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Abstract:
China and India are the fastest growing major markets in the world and the most popular markets for foreign entrants. Yet no study has examined the success or failure of these entries. Using a new definition of success and a uniquely compiled archival database, the authors analyze whether and why firms that entered China and India succeeded or failed. The most important findings are rather counter-intuitive: smaller firms are more successful than larger firms and greater openness of the emerging market have lower success. Other findings are that success is higher with earlier entry, greater control of entry mode, and shorter cultural and economic distance between the home and host nations. Importantly, with or without control for these drivers, success in India is lower than that in China. The authors discuss the reasons for and implications of these findings.

Abstract:
Managers and entrepreneurs frequently adhere to the Motto of being the first to market. But the authors have discovered that many pioneers fail, while most current leaders are not pioneers. Using a historical method, the authors try to determine why pioneers fail and early leaders succeed. They have found that market leaders embody five factors critical to success: vision, persistence, commitment, innovation, and asset leverage.

first to market, market leadership, innovation

Abstract:
Innovation is one of the most important issues in business research today. It has been studied in many independent research traditions. Our understanding and study of innovation can benefit from an integrative review of these research traditions. In so doing, we identify 16 topics relevant to marketing science, which we classify under five research fields:

- Consumer response to innovation, including attempts to measure consumer innovative-ness, models of new product growth, and recent ideas on network externalities
- Organizations and innovation, which are increasingly important as product development becomes more complex and tools more effective but demanding
- Market entry strategies, which includes recent research on technology revolution, exten-sive marketing science research on strategies for entry, and issues of portfolio manage-ment
- Prescriptive techniques for product development processes, which have been transformed through global pressures, increasingly accurate customer input, web-based communica-tion for dispersed and global product design, and new tools for dealing with complexity over time and across product lines
- Defending against market entry and capturing the rewards of innovating, which includes extensive marketing science research on strategies of defense, managing through metrics and rewards to entrants

For each topic, we summarize key concepts and highlight research challenges. For pre-scriptive research topics, we also review current thinking and applications. For descriptive top-ics, we review key findings.

Innovation, new products, consumer innovativeness, diffusion models, network externalities, strategic entry, defensive strategy, ideation, rewards to entrants, metrics

Abstract:
Traditional econometric models suggest that advertising has a clear and significant positive effect on sales in the current period. However, recent studies using scanner data indicate that the estimated effects of TV advertising on households' brand choices are weak and rarely significant. Do those findings mean that TV advertising does not really have an impact on current brand choices and sales? Or are the discrepant findings due to differences among the measures, models and aggregation levels used by different researchers? The authors address these issues. Their analysis indicates that aggregating data over time and households may create a false impression of advertising having a statistically significant effect on sales.

TV Advertising, Sales Impact, Data Aggregation

Abstract:
Bundling is pervasive in today's markets. However, the bundling literature contains inconsistencies in the use of terms and ambiguity about basic principles underlying the phenomenon. The literature also lacks an encompassing classification of the various strategies, clear rules to evaluate the legality of each strategy, and a unifying tramework to indicate when each is optimal. Based on a review of the marketing, economics, and law literature, this article develops a new synthesis of the field of bundling, which provides three important benetits. First, the article clearly and consistently defines bundling terms and identifies two key dimensions that enable a comprehensive classitícation of bundling strategies. Second, it formulates clear rules for evaluating the legality of each of these strategies. Third, it proposes a framework of 12 propositions that suggest which bundling strategy is optimal in various contexts. The synthesis provides managers with a framework with which to understand and choose bundling strategies. It also provides researchers with promising avenues for further research.

Bundling, Marketing, Strategy

Abstract:
Critics often decry an earnings-focused short-term orientation of management that eschews spending on risky, long term projects such as innovation in order to boost a firm's stock price. The critics' assume that stock markets respond to announcements of earnings that report immediate earnings and not of innovation that have a long-term payoff. Contrary to this position, the authors argue that the market's true appreciation of innovation can be estimated by assessing the total market returns to the entire innovation project The authors demonstrate this approach via the Fama-French 3 Factor Model (including Carhart's Momentum Factor) on 5481 announcements from 69 firms in 5 markets and 19 technologies, during the period 1977-2006.

The authors find that total market returns to an innovation project are $643 million, more than 13 times the $49 million due to an average innovation event. Returns to negative events are higher in absolute value than those to positive events. Returns to development activities are higher than returns to either the setup or market activities. Returns are higher for smaller firms than larger firms. Returns to the announcing firm are substantially greater than those to competitors across all stages. The authors discuss the implications of the results.

