The Weber-Fechner Law applied to pricing Monroe 1971b) includes the proposition that the relative, rather than absolute, discount size influences consumers reaction to price incentives is largely influenced by relative, rather than absolute, discount size. For example, shoppers value a $10 discount when its relative size is large, in comparison to the products original price e.g., $10 off $25), whereas, small relative discounts e.g., $10 off $125) are not seen as attractive； even though absolute dollars gained is identical. Researchers argue that consumers use a form of mental accounting to frame decisions in relation to the product price topical) and not in relation to the absolute wealth gain pure) or the costs associated with obtaining a given discount minimal). While research documents consumers use of mental accounts and the psychophysical effects of price judgments, most findings have involved a traditional brick-and-mortar shopping environment. Few studies explore whether these findings hold true in an online shopping situation. This dissertation explores the influence of contextual factors, such as shopping environment, on consumers reaction to price promotions and attempts to understand whether a) contextual factors influence by the relative size of price promotions online to the same extent as traditional promotions； b) shoppers use a different form of mental accounting to evaluate online shopping decisions； and c) lower price incentives offered in an online environment gain the same level of consumer response as larger discounts in a traditional brick and mortar environment. Results from three studies show that, for a given relative price discount, online price promotions were more efficacious compared to traditional promotions. Furthermore, respondents indicated a willingness to spend more time obtaining online discounts. Small relative and absolute online discounts were as efficacious as larger traditional discounts. In contrast to Kahneman and Tverskys 1981) seminal findings, respondents demonstrate fewer preference reversals and are more likely to accept relatively small price discounts online. Qualitative data reveal that consumers used minimal account framing, comparing discounts to value of their time online. Their ability to multi-task while shopping online contributed to their willingness to spend more time pursuing smaller price promotions. The managerial implications of findings suggest that marketers can gain the same level of behavioral response using smaller price incentives online compared to larger promotions in a traditional shopping situation.

Mobile phone market is a technology driven invention. People consider convenience to be one of the primary advantages when using mobile technology. Because of technological innovations and continuous improvement, cell-phones also provide powerful applications in many fields. Today, cell-phones are not only limited to communication devices, but also applicable in entertainment, medical fields, etc. Thus, the cell-phone use plays an important role in daily lives. Evidence shows that the permeability of mobile phones and the population of subscribers have rapidly risen. No matter what the market status is, innovation is regarded as a vital factor for global market growth and is acknowledged to play a pivotal role in companies competitiveness. Customers demand for innovation has not declined. Moreover, the lack of innovativeness in new products usually leads to launching failure. Hence, firms should recognize the importance of providing a unique benefit that suits customers needs. Nowadays, the issues of product design and brand are increasingly gaining attention in the mobile market. The present study examined innovation from product design and brand innovation from customers perspectives. Both product attractiveness and brand innovativeness are proposed as the innovativeness indicators and information cues. In addition, product monetary price also is included in this study. Product attractiveness is considered an intrinsic cue. Brand innovativeness and monetary price construct are considered the extrinsic cues. Based on Zeithamls proposed model 1988), this study discussed how these three different information cues product attractiveness, brand innovativeness, and monetary price) influence consumers product evaluations perceived quality and perceived value), and subsequently, their behavioral intention purchase intention). SEM was implemented to test proposed relationships among these constructs. Moreover, two types of customers personality traits consumer innovativeness and need for uniqueness) were explored in this study and were considered as moderators.

Running continues to be one of the more popular sports enjoyed by all ages. Regardless of the popularity of the sport, limited research currently exists to quantify the apparel purchase behavior of runners. This research studied variables that influenced purchase intentions of runners at different levels of involvement. The runners were categorized by the dualistic theory of passion, and their purchase intentions toward apparel brands for running were investigated from the self-congruity perspective. Runners completed an online survey that provided comprehensive information on their running behavior and their past and future apparel purchases. Exploratory factor analysis was used to investigate the dualistic theory of passion and self-congruity theory on the running population. Four variables were found to be important predictors of purchase intentions for all runners: Self-Image Congruence, Function, Aesthetic, and Technology Appeal. Further, logistic regression was used to determine which variables significantly influenced purchase intentions of runners in each category. Based on the findings, a theoretical framework was proposed. This study concluded that functional attributes of running apparel influence runners’ purchase intentions.

