An important question that firms face in advertising is developing effective media strategy. Major improvements in the quality of consumer information and the growth of targeted media vehicles allow firms to precisely target advertising to consumer segments within a market. This paper examines advertising strategy when competing firms can target advertising to different groups of consumers within a market. With targeted advertising, we find that firms advertise more to consumers who have a strong preference for their product than to comparison shoppers who can be attracted to the competition. Advertising less to comparison shoppers can be seen as a way for firms to endogenously increase differentiation in the market. In addition, targeting allows the firm to eliminate “wasted” advertising to consumers whose preferences do not match a product’s attributes. As a result, the targeting of advertising increases equilibrium profits. The model demonstrates how advertising strategies are affected by firms being able to target pricing. Target advertising leads to higher profits, regardless of whether or not the firms have the ability to set targeted prices, and the targeting of advertising can be more valuable for firms in a competitive environment than the ability to target pricing.media precision, advertising, targeting, price discrimination

The objective of this article is to clarify ambiguities in the literature regarding the relationships among three key constructs of work relationships: effort, job performance, and job satisfaction. The relationship between job performance and job satisfaction is of central interest to research in organizational psychology. However, empirical research in that area finds that the link between these constructs is weak at best. A negative effect of effort on job satisfaction is consistent with agency theory, but there is limited empirical evidence to support this assumption. Moreover, some studies have found a positive effect of effort on job satisfaction. Using a model that incorporates the main constructs from agency theory and organizational psychology, the current study finds a negative, direct effect of effort and a positive, direct effect of job performance on job satisfaction. The authors show that conflicting findings in the literature are the result of inconsistency in both the measurement and the definition of constructs across studies that do not fully account for all the relationships between constructs. The current findings emphasize the need to distinguish clearly between factors that represent employees' inputs in a work relationship (i.e., effort) and those that represent their outputs (i.e., job performance). The article also demonstrates the importance of properly accounting or controlling for all key variables to eliminate biases that can arise in empirical research on work relationships.

The objective of this article is to clarify ambiguities in the literature regarding the relationships among three key constructs of work relationships: effort, job performance, and job satisfaction. The relationship between job performance and job satisfaction is of central interest to research in organizational psychology. However, empirical research in that area finds that the link between these constructs is weak at best. A negative effect of effort on job satisfaction is consistent with agency theory, but there is limited empirical evidence to support this assumption. Moreover, some studies have found a positive effect of effort on job satisfaction. Using a model that incorporates the main constructs from agency theory and organizational psychology, the current study finds a negative, direct effect of effort and a positive, direct effect of job performance on job satisfaction. The authors show that conflicting findings in the literature are the result of inconsistency in both the measurement and the definition of constructs across studies that do not fully account for all the relationships between constructs. The current findings emphasize the need to distinguish clearly between factors that represent employees' inputs in a work relationship (i.e., effort) and those that represent their outputs (i.e., job performance).T here is an extensive body of research in organizational psychology that considers the role of job satisfaction in managing effective work relationships. Similarly, job satisfaction is a widely studied construct in marketing research on sales force (Brown and Peterson 1993), retail store managers (Lusch and Serpkenci 1990), and service workers (Boyt, Lusch, and Naylor 2001). This research examines the antecedents of job satisfaction and, in particular, the effects of job performance, effort, and the compensation structure. However, findings in this literature about the relationships between job satisfaction and these antecedents have been inconsistent and even controversial. For example, despite the finding that people derive intrinsic value from work, the relationship between job performance and job satisfaction has been found to be inconsistent and weak (Brown and Peterson 1993;Iaffaldano and Muchinsky 1985). Similarly, studies that examine the effect of effort on job satisfaction find that it has a positive effect (Brown and Peterson 1994). This second finding appears to contradict the logic of the equally large literature on agency relationships in economics and marketing, which is based on the assumption that effort is costly to an agent and therefore reduces the agent's utility (or job satisfaction).The objective of this article is to develop a model of work relationships to investigate the relationship between job satisfaction and its key determinants, job performance and effort. The premise is that a complete understanding of job satisfaction and work relationships must be predicated on a theory of how effort affects job satisfaction and the way that effort affects the relationship betw...

It is well known that sellers can use warranties to screen consumers and increase profits. The ability of warranties to signal is also well accepted. The author considers a situation in which a high quality seller needs warranty policy to both screen and signal. Through an analytical model, the objective is to identify the optimal strategy for a high quality seller that offers a base warranty and optional extended warranty for a product whose quality is not observable to buyers. The author finds that signaling can limit a seller's ability to screen, especially when buyers are willing to pay a significant premium for higher quality. To signal, the seller generally lengthens base warranties and shortens optional coverage, making the bundles for each type of buyer more and more similar. The author also provides an empirical application of the model in the Toronto used-car market.

With advances in technology, the collection of information from consumers at the time of purchase is common in many categories. This information allows a firm to straightforwardly classify consumers as either “new” or “past” consumers. This opens the door for firms to implement marketing that (a) discriminates between new and past consumers and (b) entails making offers to them that are significantly different. Our objective is to examine the competitive effects of marketing that tailors offers to consumers based on their past buying behavior. In a two-period model with two competing firms, we assume that each firm is able to commit about whether or not to implement behavior-based discrimination (BBD), i.e., to add benefits to its offer for past consumers in the second period. When the firms are identical in their ability to add value to the second-period offer, BBD generally leads to lower profits for both firms. Past customers are so valuable in the second period that BBD leads to cutthroat competition in the first period. As a result, the payoffs associated with the implementation of BBD form a prisoner's dilemma. Interestingly, when a firm has a significant advantage over its competitor (one firm has the capability to add more benefits for its past customers than the other), it can increase its profit versus the base case even when there is significant competition in the second period. Moreover, the firm at a disadvantage sometimes finds that the best response to BBD by a strong competitor is to respond with a uniform price and avoid the practice completely.dynamic games, price discrimination, customer data, product design