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April 1999 Volume 3.1

THOMAS G. BRASHEAR, EDITOR
UNIVERSITY OF MASSACHUSETTS, AMHERST

Future of Marketing, Marketing Research and Research in Marketing: Plenary Session

Naveen Donthu, the immediate past chair of the Marketing Research SIG has organized and will chair a plenary session at the 1999 Summer Educators' Conference. Five leading scholars will look at the future of marketing as we enter the new millenium.

Thedistinguished panel includes:

· Rohit Deshpande, Harvard Business School and MSI
· Don Lehmann, Columbia University
· Jag Sheth, Emory University
· Bart Weitz, University of Florida
· Jerry Wind, Wharton School

1999 Gil Churchill Award To Be Presented

The Marketing Research SIG awards the Gil Churchill Award for lifetime achievement in Marketing Research. The 1998 award went to Seenu Srinivasan of Stanford University. Previous honorees include Paul Green and Bill Perreault. This year the award will be presented at the Summer Educators Conference in San Francisco.

Call For Nominations: Don Lehmann Award

Nominations are being accepted for the 1999 Marketing Research SIG Don Lehmann Award. This annual award, chosen by the SIG awards committee, honors the best dissertation-based article published in the Journal of Marketing or Journal of
Marketing Research. Ujwal Kayandé was presented the 1998 award for the paper, “Reliability Assessment and Optimization of Marketing Measurement” co-authored with
Adam Finn. This year articles from 1997-98 are eligible. Please send your nominations to Wagner Kamakura by email (wagner-kamakura @uiowa.edu) by June 15, 1999.

Summary of the Winter AMA MR SIG Special Session

By Wagner A. Kamakura,
University of Iowa, MRSIG Chair

R-SIG chair-elect Praveen Kopalle organized a special session at the 1999 AMA Winter Educator’s Conference, with three thought-provoking presentations on Consumers’ Price Perceptions. The session started with Joel E. Urbany, who presented his work on “The Effect of Discount Frequency and Depth on
Consumer Price Judgements,” (co-authored with Joseph W. Alba, Carl F. Mela and Terence A. Shimp). The main objective of their research was to ascertain whether brands that are discounted more often are perceived to be less expensive than brands promoted less often but with deeper discounts. It is known that stores which offer frequent and shallow discounts (EDLP stores) are perceived to have lower prices
than those offering deeper, but less frequent discounts (High-Low stores). In their first study, Urbany and co-authors found that the effects of depth and frequency for
brand discounts were the opposite to those found for stores: deep and infrequent discounts had stronger impact on brand price perception than shallow and frequent discounts. Two subsequent studies ruled out several possible explanations for this “depth” effect, such as a) biased estimates of promotion frequency, b) extreme price discounts, c) memory availability. On the other hand, Urbany presented results from another study showing that the depth effect is removed when the price stimuli are made more complex. Moreover, he found that the dominance of depth or frequency on price perceptions is moderated by the degree of complexity in the price stimuli.

Following this discussion on the impact of depth or frequency on price perceptions, Aradhna Krishna presented “A Meta-Analysis of the Impact of Price Presentation on Deal Evaluation,” co-authored with Richard Briesch and Donald R. Lehmann. This meta-analysis covered 38 published articles studying the effects of price frames and contexts on consumer reactions to promotions, with a total of 56 pricing studies. Price presentation was studied along three dimensions: a) deal characteristics (amount of discount, percent discount, frequency of deals, number of items on deal, etc.), b) context effects (brand type, store type, type of good, ad frame, etc.) and c) presentation effects (reference price, plausibility of the deal, tensile claims, etc.).

One of the major benefits of the meta-analysis of multiple studies is the possibility of comparing the magnitude of effects for different treatments across studies, which
allowed Krishna and co-authors to draw valuable empirical generalizations about the impact of presentation on price perceptions. Krishna presented conclusions such as:

1. Both the dollar and percent amount of the deal have a positive impact on perceptions of deal savings.

2. High discounts have a positive impact on perceived savings even when the deal seems exaggerated.

3. Deals of the form “savings of __% and more” are perceived to offer lower savings compared to deals framed in terms of objective claims

4. The presence of manufacturer suggested price (MSP) increases perceived deal savings. However, consumers may not realize that the store is offering a sale if MSP is the only frame for the deal.

5. Sales offered by discount stores and supermarkets are less credible than deals offered by department and specialty stores.

