Focal Product Research Articles

The Effects of Binge-Watching on Media Franchise Engagement

We investigate the relationship between viewing modus (low and high intensity viewing) and consumers' engagement with media franchises in two areas: personal and interactive engagement. The former involves consumers' adoption and consumption of franchise extensions and the latter concerns consumers' content generation related to a focal media product they watched. Our novel data come from an online anime (Japanese cartoons) platform containing individual-level information on consumers' anime watching behavior and their user-generated content. We find that the effects of high intensity viewing on personal engagement critically depend on the availability of a franchise extension at the time of watching the focal media product and the type of franchise extension (sequels versus other types of extensions). For interactive engagement, our results show that high intensity viewing is associated with lower submission rates but higher valence of anime ratings, the most prevalent form of UGC on the platform. Furthermore, we explore five common sources of heterogeneity: age, gender, geography, usage, and experience. We discuss managerial implications for TV networks and online streaming services regarding the timing of content release.

Cultural Differences in Opportunity Cost Consideration.

Two studies were conducted to investigate cultural differences in opportunity cost consideration between Chinese and Euro-Canadians. Opportunity cost is defined as the cost of a benefit that must be forgone in order to pursue a better alternative (Becker et al., 1974). In both studies, participants read about hypothetical purchase scenarios, and then decided whether they would buy a certain product. Opportunity cost consideration was measured in two ways: (1) participants' thoughts pertaining to other (nonfocal) products while making decisions; (2) participants' decisions not to buy a focal product (Study 1) or a more expensive product (Study 2). Across both indexes, we found that after controlling for individual difference variables and amount of pocket money, Chinese participants in China considered financial opportunity cost more than Euro-Canadians in Study 1. Similar results were observed in Study 2 when comparing Chinese in Canada with Euro-Canadians However, the cultural effect on opportunity cost consideration was confounded by family income in Study 2. Implications for resource management, limitations of the current research and directions for future research are discussed.

Value-based pricing in competitive situations with the help of multi-product price response maps

This article introduces multi-product price response maps for various value pricing applications in competitive situations. The maps are based on the direct elicitation of individual willingness to pay (WTP) as a range for competing products; they reveal an individual's or market's choice probability for a focal product, at its own and competing products' prices. Transforming the price response into profit, revenue, or unit sold maps supports optimal pricing decisions. The maps are also useful for optimizing profit differences from the closest competitor and for portfolio pricing. Managers can use a consumer indecisiveness map, gained from the WTP range data, to devise complementary marketing measures at prices where consumer uncertainty is high. The illustration of this approach uses two empirical examples, featuring two or more competing consumer goods, and demonstrates the predictive and external validity of these proposed maps.

Influence of evoked contexts on hedonic product discrimination and sensory characterizations using CATA questions

This research contributes new understanding of the role of consumption context. 12 studies involving 1727 consumers were conducted as central location tests (CLT). Using between-subjects experimental designs, the influence of evoked contexts relative to control condition for hedonic responses and sensory product characterization using check-all-that-apply (CATA) questions was evaluated. Contexts were evoked by asking consumers to think of the last time they ate/drank the focal product category or by imagining a specific consumption situation where product consumption would take place (e.g., breakfast on a weekend morning). In half of the studies, consumers were asked to provide a description of the consumption context they imagined. There was no consistent trend in the results regarding the influence of evoked context of hedonic responses. Effects were seen in a minority of studies, but not consistently showing differences in mean scores or changes in sample discrimination. The type of context that was evoked (last time ate/drank vs. specific situation) did not systematically influence the results, although the use of a description phase during context evocation was detrimental to hedonic sample discrimination. In all the studies where participants were asked to describe the context they imagined, hedonic discrimination was inferior to that achieved under no evoked context. Sensory responses to CATA questions were highly similar under evoked and no evoked context and suggested that product characterisations generated by consumers in a typical CLT provide a good proxy for sensory product experience in contextualised consumption situations.