Previous studies have shown that managers are overwhelmingly likely to sacrifice long-term firm value for immediate earnings and satisfaction from the financial markets Graham, Harvey, and Rajgopal, 2005). Research in marketing has empirically confirmed this myopia at both aggregate Mizik and Jacobson, 2007； Mizik, 2010) and individual firm levels Chapman, 2011). That is, marketing managers consider not only actions that impact real earnings, but also how their firm is immediately perceived by the financial markets. Although plenty of research exists detailing how managers care about the financial markets, how the financial markets react to marketing actions has received less attention. That is, how do board members and the general financial markets interpret marketing spending and actions? This dissertation investigates how firms walk the walk and talk the talk regarding marketing spending and communication of strategy. Specifically, I address the following questions: 1) How do financial markets interpret real investments in marketing? and 2) How are these investments and strategic directions communicated to the financial markets? First, I find that markets only appreciate changes in marketing investments when those changes directly result in earnings, not when the investments are made. Second, I created a novel dataset of communications between firms and markets that investigates how marketing constructs are transmitted to the investment community. To address these questions, I use a mixture of event and drift studies. This first essay a) highlights the importance of long-term stock market reactions and event studies and b) provides evidence managers can give investors on how firm spending should be interpreted. This evidence is consistent with the market initially under-appreciating marketing efforts. Specifically, I find differences in the immediate market response to earnings announcements for firms expanding versus reducing their marketing and R&D effort. The findings suggest that the stock market takes time to fully incorporate implications of strategic marketing decisions and tends to update firm valuation when the outcomes of marketing strategies are realized in future financial performance and new performance signals are sent to the market. The second essay is distinctive in that although a large amount of research has addressed marketing information released by firms, mine is the first to look at marketing information that is released on a periodic basis along with annual announcements. The essay also examines the stock markets reaction to such information. I studied non-financial disclosures from 1,745 earnings statements for the existence and valence of classical marketing constructs, including the 4Ps, 3Cs, consideration of external factors, and the amount of space given to management, operations, accounting, and financial measures. First, using this unique dataset, I determine which metrics executives are likely to be discuss taking into account a firms financial situation. Second, using event study methodology, I estimate which constructs have a higher ability to move the market and increase firm value. Third, by creating long-term portfolios, I determine which statements truthfully create long-term value for the firm and which are merely cheap talk meant to moderate market response.

Consumers making purchases in service categories such as insurance potentially face search and switching costs. On the one hand, incomplete information about the various alternatives necessitates search behavior which could lead to consumers switching from the current provider to a different provider. On the other hand, brand loyalty, the prospect of dealing with a new provider, and other psychological factors result in switching costs that introduce frictions in the market. Both search and switching have been studied in the empirical literature albeit separately. In this paper, our objective is to distinguish empirically between search and switching costs in the context of consumers’ choices in the U.S. auto insurance industry. Our data contain information on respondents’ search behavior in terms of their consideration set of insurance providers； the corresponding premia for those providers； the actual provider chosen； the identity of the previous insurer and the demographic and psychographic characteristics of the consumers and their policies. This information enables us to identify separately both search and switching costs. To quantify the magnitudes of these costs, we explicitly model consumers’ decisions about for how many companies to search, the identities of these companies and from which company to purchase. Our modeling approach specifically acknowledges the observed consideration set as being the outcome of a search process by a consumer. Using this approach we learn about the levels of search and switching costs, and their relative magnitudes. Taking our model to the data, we find that there are substantial search and switching costs in the auto insurance industry. We are thus able to provide an explanation for the very high observed retention rate in this industry and also explain why insurance providers advertise very high potential annual savings of roughly $400 when switching insurance providers. A 50% reduction in search costs results in consumers considering 58% more companies, while a 50% reduction in switching costs leaves consumers’ consideration and purchase decisions largely unaffected. We find a reduction in search costs to be the most effective way to decrease the retention rate. Our results also suggest that insurance providers are differentially affected by search and switching costs depending on firm and consumer characteristics.

This paper contributes to the service marketing and social networking literature by identifying and quantifying the direct and indirect effects of service quality on new customer acquisition, usage and retention using behavioral data. We use a unique dataset describing the launch of a new high-tech entertainment product a video on demand type service). We observe the signal quality which translates directly into the number of movies available for viewing, thus representing a part of overall service quality. For this technology, service quality is exogenously determined, objectively measured and spatially uncorrelated. Our counterfactual experiment involves computing the marginal effect of service quality improvement on Customer Lifetime Value CLV). We find that the Customer Lifetime Value CLV) and the marginal CLV have a non-linear relationship. Interestingly, the lowest CLV decile has the highest marginal effect. On average, a 10% increase in service quality leads to a 2.3% increase in customer lifetime value. The practical implication is that resources related to service quality should be allocated not by the absolute CLV but by the marginal CLV. We also document the existence and magnitude of contiguous word of mouth effects of signal quality on customer acquisition. We operationalize contiguous word of mouth effects based on geographic proximity and use behavioral data to resolve typical challenges in measuring causal social network effects. We find that contiguous word of mouth affects about 8% of the new subscribers. However, this effect acts as a double-edged sword as it is asymmetric. We find that the effect of negative word of mouth arising from poor signal quality is more than twice as large as the effect of positive one arising from excellent signal quality. Besides contiguous word of mouth, we find that advertising and the retail environment also play a role in adoption. We find these effects after controlling for unobserved heterogeneity, competition and consumer demographics. Keywords: Services, Service Quality, Customer Relationship Management CRM), Customer Lifetime Value, New Product Adoption, Word of Mouth, Contagion, Social Networks, High Technology, Hazard Models

A ‘wave of nostalgia’ has gripped the US leading to nostalgic fashions, furniture, television programming and even food. The marketing literature suggests that nostalgic-related consumption is the result of an aging population. It has been proposed that the purchase of nostalgic-products and services is an attempt by mature consumers to return psychologically to the ease, certainties and conflict free periods that existed or seemed to exist during their childhood or adolescence. This paper proposes that discontinuity, as argued by Davis (1979), is a better explanation for why people develop a preference for and consume nostalgic goods. Although some insights have been developed, research focused only on mature consumers and is rather limited in offering alternative explanations for the evocation of nostalgic feelings. MANCOVA was the primary method used to test hypotheses. Findings of this study indicate that discontinuity does not necessarily lead to nostalgia and preference for nostalgic products varies.