6. Direct deal comparisons with competing stores are less believable than comparisons with a store’s own regular prices.

The session ended with a presentation by Kent Monroe,who challenged some conclusions drawn from previous pricing research with his work “Remembering vs. Knowing:
Issues in Buyers’ Processing Price Information” (co-authored with Angela Y. Lee). Monroe’s presentation started with a review of behavioral pricing research, from
the early behavioral research in economics to the more recent research on price perception and awareness. In this review, he showed that empirical research in the past four decades has repeatedly found that buyers are often unable to correctly recall prices for items that they have recently purchased. Researchers in the past have equated this inability to remember prices to the lack of price awareness,
concluding that buyers are often unaware of prices when they make purchase decisions. Monroe argued that this conclusion may be incorrect because what consumers can remember does not always reflect what they know, and consumers make decisions based on what they know, rather than on what they can remember.

Drawing on the growing research on memory, Monroe and co-author make a distinction between explicit memory (measured in the typical price recall test) and implicit memory, which does not involve conscious recollection of past exposures to an event, but can still be used in processing information related to that event. They argue that consumers may have knowledge of relevant price information even though they might not be able to estimate prices accurately (for example, a consumer might not recall the exact price paid for a product, but know that it was the lowest among the brands in her consideration set). Their argument raises some questions on previous pricing research based on price recalls, and calls for future pricing
research based on more sophisticated methodology than the unaided tests used in the past.

Summer 1999 AMA MR SIGPre-conference ProgramActivities San Francisco, CA
Saturday August 7 th , 1999 (2:00 PM – 5:00 PM)

Session Title: Frontiers of Marketing Research
Session Chair: PK Kannan, University of Maryland
2:00 p.m. – 2:30 p.m.
Matching Attitudinal and Scanner Data to ExplainConsumer Purchases of Multiple Items Richard Durand, University of Maryland.

Abstract

The issue of consumers’ multiple item purchases –transactions in which more than one item (of the same UPC,or an assortment of different UPCs within a product category) is bought on a given shopping trip – has recently gained interest in both the practitioner and academic marketing literature. As markets mature, manufacturers are
finding it increasingly difficult to acquire new users of the product category as compared to increasing the usage of the category among existing users. To increase category usage, manufacturers are turning more and more toward the promotion of multiple item purchases. A better understanding of multiple item purchases is thus, key to their promotional decisions. In this presentation, we present a framework of multiple item purchases that matches survey based attitudinal data with scanner based behavior data to understand consumer purchase of multiple items in a category. We illustrate the application of the framework using survey data and scanner data for the salty snack product category and show how the synergistic merger of the two data types provides useful insights into consumers’ multiple purchases for both manufacturers and retailers.
2:30 p.m – 3:00 p.m.
A Baby Or Your Money Back: The Marketing of In Vitro Fertilization Procedures, David C. Schmittlein, The Wharton School and Donald G. Morrison (presenter) UCLA Anderson Graduate School of Management

Abstract

A large number of clinics that offer in vitro fertilization (IVF) have begun to aggressiv -ely market the following
options to couples seeking to have a genetically related baby: (1) an a la carte program where the couple pays $7,500 per attempt regardless of the outcome; or (2) a money-back-guarantee program where the couple pays a $15,000 up-front fee that covers up to three attempts – however, if after three cycles there is no live birth delivery,then the full $15,000 is refunded.

If the couple contemplating these two choices knew the success probability for each attempt, then a simple analysis would show whether the a la carte or money-back-guarantee program is better. Unfortunately, it is difficult for couples to gather the relevant data and even more daunting to adjust the aggregate data to their own situation. In this presentation we assemble the most recent available data and
develop a model that allows patients, clinics, and public policy advocates to assess the a la carte vs. money-back-guarantee programs. The most surprising result of our
analysis is that the money-back-guarantee program appears (for the patients) to be “too good to be true.” That is, with reasonable projections from the most recent data, the money-back-guarantee yields a substantial negative expected profit per couple for the clinics. More importantly from the patients’ perspective, the money-back-guarantee turns out to be the better option for all couples with less than 0.5 success probability per cycle. (The break-even probability is even higher if risk aversion is considered). Virtually all traditional IVF patients can be considered to
have per-cycle success probabilities well below 0.5. Can it be that clinics are offering money-back-guarantees that both lose money for the clinics and give the patients a deal that is far better for them than the traditional a la carte payment method? We show scenarios under which this is not the case and how money-back-guarantees can be profitable for the clinics.
3:00 p.m. – 3:30 p.m.

The Joint Spatial Representation of Multiple Data Sets Collected in Marketing Research Wayne S. DeSarbo (presenter) and Jianan Wu, Penn State University

Abstract

Marketing research studies concerning market segmentation, competitive market structure, and positioning, often involve the collection of multiple batteries of measurements from the same set of respondents (preferences, attribute ratings, demographics, proximity judgments, etc.). Various multidimensional scaling (MDS)
methods have been utilized in the analysis of these variable batteries separately, without much effort expended in attempting to relate the different derived structures. We propose a new latent structure MDS procedure devised to jointly represent the structure in multiple batteries of variables collected across the same set of respondents. We present the technical structure of the maximum likelihood based model and conceptually compare it to other related spatial MDS models. An illustration of the procedure is presented with respect to proximity and preference data
collected from the Netherlands concerning some twelve major grocery food stores.