On the Spillover Effects of Online Product Reviews on Purchases: Evidence from Clickstream Data

We analyze the spillover effect of the online reviews of related products on the purchases of a focal product using clickstream data from a large retailer by investigating (a) whether the related, co-visited products are complementary or substitutive; (b) whether the related products are from the same or a different brand, and (c) the choice of media channel (mobile or PC) used. To identify complementary and substitutive products, we used a text-mining approach of topic modeling on the product descriptions to quantify the functional similarity of pairwise products. Our empirical analysis shows that the mean rating of the online reviews of substitutive products has a negative effect on the purchasing of the focal product, while the mean rating of complementary products has a positive effect. Moreover, we find that the negative spillover effect of the online reviews of substitutive products across different brands on the purchasing of a focal product is significantly higher than those of the same brand, and for consumers who viewed online product reviews on mobile devices versus traditional PCs. Our study has theoretical and managerial implications on leveraging the spillover effects of the online product reviews of related products on purchases.

Agency Selling or Reselling? Channel Structures in Electronic Retailing

In recent years, online retailers (also called e-tailers) have started allowing manufacturers direct access to their customers while charging a fee for providing this access, a format commonly referred to as agency selling. In this paper, we use a stylized theoretical model to answer a key question that e-tailers are facing: When should they use an agency selling format instead of using the more conventional reselling format? We find that agency selling is more efficient than reselling and leads to lower retail prices; however, the e-tailers end up giving control over retail prices to the manufacturer. Therefore, the reaction by the manufacturer, who makes electronic channel pricing decisions based on their impact on demand in the traditional channel (brick-and-mortar retailing), is an important factor for e-tailers to consider. We find that when sales in the electronic channel lead to a negative effect on demand in the traditional channel, e-tailers prefer agency selling, whereas when sales in the electronic channel lead to substantial stimulation of demand in the traditional channel, e-tailers prefer reselling. This preference is mediated by competition between e-tailers—as competition between them increases, e-tailers prefer to use agency selling. We also find that when e-tailers benefit from positive externalities from the sales of the focal product (such as additional profits from sales of associated products), retail prices may be lower under reselling than under agency selling, and the e-tailers prefer reselling under some conditions for which they would prefer agency selling without the positive externalities. This paper was accepted by Chris Forman, information systems.

Product Line Extension in Consumer Software Markets in the Presence of Free Alternatives

Hypercompetitive consumer software markets pit incumbents against free alternatives and pirates. Although the extant literature has studied firm level strategic responses to consumer heterogeneity and piracy, there is a lack of understanding of consumer reactions to digital goods choice sets that include firm product extensions such as the introduction of premium or free alternatives. With context-dependent preferences as the theoretical basis, this study systematically examines the impact of piracy controls and product line extensions on welfare in a consumer software market context (i.e., willingness to pay (WTP) and changes in consumer and producer surplus). In two controlled experiments using double-bound-dichotomous-choice WTP elicitation, we investigate how piracy controls and product line extensions impact two different platforms of the same software (PC Adobe applications and mobile Adobe applications) in terms of propensity to pirate and WTP. We show that introducing a premium or free vertical extension has different impacts on consumers’ WTP for the focal product depending on whether it is a low-cost or high-cost market even when controlling for individual differences, such as price fairness perceptions, product feature value, brand perceptions, etc. By contrast, piracy controls reduce piracy rates but have a limited impact on consumer WTP for the focal product in both contexts. By calculating the overall welfare of the market, we show that there is alignment in consumer and producer interests at current and estimated optimal price levels in both high-cost and low-cost markets. However, the introduction of a free product extension leads to a higher surplus in the high-cost market, whereas the introduction of the premium product extension leads to a higher surplus in the low-cost market.

Spillover Effects in Seeded Word-of-Mouth Marketing Campaigns

Seeded marketing campaigns (SMCs) involve firms sending products to selected customers and encouraging them to spread word of mouth (WOM). Prior research has examined certain aspects of this increasingly popular form of marketing communication, such as seeding strategies and their efficacy. Building on prior research, this study investigates the effects of SMCs that extend beyond the generation of WOM for a campaign’s focal product by considering how seeding can affect WOM spillover effects at the brand and category levels. The authors introduce a framework of SMC-related spillover effects, and empirically estimate these with a unique data set covering 390 SMCs for products from 192 different cosmetics brands. Multiple spillover effects are found, suggesting that while SMCs can be used primarily to stimulate WOM for a focal product, marketers must also account for brand- and category-level WOM spillover effects. Specifically, seeding increases conversations about that product among nonseed consumers, and, interestingly, decreases WOM about other products from the same brand and about competitors’ products in the same category as the focal product. These findings indicate that marketers can use SMCs to focus online WOM on a particular product by drawing consumers away from talking about other related, but off-topic, products. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2016.1001 .

