http://repub.eur.nl/res/aut/3498/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/19235/ 2010-03-01T00:00:00Z http://repub.eur.nl/res/pub/16979/ 2009-04-01T00:00:00Z We propose that negative affect can induce people to engage in risky decisions. We test two alternative hypotheses as to how this effect may emerge. The mood repair hypothesis states that risky choices in risk decision making serve as a means to repair one's negative affect. The depletion hypothesis, in contrast, states that risky choices in risk decision making are the mere consequence of a state of depletion resulting from engagement in active mood regulation attempts. The results of a first laboratory study establish a link between risky choices in risk decision making and negative affect. Subsequent experiments provide evidence that depletion due to active mood regulation attempts, rather than mood repair, is the underlying process for this link. http://repub.eur.nl/res/pub/10890/ 2007-12-19T00:00:00Z Cutting advertising budgets has traditionally been a popular reaction by companies around the globe when faced with a slacking economy. Still, anecdotal evidence suggests the presence of considerable cross-country variability in the cyclical sensitivity of advertising expenditures. We conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries across all continents, covering up to 25 years and four key media: magazines, newspapers, radio and television. While our findings confirm that advertising moves in the same direction as the general economic activity, we also show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole, with an average co-movement elasticity of 1.4. Interestingly, advertising’s cyclical dependence is systematically related to the cultural context in which companies operate. Advertising behaves less cyclically in countries high on long-term orientation and power distance, while advertising is more cyclical in countries high on uncertainty avoidance. Further, advertising is more sensitive to the business cycle in countries characterized by significant stock-market pressure and few foreign-owned multinationals. These results have important strategic implications for both global advertisers and their ad agencies. http://repub.eur.nl/res/pub/7984/ 2006-09-20T00:00:00Z Marketing data appear in a variety of forms. An often-seen form is time-series data, like sales per month, prices over the last few years, market shares per week. Time-series data can be summarized in time-series models. In this chapter we review a few of these, focusing in particular on domains that have received considerable attention in the marketing literature. These are (1) the use of persistence modelling and (2) the use of state space models. http://repub.eur.nl/res/pub/6997/ 2005-10-18T00:00:00Z This study investigates the cyclical dependence of private-label success in four countries. The results show that private-label share behaves countercyclically. Moreover, asymmetries are present in both the extent and speed of up- and down-ward movements in private-label share over the business cycle. Finally, part of private-labels’ share gain during contractions is found to be permanent. http://repub.eur.nl/res/pub/6924/ 2005-09-14T00:00:00Z An important development that contributes to store brands’ growing success in the grocery market is the increasing number of discount stores that sell predominantly own, private-label, brands. To fight private labels, manufacturers of national brands feel increasingly compelled to develop better trade relations with discounters. Some discounters, from their part, are looking for opportunities to differentiate themselves, and to move beyond a pure price-based competition, by extending their assortment with attractive national brands. In this study, we determine what factors drive national-brand success at discount stores, and lead to positive outcomes for both the manufacturer and the discounter. http://repub.eur.nl/res/pub/6887/ 2005-09-06T00:00:00Z Product-harm crises are among a firm’s worst nightmares. Since marketing investments may be instrumental to convince consumers to purchase the firm's products again, it is important to provide an adequate measurement of the effectiveness of these investments, especially after the crisis. We provide a methodology through which firms can assess the impact of product crises in a quantitative way. Based on the model estimates, firms can estimate the required level of investment to recoup from the crisis. A key finding of this paper is that it is not only important to assess the extent to which business is lost as a result of the crisis, but also to find the new, postcrisis response parameters to marketing activities. The study of an Australian product-harm crisis for peanut butter reveals that a product crisis may represent a quadruple jeopardy for a firm: (i) loss of baseline sales, (ii) a reduced own effectiveness for its marketing instruments, (iii) increased vulnerability, and (iv) decreased clout. We arrive at this conclusion by using a time-varying error-correction model that allows for (i) shortand long-term marketing mix effects, (ii) intercepts and response parameters that change over time as a result of the crisis, and (iii) missing observations, which result from the absence of the impacted brands during the product-recall period. The time-varying error-correction model is applicable to other marketing-research areas in which these three requirements (or any subset thereof) apply. http://repub.eur.nl/res/pub/6890/ 2005-09-06T00:00:00Z We propose that weather conditions can influence consumers’ engagement in lottery play. A longitudinal study on the extent of lottery play in Belgium shows that lottery expenditures are indeed higher after reduced exposure to sunshine, even after controlling for people’s inertia, time-varying characteristics of the game, and deterministic seasonal components. The results of a first laboratory study are consistent with these findings, and