Innovation, Market Returns, Event Study, Fama-French model, High-Tech Marketing

Abstract:
Radical innovation is an important driver of the growth, success, and wealth of firms and nations. Because of its importance, authors in a variety of disciplines and time periods have addressed this topic. They have proposed many hypotheses about the drivers of innovation in firms across nations, including factors such as religion, geography, number of scientists and engineers, country culture, intellectual property protection, patents, R&D, and firm culture. The authors test these hypotheses using survey and archival data across 759 firms drawn from 17 major world economies. Results contradict many prior assertions about the appropriate metric for innovation and the drivers of innovation.

Results show that: 1) Commercialization of radical innovations has an important impact on a firm's financial performance and as such is a more valid measure of innovation than patents. 2) The internal culture of a firm is the strongest driver of radical innovations. Its impact exceeds that of all other factors proposed in the literature.

innovation

Abstract:
The authors study the takeoff of 16 new products across 31 countries (430 categories) to analyze how and why time-to-takeoff varies across products and countries. They test the effect of 12 hypothesized drivers of time-to-takeoff using a parametric hazard model. The authors find that the average time-to-takeoff varies substantially between developed and developing countries, between work and fun products, across cultural clusters, and over calendar time. Products take off fastest in Japan and Norway, followed by other Nordic countries, the US, and some countries of Mid-western Europe. Time-to-Takeoff is driven by culture and wealth plus product class, product vintage and prior takeoff. Most importantly, time-to-takeoff is shortening over time and takeoff is converging across countries. The authors discuss the implications of these findings.

Diffusion of Innovations, Global Marketing, Consumer Innovativeness, Marketing Metrics, New Products, Hazard Model, Product Life Cycles

Abstract:
Researchers in a variety of disciplines have studied various aspects of technological innovation. However, those in marketing have a unique advantage. Adopting a consumer orientation helps in understanding technological innovation because all innovations ultimately aim to produce better products for consumer welfare. Thus researchers in marketing have a unique vantage point in researching and understanding this phenomenon. This essay outlines ten important research questions in technological innovation from a marketing perspective.

Technology, innovation, diffusion, new product growth, network effects, payoff, wealth of nations

Abstract:
Most past research has focused on how aggregate advertising works in field settings. However, the information most critical to managers is which ad works, in which medium or vehicle, at what time of the day, at what level of repetition, and for how long. Managers also need to know why a particular ad works in terms of the characteristics (or cues) of its creative. The proposed model addresses these issues. It provides a comprehensive method to evaluate the effect of TV advertising on sales by simultaneously separating the effects of the ad itself from that of the time, placement (channel), creative cues, repetition, age of the ad, and age of the market. It also captures ad decay by hour to avoid problems of data aggregation. No model in the literature provides such an in-depth and comprehensive analysis of advertising effectiveness. Applications of the model have saved millions of dollars in costs of media and design of creatives.

advertising response, wear-in, wear-out, carry-over effect, long-term effect, ad creative, ad cues

Abstract:
Christensen's (1997) thesis of disruptive technology has been highly praised and popular with managers. Two of its premises are important and insightful. These deal with the performance path of a disruptive technology and its impact on dominant incumbents who ignore it in favor of listening to their current consumers. However, Christensen's thesis also suffers from limitations, two of which are troubling: ambiguity in the definition of disruptive technology and the logic of the sampling to test its validity. Several studies I have conducted over the years suggest that the disruption of incumbents - if and when it occurs - is due not to technological innovation per se but rather to incumbents' lack of vision of the mass market and an unwillingness to cannibalize assets to serve that market. I have developed metrics to test these concepts, along with models to predict the outcomes and financial value of strategic changes firms can make to avoid these problems.

Disruptive Technology, Innovation, Strategy

Abstract:
Technological change is perhaps the most powerful engine of growth in markets today. To harness this source of growth, firms need answers to key questions about the dynamics of technological change: (1) How do new technologies evolve? (2) How do rival technologies compete? and (3) How do firms deal with technological evolution? Currently, the literature suggests that a new technology seems to evolve along an S-shaped path, which starts below that of an old technology, intersects it once, and ends above the old technology. This belief is based on scattered empirical evidence and some circular definitions. Using new definitions and data on 14 technologies from four markets, the authors examine the shape and competitive dynamics of technological evolution. The results contradict the prediction of a single S-curve. Instead, technological evolution seems to follow a step function, with sharp improvements in performance following long periods of no improvement. Moreover, paths of rival technologies may cross more than once or not at all.