User Reviews Variance, Critic Reviews Variance, and Product Sales: An Exploration of Customer Breadth and Depth Effects

Online user reviews constitute a new element of the marketing communication mix that can significantly affect product sales. A general consensus holds that positive user reviews valence benefits product sales, yet the effect of variance is less intuitive and current findings are mixed. We propose that user reviews variance actually constitutes a double-edged sword that can either hurt or help product sales, depending on the variance of critic reviews and other quality signals. Three complementary studies in multiple industries (movies, digital cameras, and books) with multiple methods (secondary data analysis and behavioral experiment) reveal three key insights in this setting. First, after recognizing a high variance in user reviews, many potential buyers may simply exclude the focal product from their consideration sets for fear that it does not match their needs and preferences, which is termed the customer breadth effect. Second, high user reviews variance, in combination with high critic reviews variance, can elicit a sense of uniqueness and thus enhance purchase intentions of some consumers, which is termed the customer depth effect. Third, quality signals (e.g., product cost and product extension) can strengthen the positive customer depth effect. The overall effects of user reviews variance, therefore, can be negative, insignificant, or even positive. These findings have important theoretical and managerial implications.

Bullwhip effect under substitute products

Using a large-scale, product-level dataset collected from a supply chain dyad, we examine the effect of own and substitute products on a focal product's bullwhip effect and estimate the existence and magnitude of the bullwhip effect at the product level. We find that, under substitute products, the bullwhip effect is not only affected by a product's own factors but also by those of its substitute products. An increase in the number of own price changes is associated with a decrease in the bullwhip effect in terms of the direct effect but with an increase in the bullwhip effect in terms of the total effect, and increases in the number of price changes of substitute products and own stockouts are associated with increases in the bullwhip effect. The potential effects for own price changes, price changes of substitute products and own stockouts are as much as 59.51%, 95.06% and 66.11%. We also find that the bullwhip effect is prevalent and very intensive at the product level. We discuss the theoretical and managerial implications of the findings.

The Reach and Persuasiveness of Viral Video Ads

Many video ads are designed to go viral so that the total number of views they receive depends on customers sharing the ads with their friends. This paper explores the relationship between the number of views and how persuasive the ad is at convincing consumers to purchase or to adopt a favorable attitude towards the product. The analysis combines data on the total views of 400 video ads, and crowd-sourced measurement of advertising persuasiveness among 24,000 survey responses. Persuasiveness is measured by randomly exposing half of these consumers to a video ad and half to a similar placebo video ad, and then surveying their attitudes towards the focal product. Relative ad persuasiveness is on average 10% lower for every one million views that the video ad achieves. The exceptions to this pattern were ads that generated views and large numbers of comments, and video ads that attracted comments that mentioned the product by name. Evidence suggests that such ads remained effective because they attracted views due to humor rather than because they were outrageous.

The effects of adjacent competitors and promotion on brand sales

Purpose – This paper aims to examine the potential for adjacent brands to influence sales of a focal brand. Specifically, this paper examines whether the type of adjacent brand (market leader or non-market leader competitor) and its promotion (featuring or discounting) have an effect on sales of a focal product. Design/methodology/approach – Store-level scanner data supplemented with in-store audits are used. Findings – It is demonstrated that adjacent brands and their specific marketing activities influence focal brand sales in specific ways, and that market leaders have a disproportionate and different effect than other competitors on the sales of adjacent brands. Originality/value – Recent marketing research has suggested that brand activities such as featuring and discounting and in-store environmental stimuli such as shelf allocation and displays can have an important effect on category and individual brand sales. Prior work in this area, however, has not explicitly considered the potential influence of relative shelf positions (i.e. adjacencies) on brand and category sales.

