Conference Abstracts

First Annual Marketing Academic Research Colloquium (MARC)

Friday, May 6, 2011University of Maryland, College Park

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The Marketing Department of Robert H. Smith School of Business at the University of Maryland is proud to invite you to the first Marketing Academic Research Colloquium (MARC) on Friday, May 6, 2011 at the University of Maryland, College Park.  It will bring together leading marketing scholars from the Joseph M. Katz School of Business at the University of Pittsburgh, Smeal College of Business at Penn State University, Tepper School of Business at Carnegie-Mellon University, and the Robert H. Smith School of Business at the University of Maryland.

We hope MARC will provide opportunities for a high level of interaction among participants, leading to the generation of cutting-edge research ideas and fruitful collaborations. To represent a diverse set of ideas and approaches at the colloquium, we have asked four speakers -- one from each school, to present a paper with a behavioral, quantitative or managerial focus (or an interdisciplinary one).  We are limiting our schedule to four talks to allow time for an in-depth discussion of each paper. Listed below are the four speakers, their topics, and an abstract of their presentation.

Further, to encourage our Ph.D. students to participate in the colloquium, the program will feature a student poster session at our concluding cocktail reception -- an excellent opportunity to learn more about the ongoing research in each school. The Ph.D. students presenting a poster are listed below.  

Presentations

Roland Rust

University of Maryland"Optimizing Service Productivity"

To increase service productivity, many companies utilize automation more extensively, to reduce the use of labor. However, the greater use of automation does not always result in higher service quality, and the effectiveness of automation in providing service hinges on how advanced the technology level is. Departing from the standard perspective in which productivity is simply treated as an output measure of firm performance, we propose service productivity as a strategic decision variable—that is, the firm manages the service productivity level to maximize profits. We develop a theory of optimal service productivity that explains when the optimal productivity level will be higher or lower, and distinguishes between short-term effects of service productivity, due to labor-automation tradeoffs, and long-term effects, due to the advance of technology. The theory, together with the existing literature, inspires the development of three testable empirical hypotheses, which are confirmed using data from more than 700 service companies in two time periods. The research shows that service productivity should be lower when factors (e.g., higher profit margin, higher price) motivate the provision of better service quality, and that service productivity should be higher when factors (e.g., higher market concentration, higher wages) discourage the provision of better service quality. Our empirical results also provide preliminary evidence that large service companies may tend to be too productive, relative to the optimal level, and if so, should place less emphasis (in the short run) on cost reduction through automation and more emphasis on service quality.

Lisa Bolton

Pennsylvania State University"Revealing the Downside of Remedy Marketing"

In a series of papers, my co-authors and I have investigated the impact of "remedy marketing" on consumer behavior. Remedies are products or services that promise to mitigate risk; examples include smoking cessation aids, debt consolidation loans, and weight management drugs. Like traditional risk-avoidance messages, advertisements for remedies aim to reduce risk--by advocating use of the branded product promoted by the marketers. Ironically, however, we find that remedy messages instead increase risky behavior--a boomerang effect with negative consequences for consumer welfare. In recent research, we explore ways to mitigate the boomerang--focusing on debt consolidation loans in the financial domain and weight management drugs in the health domain. Findings from a series of experiments suggest that interventions targeting the (erroneous) lay beliefs that underlie the boomerang can be used to "undo" the negative consequences of remedy marketing.

Kinshuk Jerath

Carnegie Mellon University"Firm Strategies in the "Mid Tail" of Platform-Based Retailing"

While millions of products are sold on its retail platform, Amazon.com itself stocks and sells only a small fraction of them. Most of these products are sold by third-party sellers, who pay Amazon a fee for each unit sold. Empirical evidence clearly suggests that Amazon tends to sell high-demand products and leave long-tail products for independent sellers to offer. We investigate how a platform owner such as Amazon, facing ex ante demand uncertainty, may strategically learn from these sellers’ early sales which of the “mid-tail” products are worthwhile for its direct selling and which are best left for others to sell. The platform owner’s “cherry-picking” of the successful products, however, gives an independent seller the incentive to mask any high demand by lowering his sales with a reduced service level (unobserved by the platform owner). We analyze this strategic interaction between the platform owner and the independent seller using a game-theoretic model with two types of sellers — one with high demand and one with low demand. We show that it may not always be optimal for the platform owner to identify the seller’s demand. Interestingly, the platform owner may be worse off by retaining its option to sell the independent seller’s product whereas both types of sellers may benefit from the platform owner’s threat of entry. The platform owner’s entry option may reduce the consumer surplus in the early period though it increases the consumer surplus in the later period. We also investigate how consumer reviews influence the market outcome.

Jeff Inman

University of Pittsburgh"Understanding In-Store Decision Making Using Real-time Shopper Tracking"

Companies have recently become quite interested in shopper decision-making. The recent trend toward shopper marketing makes it imperative to better understand how shoppers make decisions and the role of marketing stimuli therein. Researchers are beginning to answer this call through research to explicate the drivers of shopper decisions (e.g., Inman, Winer, and Ferraro 2009). Developments in technology have enabled researchers to track shopper movements and assess their eye movements en vivo, and has launched the nascent field of "neuromarketing". This presentation will describe three studies in this domain. In the first study, Huang et al. (2011a) couple RFID technology with in-store intercepts to track shoppers' paths and their in-store decisions. We then employ instrumental variable regression to estimate that the elasticity of unplanned purchase on travel distance is 1.44, which is 53% higher than the uncorrected OLS estimate. Based on our econometric framework, we explore the potential of using location-based mobile app strategies and product placement strategies to increase unplanned purchases. We find that by strategically promoting a single additional product category to each shopper, unplanned spending could be increased by as much as 28%. In contrast, changing product location only has a limited effect on increasing unplanned spending. In the second study, we supplement RFID and in-store intercept data with eye tracking in order to assess the drivers of consideration of unplanned purchases and the factors that result in the conversion from unplanned consideration to unplanned purchase (Huang et al. 2011b). Finally, an upcoming study that combines in-store intercepts, eyetracking, and ambulatory EEG will be overviewed.
 

PhD Poster Sessions

Zac Arens, University of MarylandThe Rebound of the Forgone Alternative

Sara Loughran Dommer, University of Pittsburgh Blending In by Standing Out? The Paradox of Self-Differentiating with Brands to Signal a Desire to Belong

Frank Germann, Pennsylvania State UniversityWhen Bad Things Happen to Good Brands: Product Recalls and the Moderating Role of Brand Equity 

Didem Kurt, University of Pittsburgh Lost Your License to Spend? The Moderating Role of Savings on the Licensing Effect of Basket Composition on Impulsive Spending 

Ted Matherly, University of MarylandIs What You Feel What They See? Fluency and Identity SignalingHyoryung Nam, University of MarylandSocial Tag Maps: A New Approach for Understanding Brand Association Networks

Alok Saboo, Pennsylvania State University Stock Market Rewards for Customer and Competitor Orientations: The Case of Initial Public Offerings 

Amin Sayedi , Carnegie Mellon UniversityTraditional versus Sponsored Search Advertising: Tradeoffs Between BuildingYour Brand and Poaching Your Competitor's Customers

Tuba Pinar Yildirim, University of PittsburghUser-generated Content in News Media