establish a link between lottery play and negative mood. Subsequent experiments provide evidence that depletion due to active mood regulation attempts, rather than mood repair, is the underlying process for the link between bad weather and lottery play. http://repub.eur.nl/res/pub/1942/ 2005-04-07T00:00:00Z The ongoing unification which takes place on the European political scene, along with recent advances in consumer mobility and communication technology, raises the question whether the European Union can be treated as a single market to fully exploit the potential synergy effects from pan-European marketing strategies. Previous research, which mostly used domain-specific segmentation bases, has resulted in mixed conclusions. In this paper, a more general segmentation base is adopted, as we consider the homogeneity in the European countries’ Consumer Confidence Indicators. Moreover, rather than analyzing more traditional static similarity measures, we adopt the concepts of dynamic correlation and cohesion between countries. The short-run fluctuations in consumer confidence are found to be largely country specific. However, a myopic focus on these fluctuations may inspire management to adopt multicountry strategies, foregoing the potential longer-run benefits from more standardized marketing strategies. Indeed, the Consumer Confidence Indicators become much more homogeneous as the planning horizon is extended. However, this homogeneity is found to remain inversely related to the cultural, economic and geographic distances among the various Member States. Hence, pan-regional rather pan-European strategies are called for. http://repub.eur.nl/res/pub/1925/ 2005-03-30T00:00:00Z Although economically very important, local-service sectors have received little attention in the extensive literature on competitive interactions. Detailed data gathering in these sectors is hard, not only because of the multitude of local players, but also because key service dimensions are hard to quantify. Using empirical entry models, we show how to infer information on these sectors’ degree of intra- and inter-channel competition from the observed entry decisions in different local markets. The approach also controls for relevant socio-demographic characteristics of the trading area that may affect performance. We apply the proposed empirical entry model to the video-rental market. Additional entries of video stores are found to significantly increase the level of intra-channel competition. Unlike the predictions of many normative economic models, we find this increase to be larger when the entry occurs in a duopoly than in a monopoly, a pattern consistent with recent experimental research on collusive behavior in oligopolies. We also find evidence of inter-channel cannibalization from the upstream channel (movie theatres), but not from the downstream channel (premium cable). Finally, various socio-demographic characteristics of the trading zone, such as income and household size, are found to also have a significant impact on store performance. http://repub.eur.nl/res/pub/1814/ 2004-12-01T00:00:00Z We develop a bivariate spectral Granger-causality test that can be applied at each individual frequency of the spectrum. The spectral approach to Granger causality has the distinct advantage that it allows to disentangle (potentially) di®erent Granger- causality relationships over di®erent time horizons. We illustrate the usefulness of the proposed approach in the context of the predictive value of European production expectation surveys. http://repub.eur.nl/res/pub/1675/ 2004-09-29T00:00:00Z The Lucas critique has been largely ignored in the marketing literature. We present a number of conditions under which the critique is most likely to (also) apply in marketing settings. Next, we provide some perspectives on how to diagnose and accommodate the Lucas critique, and identify various avenues for future research. http://repub.eur.nl/res/pub/1581/ 2004-09-10T00:00:00Z In most western countries, grocery retailers are faced with maturing domestic markets with a year-to-year sales growth close to zero. Moreover, most Western-European markets are characterized by a high concentration rate, with a combined market share of the top five players easily exceeding 70%. One important outcome of this evolution has been a growing interest in cross-border initiatives. However, even though the industry gained importance, retailers are still struggling to develop the competencies to compete and survive in this new, more global, arena. In this paper, we study entry investments into Central and Eastern-European transition economies to unveil when, to what extent, and to which retailer the strategic window in these different markets opens. We develop and empirically test a set of hypotheses on factors that affect (1) the speed (timing) and (2) size of retailers’ decisions to enter Central and Eastern European markets. A conceptual framework is proposed which looks at strategic decisions through the option lens. This perspective offers an economic rationale for the behavioral process of major resource allocations. The resulting hypotheses are tested, using a joint hazard/poisson-regression framework, on a data set covering all entry decisions of the top 75 European grocery retailers towards Central and Eastern Europe. We find that in these transition economies important legitimization effects can be derived from rivals’ actions. Especially the moves, made and anticipated, by home rivals are carefully monitored. This reflects the idea that retailers are motivated not only by the chance of creating value in these new markets, but also by the fear of being left out. http://repub.eur.nl/res/pub/1334/ 2004-06-24T00:00:00Z In the literature, little attention has been paid to instances where companies add an Internet channel to their direct channel portfolio. However, actively managing multiple sales channels requires knowing the customers’ channel preferences