Spillover Effects in Seeded Word-of-Mouth Marketing Campaigns

Seeded marketing campaigns (SMCs) involve firms sending product samples to selected customers and encouraging them to spread word of mouth (WOM). Prior research has examined certain aspects of this increasingly popular form of marketing communication, such as seeding strategies and their immediate efficacy. Building on prior research, this study investigates the effects of SMCs that extend beyond the generation of WOM for a campaign’s focal product by considering how seeding can affect WOM spillover effects at the brand and category levels. The authors introduce a framework of SMC-related spillover effects, and then empirically estimate these with a unique dataset covering 390 SMCs for products from 192 different cosmetics brands. Multiple spillover effects are found, suggesting that while SMCs can indeed be used primarily to stimulate WOM for a focal product, marketers must also account for brand- and category-level WOM spillover effects. Specifically, product seeding increases conversations about that product among non-seed consumers, and, interestingly, decreases WOM about other products from the same brand and about competitors’ products in the same category as the focal product. These findings indicate that marketers can use SMCs to focus online WOM on a particular product by drawing consumers away from talking about other related, but off-topic, products.

The Effects of Design Attributes on Other Attributes and Product Evaluation

This study examines how consumers’ perceptions of a product’s design attributes influence their perceptions on other product attributes, and attitudes toward the focal product. This study explored image-related adjectives in order to analyze product attributes, which are categorized into design, symbolic, and functional factors. The empirical test results confirmed the mediating role of attitudes toward design, which indicate the overall preference about product design, between design attributes and attitudes toward product, while the hypothesis of the moderating role of design sensitivity was not supported. These findings revealed that design attributes have influences beyond the aesthetic value, as product design rouses symbolic value and delivers information about functions. Therefore, in the context of product development process, it would be effective to distinguish design elements that can strengthen advantages and * Corresponding author, Professor of Marketing, College of Business Administration, Seoul National University, #58-612, 1 Gwanak-Ro, Gwanak-Gu, Seoul 151-916, Korea. Email: profkim@snu.ac.kr, Phone: +82-2-880-6934 ** Doctoral candidate, College of Business Administration, Seoul National University, Email: muse710@naver.com *** Master student, College of Business Administration, Seoul National University, Email: yehahm@gmail.com 2 Seoul Journal of Business supplement weaknesses and to measure attitudes toward design that can be an important index of product evaluation.

The effects of promotional frames of sales packages on perceived price increases and repurchase intentions

This article explores how framing a promotional package (i.e., presenting the promotion as a bundle versus as a free gift) influences consumers' price assignments to the individual items in the package. It examines the potential influences of framing on consumers' perceptions of price increases and repurchase intentions after the promotion expires. The findings show that when a package contains two different products, consumers in the free gift (bundle) condition assign a higher price to the focal (supplementary) product, perceive a smaller price increase, and exhibit higher repurchase intentions toward the focal (supplementary) product after the promotion ends. If the promotional package contains two identical products, the free gift promotion generates higher perceived price increases and lower repurchase intentions than a price bundle, through similar price assignment mechanisms. An incentive-compatible experimental design finds that a free gift promotion lowers consumers' willingness to pay for the target product compared with a price bundle promotion. The findings of this research have significant implications for both framing research and marketing practice.

Consumer reaction to price increase: an investigation in gasoline industry

Purpose – The aim of this study is to investigate the impact of increase in price of an essential product (i.e. gasoline) toward the focal product and other seemingly non-related products. Design/methodology/approach – A self-administered survey was used to collect data from the drivers at a large metroplex in Southwest USA. Multiple regression and scanning electron microscope procedures were used to analyze and test the proposed hypotheses. Findings – When consumers notice the increase in gas prices, they become very anxious. This anxiety is positively associated with average gas bought in gallons and negatively associated with threshold price. Further, this consumer anxiety has the strongest influence on lifestyle changes, followed by automobile technology change and transportation mode change, and has the weakest influence on gasoline brand/type change. Research limitations/implications – We focus on only anxiety as a mediator between increase in gas prices and the behavioral outcomes, and collect data from only one location. Practical implications – Managers must be cognizant that a price increase in essential goods not only influences the demand for focal products but also for products that may not seem related to the focal products. Social implications – Increase in gasoline price will not only affect the demand for gasoline, but also the demand for alternate forms of transportation, fuel efficient vehicles, and other aspects of life. Originality/value – This study is the first to look at the role of anxiety as a mediator and looks at the effects of increase in gas prices in a holistic manner.

