focuses on the problems researchers are likely to encounter when employing domestic mixed-worded scales (i.e., scales that contain both positive and reverse-worded items) in cross-cultural applications. Through an initial study among over 800 adults from the U.S., Singapore, Thailand, Japan, and Korea, we show that the cross-cultural measurement equivalence and construct validity of the MVS is challenged by its mixed-worded Likert format. Through a second study among approximately 400 Americans and East Asians, we find that other mixed-worded scales produce similar problems and that the cross-cultural applicability of such scales may be enhanced by replacing items posed as statements with items framed as questions.

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