and the resulting channel power. Two key components of channel power are (i) the existing customers’ intrinsic loyalty to a channel, and (ii) the channel’s ability to attract new customers. We apply the Colombo and Morrison (1989) model to analyze the channel loyalty and conquesting power of two direct channels operated by a given firm. In addition, we analyze the evolution over time in each channel’s power, and test for differences in channel power among different product categories offered by the firm, and among different customer segments. http://repub.eur.nl/res/pub/1175/ 2004-02-20T00:00:00Z For over forty years, Business Tendency Surveys have been collected in multiple member states of the European Union. Previous research has studied the predictive accuracy of the expectation variables included in those surveys through bivariate, within-country, Granger-causality tests, which has resulted in mixed conclusions. We extend previous research in various ways, as we (i) explicitly allow for cross-country influences, and (ii) do so using both bivariate and multivariate Granger-causality tests. Specifically, the multivariate El-Himdi and Roy test is adapted to jointly test the forecasting value of multiple production expectation series, to assess whether part of this joint effect is indeed due to cross-country influences, and to determine which countries' expectation series have most "clout" in predicting the production levels in the other member countries, or have higher "receptivity", in that their production levels are Granger-caused by the other countries' expectations. http://repub.eur.nl/res/pub/1062/ 2003-11-27T00:00:00Z The use of price promotions to stimulate brand and firm performance is increasing. We discuss how (i) the availability of longer scanner data time series, and (ii) persistence modeling, have lead to greater insights into the dynamic effects of price promotions, as one can now quantify their immediate, short-run, and long-run effectiveness. We review recent methodological developments, and illustrate how the analysis of numerous brands and product categories has resulted in various empirical generalizations. Finally, we argue that persistence modeling should not only be applied to traditional performance metrics such as sales, but also to metrics such as firm value and customer equity. http://repub.eur.nl/res/pub/1063/ 2003-11-27T00:00:00Z The question of long-run market response lies at the heart of any marketing strategy that tries to create a sustainable competitive advantage for the firm or brand. A key challenge, however, is that only short-run results of marketing actions are readily observable. Persistence modeling addresses the problem of long-run market-response quantification by combining into one measure of “net long-run impact” the chain reaction of consumer response, firm feedback and competitor response that emerges following the initial marketing action. In this paper, we (i) summarize recent marketing-strategic insights that have been accumulated through various persistence modeling applications, (ii) provide an introduction to some of the most frequently used persistence modeling techniques, and (iii) identify some other strategic research questions where persistence modeling may prove to be particularly valuable. http://repub.eur.nl/res/pub/428/ 2003-06-06T00:00:00Z Despite its obvious importance, not much marketing research focuses on how business-cycle fluctuations affect individual companies and/or industries. Often, one only has aggregate information on the state of the national economy, even though cyclical contractions and expansions need not have an equal impact on every industry, nor on all firms in that industry. Using recent time-series developments, we introduce various measures to quantify the extent and nature of business-cycle fluctuations in sales. Specifically, we discuss the notions of cyclical volatility and cyclical comovement, and consider two types of cyclical asymmetry related, respectively, to the relative size of the peaks and troughs and the rate of change in upward versus downward parts of the cycle. In so doing, we examine how consumers adjust their purchasing behavior across different phases of the business cycle. We apply these concepts to a broad set (24) of consumer durables, for which we analyze the cyclical sensitivity in their sales evolution. In that way, we (i) derive a novel set of empirical generalizations, and (ii) test different marketing theory-based hypotheses on the underlying drivers of cyclical sensitivity. Consumer durables are found to be more sensitive to business-cycle fluctuations than the general economic activity, as expressed in an average cyclical volatility of more than four times the one in GNP, and an average comovement elasticity in excess of 2. This observation calls for an explicit consideration of cyclical variation in durable sales. Moreover, even though no evidence is found for depth asymmetry, the combined evidence across all durables suggests that asymmetry is present in the speed of up- and downward movements, as durable sales fall much quicker during contractions than they recover during economic expansions. Finally, key variables related to the industry's pricing activities, the nature of the durable (convenience vs. leisure), and the stage in a product's life cycle tend to moderate the extent of cyclical sensitivity in durable sales patterns. http://repub.eur.nl/res/pub/342/ 2003-03-07T00:00:00Z Rede in verkorte vorm uitgesproken bij de openbare aanvaarding van het ambt van hoogleraar Bedrijfskunde, in het bijzonder Marketing Models aan de Faculteit Bedrijfskunde van de Erasmus Universiteit Rotterdam op 7 maart 2003 http://repub.eur.nl/res/pub/175/ 2002-03-06T00:00:00Z How do competitors react to each other's price-promotion and advertising actions? How do these reactions influence the net sales impact we observe? We answer these questions by performing a large-scale empirical study of the short-run and