Behavioral research and empirical modeling of marketing channels: Implications for both fields and a call for future research

Meyer, Robert J.; Vosgerau, Joachim; Singh, Vishal; Urbany, Joel E.; Zauberman, Gal; Norton, Michael I.; Cui, Tony Haitao; Ratchford, Brian T.; Acquisti, Alessandro; Bell, David; Kahn, Barbara E.

doi:10.1007/s11002-010-9109-y

Cited by 16 publications

(6 citation statements)

References 73 publications

(65 reference statements)

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“…2The research includes Anderson and Weitz (1992), Caliskan-Demirag, Chen, and Li (2010), Corsten and Kumar (2003, 2005), Frazier (1983), Hackett (1994), Katok and Pavlov (2013), Katok and Wu (2009), Kaufmann and Stern (1988), Kumar (1996), Kumar, Scheer, and Steenkamp (1995), Loch and Wu (2008), Macneil (1980), McCarthy (1985), Meyer et al (2010), Olmstead and Rhode (1985), and Scheer, Kumar, and Steenkamp (2003).…”

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confidence: 99%

Fairness Ideals in Distribution Channels

Cui

Mallucci

2016

Journal of Marketing Research

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The authors analytically and experimentally evaluate how firms make decisions in a two-stage dyadic channel, in which firms decide on investments in the first stage and then on prices in the second stage. They find that firms’ behavior differs significantly from the predictions of the standard economic model and is consistent with the existence of fairness concerns. Using a quantal response equilibrium model, in which both manufacturer and retailer make noisy best responses, the authors show that fairness significantly affects channel pricing decisions. In addition, they investigate what affects the perceptions of fairness. More specifically, they analyze whether the notion of fairness is influenced by social norms of strict equality, by endogenous investments and contributions that are affected by players’ decisions, or by the exogenous game structure. To do so, the authors compare four principles of distributive fairness: strict egalitarianism; liberal egalitarianism; libertarianism; and a sequence-aligned ideal, which is studied for the first time in the literature. Surprisingly, the exogenous game structure reflected by the new ideal, whereby the sequence of moving determines the equitable payoff for players, significantly outperforms other fairness ideals, suggesting that equity in distribution channels can arise even in contests in which channel members have fairly different payoffs.

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confidence: 99%

Fairness Ideals in Distribution Channels

Cui

Mallucci

2016

Journal of Marketing Research

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“…We do not equate exit with failure, nor do we imply the industry is declining. We note that exit is a complex phenomenon that can be triggered by many factors such as high competitive intensity in the market (Baum & Korn, ), instability of overall market demand (Harrigan, ), the viability of the exiting rival's business model (Chuang & Baum, ), or managers' limited cognitive abilities to achieve optimization objectives (Meyer et al, ). Exploring the fundamental reasons behind exit and distinguishing different types of exits will advance our understanding of the motives and patterns of incumbent responses to rival exit.…”

Section: Discussionmentioning

confidence: 94%

Responses to rival exit: Product variety, market expansion, and preexisting market structure

Ren

Cui

2018

Strategic Management Journal

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Research Summary This study investigates incumbent responses to a main rival's exit. We argue that long‐time rivals have developed an equilibrium by offering a mix of overlapping and unique products and by choosing geographic proximity to each other. A rival's exit, however, disrupts this equilibrium and motivates surviving firms to expand in both product and geographic spaces to seek a new equilibrium. Using data from all U.S. Best Buy stores before and after the exit of Circuit City, we find that Best Buy uses product variety expansion as its major response in markets where Circuit City was colocated, but it more often responds by opening new stores in non‐colocated markets. Regardless of preexisting market structures, the magnitude of product variety expansion decreases with the opening of new stores. Managerial Summary How do surviving firms respond to a major rival's exit? By studying Best Buy's responses to Circuit City's withdrawal, we find the survivor expands in both product space (increasing product variety) and geographic space (opening new stores), due to two motives. First, the survivor strives to fill in “holes” left in the market. Second, the survivor experiences uncertainty in the postexit world wherein its reference point is gone, threat of potential entry looms, and it lacks information about new entrants. Thus, it must deter potential entry ex ante by preempting many prime product and geographic locations. Best Buy also responds according to preexisting market structures, primarily through product variety expansion in markets wherein Circuit City was colocated and through opening new stores in non‐colocated markets.

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“…This is because marketing can produce dividends for both players when the right message reaches the right audience at the right time. Meyer et al (2010) stated that greater convergence of game theoretic modelling and behavioural research in marketing would lead to new insights for both fields.…”

Section: Literature Reviewmentioning

confidence: 99%

Game theory modelling of retail marketing discount strategies

Taylor

Kwasnica

Reilly

et al. 2019

MIP

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Purpose The purpose of this paper is to use the game theory combined with Monte Carlo simulation modelling to support the analysis of different retail marketing strategies, in particular, using payoff matrices for modelling the likely outcomes from different retail marketing strategies. Design/methodology/approach Theoretical research was utilised to develop a practical approach for applying game theory to retail marketing strategies via payoff matrices combined with Monte Carlo simulation modelling. Findings Game theory combined with Monte Carlo simulation modelling can provide a formal approach to understanding consumer decision making in a retail environment, which can support the development of retail marketing strategies. Research limitations/implications Game theory combined with Monte Carlo simulation modelling can support the modelling of the interaction between retail marketing actions and consumer responses in a practical formal probabilistic manner, which can inform marketing strategies used by retail companies in a practical manner. Practical implications Game theory combined with Monte Carlo simulation modelling can provide a formalised mechanism for examining how consumers may respond to different retail marketing strategies. Originality/value The originality of this research is the practical application of game theory to retail marketing, in particular the use of payoff matrices combined with Monte Carlo simulation modelling to examine likely consumer behaviour in response to different retail marketing approaches.

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Behavioral research and empirical modeling of marketing channels: Implications for both fields and a call for future research

Cited by 16 publications

References 73 publications

Fairness Ideals in Distribution Channels

Fairness Ideals in Distribution Channels

Responses to rival exit: Product variety, market expansion, and preexisting market structure

Game theory modelling of retail marketing discount strategies

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