4:00 p.m. – 4:30 p.m.
The Impact of Satisfaction on Search, Consideration and
Choice, Brian T. Ratchford, SUNY Buffalo

Abstract

Understanding how satisfaction impacts search, consideration and choice is the key to studying the relationship between satisfaction with a prior consumption experience and the current choice, a topic of considerable importance given the popularity of customer satisfaction studies.

Using data from a survey of automobile purchasers, we estimate an econometric model of the linkage between satisfaction with the previously-owned car, time spent with various information sources, models considered, and choice of a model from the consideration set. Our survey data contains information on each of these variables, as well as ratings of the models considered on a number of attributes. Thus, unlike studies of consideration and choice done on scanner data, we have information on the actual composition of the consideration set, and do not have to infer it from the data.

Our results show that satisfaction has a strong effect on whether a model is onsidered again, and on the size of the consideration set. Consistent with other work, we show that consideration sets of size one are common, and that these are related to satisfaction with the previous model. Finally we study the determinants of choice given consideration, and how satisfaction affects this.

4:30 p.m. – 5:00 p.m.
Pleasant Surprises: Consumer Response to Unexpected In-store Promotions, Carrie Heilman, Washington University, Kent Nakamoto Virginia Tech and Ambar Rao (presenter), Washington University.

Abstract

We examine the impact of unexpected, in-store grocery promotions on planned shopping behavior. We hypothesize that both information processing responses and affective responses are possible. Information processing responses include unplanned purchases of complementary products, or products located close to the promoted item. Affective responses include increased likelihood of impulse purchases, increased overall spending, and increased trial of new products, all due to mood enhancement. We test these hypotheses in an in-store experiment, and study their implications for category management.

Call for Papers: Winter AMA Marketing Research and Data Analysis Track

This track of the 2000 Winter AMA will be chaired by George R. Franke, University of Alabama. Papers and special sessions that deal with innovative methods in marketing research and data analysis or that improve our understanding of existing methods are requested. Of particular interest are papers that advance the state of the art
of marketing research methodology while demonstrating added benefits for the analysis of substantive marketing issues. Topics may include, but are not limited to: methods of analyzing or presenting marketing data; imputation of missing data; measurement methods for marketing;marketing information systems and the use of information within organizations; obtaining primary or secondary data via the Internet; mathematical models of marketing phenomena; normative marketing decision models; and marketing research across cultural and national boundaries.
Conceptual, empirical, analytical, simulation-based, and qualitative approaches are welcome. Deadline for submissions is August 16 th , 1999. Send papers and special
session proposals to:
Dr. George R. Franke,University of Alabama,
Department of Management & Marketing,
105 Alston Hall, Tuscaloosa, AL 35487-0225.
Phone: (205) 348-9435 Fax: (205) 348-6695
email:(gfranke@cba.ua.edu).

Call for Papers for the IJRM-2001 Special Issue on Market Segmentation

The International Journal of Research in Marketing has scheduled a spcial issue on Marketing Segmentation to appear in 2001. This special issue will be guest edited by
Wagner A. Kamakura, University of Iowa and MichelWedel, University of Groningen. The deadline for the submission of contributions is February 1 st , 2000.
Contributions should conform to the regular IJRM requirements and are subject to a regular IJRM review process. For complete information please see the enclosed
call for papers included with the newsletter.

Call For Judges: Market Research Innovation Prize

The A.C. Nielsen Center for Marketing Research at the University of Wisconsin-Madison is seeking market research scholars who are particularly interested in on-line
based market research to act as judges for an international online market research innovation prize (known as OMRIs). We seek about 10 judges who will be asked to judge - using an all on-line process - about 5-10 applications. We estimate the total work involved will be about 4 hours. If you are interested send your resume by email to: Peter Dickson (PDickson@bus.wisc.edu). Additional details of
the contest are summarized in the adjoining attachment.

Call For Nominations: 1999 SIG Officers

You are invited to send in nominations for 1999 SIG officers. Please send your nominations to: Wagner Kamakura (wagner-kamakura @uiowa.edu) by June 15, 1999. The following offices are available:
· Chair-Elect
· Vice Chair for Conference Sessions
· Vice Chair for PR and Treasurer
· Webmaster Editor
· Newsletter Editor

SIG(NIFICANT) RESEARCH NEWS is the official newsletter of the Marketing Research Special Interest Group (MR SIG) of the American Marketing Association (AMA). For more information please contact the SIG chair Wagner Kamakura
(wagner-kamakura @uiowa.edu) or newsletter editor Tom Brashear (brashear@mktg.umass.edu).