long-run reactions to promotion and advertising shocks in over 400 consumer product categories, over a four-year time span. Competitive reaction can be passive, accommodating or retaliatory. We first develop a series of expectations on the type and intensity of reaction behavior, and on the moderators of this behavior. These expectations are assessed in two ways. First, vector-autoregressive models quantify the short-run and long-run effect of a promotion or advertising action on competitive sales and on competitive reactions. By cataloging the numerical results, we are able to formulate empirical generalizations of reaction behavior ("how do they react?"). Second, we estimate structural models of reaction intensity, in function of various market and competitive characteristics ("what are the drivers of reaction?"). Finally, by comparing our findings on reaction behavior with those on promotion and advertising effectiveness, we are able to evaluate competitive reaction behavior ("are they reacting as they should?"). A major finding is that competitive reaction is predominantly passive. When it is present, it is usually retaliatory in the same instrument, but accommodating or retaliatory in a different instrument. There are very few long-run consequences of any type of reaction behavior. We also report on several moderating effects that are in line with expectations, and that support the presence of a certain amount of rationality in competitive reaction behavior. The net impact of the over-time effects of advertising and price-promotion attacks, competitive reactions and the sales effectiveness of each, is that competitors' sales are generally not affected, and especially not in the long run. We weigh the evidence that this sales neutrality is "natural" (i.e., due to the nature of consumer response) versus "managed" (i.e., due to the vigilance and effectiveness of competitors), and conclude in favor of the former. http://repub.eur.nl/res/pub/170/ 2002-02-27T00:00:00Z While there has been strong managerial and academic interest in price promotions, much of the focus has been on the impact of such promotions on category sales, brand sales and brand choice. In contrast, little is known about the long-run impact of price promotions on manufacturer and retailer revenues and margins, although both marketing researchers and practitioners consider this a priority area (Marketing Science Institute 2000). Do promotions generate additional revenue and for whom? Which brand, category and market conditions influence promotional benefits and their allocation across manufacturers and retailers? To answer these questions, we conduct a large-scale econometric investigation of the effects of price promotions on manufacturer revenues, retailer revenues and margins. This investigation proceeds in two steps. First, persistence modeling reveals the short- and long-run effects of price promotions on these performance measures. Second, weighted least-squares analysis shows to what extent brand and promotion policies, as well as market-structure and category characteristics, influence promotional impact. A first major finding of our paper is that price promotions do not have permanent monetary effects for either party. Second, in terms of the cumulative, over-time, promotional impact on their revenues, we find significant differences between the manufacturer and retailer. Price promotions have a predominantly positive impact on manufacturer revenues, but their effects on retailer revenues are mixed. Retailer (category) margins, in contrast, are typically reduced by price promotions. Even when accounting for cross-category and store-traffic effects, we still find evidence that price promotions are typically not beneficial to the retailer. Third, our results indicate that manufacturer revenue elasticities are higher for promotions of small-share brands and for frequently promoted brands. Moreover, they are higher for storable products and lower in categories with a high degree of brand proliferation. Retailer revenue elasticities, in turn, are higher for brands with frequent and shallow promotions, for storable products and in categories with a low extent of brand proliferation. As such, from a revenue-generating point of view, manufacturer and retailer interests are often aligned in terms of which categories and brands to promote. Finally, retailer margin elasticities are higher for promotions of small-share brands and for brands with infrequent and shallow promotions. Thus, the implications with respect to the frequency of promotions depend upon the performance measure the retailer chooses to emphasize. The paper discusses the managerial implications of our results for both manufacturers and retailers and suggests various avenues for future research. http://repub.eur.nl/res/pub/171/ 2002-02-27T00:00:00Z During the past decade, irrational exuberance has turned into a possibly equally irrational pessimism about what the Internet can accomplish. The fear of getting ruined through cannibalization losses has recently deterred many firms from deploying the Internet as a distribution channel. But do Internet channels really cannibalize firms' entrenched channels, or is this widely held assumption exaggerated? To answer this question, we apply recent structural-break time-series econometrics to quantify the impact of an Internet channel addition on the long-run performance evolution of a firm's established channels. Using a database of 85 Internet channel additions over the last ten years in the British and Dutch newspaper industries, we find that the often-cited cannibalization fears have been largely overstated. The Internet therefore need not be disruptive to established companies and channels. This does, however, not imply that firms enjoy free play in setting up Internet channels. In cases where the newly established Internet channel too closely mimics the entrenched channels, substantial cannibalization is more likely to take place.