There has been growing interest in advertising message content and its effects on brand performance. While advertising message cues influence performance, long-term strategies to manage the content of advertising messages and the impact of such strategies on the brands market performance are unclear. Given the crucial role played by strategically appropriate message content in determining the success of a brand, the paucity of systematic research on the long-term effects of advertising message content is rather surprising. Research on advertising effectiveness may be categorized into two mostly disparate streams – econometric studies that look at advertising over time, and behavioral studies of advertising content. While econometric studies have explored the effects of advertising on actual market performance, they have primarily focused on advertising intensity – the amount of advertising for the brand. In contrast, behavioral studies investigate the effects of advertising content on behavioral intentions, not market outcomes, and are mostly cross-sectional and laboratory-based. I examine the role of advertising message content in brand development. The present study is the first, to the best of my knowledge, to assess the impact of three critical elements of advertising message content – temporal consistency, focus, and differentiation – on brands realized sales outcomes over an extended window of observation. Temporal consistency of advertising messages is the extent to which the brands advertising messages are uniform over time. Message focus is the extent to which the brands advertising messages convey a single benefit. Advertising message differentiation is the extent to which the advertising messages) of the focal brand differ from those of its competitors. In particular, the present study also sheds light on whom to differentiate from. Integrating insights from the literatures on consumer knowledge and signaling theory, I look at the effects of these three advertising content-related elements on brand sales over the life of a product category. Focused, differentiated, and consistent ads increase the clarity and credibility of the firms advertising signals and also increase consumers knowledge which, in turn, improve the sales performance of the brand. I also contend that the importance of signaling is most pronounced in young markets and consumers knowledge is higher in mature categories, so advertising content strategies may need to differ between young and mature markets. I test my hypotheses in the context of US minivan sales, creating a unique dataset from four different sources: 1) monthly sales, price, and distribution intensity for all brands from Wards Automotive Yearbook, 2) ad content ratings of approximately 2,000 print advertisements from a census of minivan ads from 7 leading magazines, 3) quality ratings for each brand from Consumer Reports, and 4) monthly advertising budgets for each brand from Competitive Media Reporting over a 21-year period from category inception. I specify a piecewise random-effects regression model that accounts for unobserved heterogeneity, the endogeneity of marketing mix decisions, and varying effects by stage of category life cycle. The results indicate that brand managers should use consistent and focused advertising messages in a young market. Also, advertising messages that are differentiated from the market leader increase sales in a young market. In contrast, in mature markets, advertising messages should be differentiated from other competitors. In addition, brand managers have more leeway to refresh and change advertising content and use more disperse ads as the category ages. Keywords: Long-term advertising effects； Advertising strategy； Signaling Theory； Consumer Knowledge； Category age.

The marketing and development of solutions has become an increasingly important concept in both marketing practice and theory. Recent conceptual work has defined solutions as sets of products and services that allow customers to achieve customized outcomes. Although the definition of a solution is becoming clearer, the process through which solution value is generated is still opaque. The purpose of this study was to add clarity to both marketing theory and practice by examining the solution value co-creation process in depth. Service-dominant logic, the relational view, service value co-creation, and theories of organizational learning and knowledge were the basis for this examination. Social capital was also examined to determine how these important relational concepts are involved in solution development. The study was conducted in four separate phases using a multi-method approach of quantitative surveys, qualitative surveys, and depth interviews. A large, multinational educational firm provided the context for the study which included access to their solution sales force and customer base. Quantitative data was collected from 97 key informants across 182 different customer opportunities for both new and existing solution engagements. Qualitative data was also collected from 71 respondents to provide a mixed-method triangulation of how solution value is created. Overall, the study provided strong support to the idea that knowledge sharing between solution providers and their customers plays a pivotal role in the co-creation of solution value.

This research explores the influence of brand and shelf display cues on consumer preferences for products that appear to be in scarce supply. In so doing, I develop a theoretical model of how scarcity operates in the retail environment, identifying when it increases purchase intentions, when it decreases purchase intentions, and the underlying mechanisms driving these outcomes. Across a series of five studies, I find that when consumers infer that products are scarce due to popularity, they are more likely to buy these products, but only when the products are unfamiliar nonfood brands. I also find that scarce products are less likely to be purchased when they are familiar food brands. In addition, the price of the product is an important moderator of these effects, as price further influences perceptions about the popularity of the product.