Durable Product Purchase Decisions: Influences of Retailer Warranty Extension Information Sequencing

This research investigates two popular ways retailers provide information about the availability and the characteristics of retailer-backed warranty extensions to consumers. With a sequential strategy, retailers draw customers' attention to an extended warranty offer only after the customers have chosen specific versions or brands of a durable product. A simultaneous strategy instead provides information about durable products and extended warranties together, prompting customers to consider the extended warranty offer while making their product choice. The warranty extensions on durable products often provide higher margins, so retailers seek to boost the sales of these warranty extensions. This experimental study uses laptop computers as the focal product category to compare the effects of sequential and simultaneous information on customer decision making. The total value of purchases consistently increases when information about durable products and extended warranties appears sequentially. These results imply that retailers can increase revenues merely by providing information sequentially instead of simultaneously.

The value of competitive information in forecasting FMCG retail product sales and the variable selection problem

Sales forecasting at the UPC level is important for retailers to manage inventory. In this paper, we propose more effective methods to forecast retail UPC sales by incorporating competitive information including prices and promotions. The impact of these competitive marketing activities on the sales of the focal product has been extensively documented. However, competitive information has been surprisingly overlooked by previous studies in forecasting UPC sales, probably because of the problem of too many competitive explanatory variables. That is, each FMCG product category typically contains a large number of UPCs and is consequently associated with a large number of competitive explanatory variables. Under such a circumstance, time series models can easily become over-fitted and thus generate poor forecasting results.Our forecasting methods consist of two stages. In the first stage, we refine the competitive information. We identify the most relevant explanatory variables using variable selection methods, or alternatively, pool information across all variables using factor analysis to construct a small number of diffusion indexes. In the second stage, we specify the Autoregressive Distributed Lag (ADL) model following a general to specific modelling strategy with the identified most relevant competitive explanatory variables and the constructed diffusion indexes.We compare the forecasting performance of our proposed methods with the industrial practice method and the ADL model specified exclusively with the price and promotion information of the focal product. The results show that our proposed methods generate substantially more accurate forecasts across a range of product categories.

Identifying Competitors in Markets with Fixed Product Offerings

We develop a novel methodology to identify competitors in markets where spatial location is an important factor of differentiation. In differentiated product markets, determining the key competitors of a focal product requires a characterization of customer demand that includes the identification of heterogeneous customer segments. The prevalent approach to characterize such a demand system is through a random utility model of customer choice. The existing methods used to estimate these models based on aggregate product sales data exploit variation in the set of product offerings to identify customer heterogeneity. Our proposed methodology uses a different empirical strategy: we use variation in observable attributes that determine the size of the distinct customer segments. This approach is useful to study markets where the set of product offerings and their characteristics are fixed or change infrequently. We apply our methodology in the hotel travel industry, where the characterization of key competitors is commonly used in practice to benchmark hotel performance. We collect publicly available data on local events to explain variation in customer segments, differentiating events by location and business/leisure purposes. Our methodology can be used effectively to characterize customer heterogeneity and identify the closest competitors to any focal hotel.

The Limits of Reflected Glory: Effects of Product Name Similarity in the U.S. Network TV Programs

The market fate of a product ultimately determines the success or failure of a firm. A name is a central feature of any product, yet it is not well understood how names affect product market longevity. In this paper, we develop a theory in which a product’s name impacts product survival. We predict that the similarity of a focal product’s name to names of other products in the industry have a profound effect on how long the product stays on the market. We argue that the direction and magnitude of this effect depends on (1) whether the product is new and (2) whether the product’s name is similar to names of other popular and high status products. Event history analyses of all TV programs that were broadcast during primetime plus early evening and late night on networks in the U.S. from the beginning of the industry in 1944 through 2003 support our predictions and thus suggest the importance of names in product market viability.