Technological Evolution, Innovation

Abstract:
Conventional wisdom is that the performance of a new technology starts below that of an exiting technology, crosses the performance of an older technology once and ends up at a higher plateau, so tracing a single S-shaped curve. As such, to stay competitive, managers need to switch from an old technology to a new one before the former matures. We test this premise in 23 technologies across six markets. The results strongly refute the existence of a single S-shaped curve of technological evolution. We find that technologies evolve through a series of jumps, whose pattern and frequency is intrinsic to a technology but increasing over time. Most importantly, jumps occur even after a long plateau of no improvement or apparent maturity. The results suggest that managers vigilantly study the internal dynamics of their technology rather than use simplistic rules of thumb for investing in technologies.

innovation

Abstract:
Product quality is probably under-valued by firms because there is little consensus about appropriate measures and methods to research quality. We suggest that published ratings of a product's quality are a valid source of quality information with important strategic and financial impact. We test this thesis by an event analysis of abnormal returns to stock prices of firms whose new products are evaluated in the Wall Street Journal. Quality has a strong immediate effect on abnormal returns, which is substantially higher than that for other marketing events assessed in prior studies. Moreover, there are some important asymmetries in the effect. We discuss the research, managerial, investing, and policy implications.

Stock returns, Quality, Published reviews, New product

Abstract:
Several studies have shown that pioneers have long-lived market share advantages and are likely to be market leaders in their product categories. However, that research has potential limitations: the reliance on a few established databases, the exclusion of nonsurvivors, and the use of single-informant self-reports for data collection. The authors of this study use an alternate method, historical analysis, to avoid these limitations. Approximately 500 brands in 50 product categories are analyzed. The results show that almost half of the market pioneers fail and their mean market share is much lower than that found in other studies. Also, early market leaders have much greater long-term success and enter an average of 13 years after pioneers.

pioneer advantage, market leadership, market share

Abstract:
Indirect network effects are of prime interest to marketers because they affect the growth and takeoff of software availability for, and hardware sales of, a new product. While prior work on indirect network effects in the economics and marketing literature is valuable, these literatures show two main shortcomings. First, empirical analysis of indirect network effects is rare. Second, in contrast to the importance the prior literature credits to the chicken-and-egg paradox in these markets, the temporal pattern - which leads which? - of indirect network effects remains unstudied. Based on empirical evidence of nine markets, this study shows, among others, that: (1) indirect network effects, as commonly operationalized by prior literature, are weaker than expected from prior literature; (2) in most markets we examined, hardware sales leads software availability, while the reverse almost never happens, contradicting existing beliefs. These findings are supported by multiple methods, such as takeoff and time series analyses, and fit with the histories of the markets we studied. The findings have important implications for academia, public policy and management practice. To academia, it identifies a need for new, and more relevant, conceptualizations of indirect network effects. To public policy, it questions the need for intervention in network markets. To management practice, it downplays the importance of the availability of a large library of software for hardware technology to be successful.

Indirect Network Effects, New Product Growth, Takeoff, Chicken-and-Egg

Abstract:
The authors develop a model to decompose the effects of television advertising for a toll-tree referral service, at the hourly level. The model estimates which ad works, when, in which station, and for how long. Results of the analysis show that ads do stimulate direct response, but their effects dissipate very rapidly. Effectiveness and profitability vary substantially by creative, television station, and station x time of the day. The results underscore the need for managers to undertake such analyses and for researchers to use such a disaggregate approach.

Advertising, Television Ads, Effectiveness

Abstract:
Research on the product life cycle (PLC) has focused primarily on the role of diffusion. This study takes a broader theoretical perspective on the PLC by incorpuratinx informational cascades and developing testing many new hypotheses based on this theory. On average, across 30 product categories, that authors find that: (i) New consumer durables have a typical pattern of rapid growth of 45% per year over 8 years. (ii) This period of growth is followed by a slowdown when sales decline by 15% and stay below those of the previous peak for 5 years. (iii) Slowdown occurs at 34% population penetration and about 50% of ultimate market penetration. (iv)Products with large sales increases at takeoff tend to have larger sales declines at slowdnwn. (v) Leisure-enhancing products tend to have higher growth rates and shorter growth ,stages than nonleisure-enhcancing products. Time-saving products tend to have lower growth rates and longer growth stages than nontime-saving products. (vi)Lower probability of slowdown is as sociated with steeper price reductions,lower penetration, and higher economic growth. (vii)A hazard model can provide a reasonable predictions of the slowdown as early as the takeoff.

product life cycles, sales takeoff, cascades, new pruduct growth, innovation product management, diffusion, high-tech marketing

Abstract:
This study examines whether there are differences in consumers' shopping behavior and product prices in grocery stores due to cultural orientation. The study uses a field setting in Southern California, comparing samples of American and Chinese culture on two occasions, each five years apart. Theory suggests that price sensitivity and the importance of the status of buyers differ substantially between Chinese and American cultures. Consistent with these differences, the study finds that these two cultural groups have dramatically different shopping practices. Chinese use multiple senses when examining unpackaged food, and do so far more than American shoppers. They also inspect many more items and take much more time to shop. The differences in shopping behavior correspond to clear differences in prices between grocery stores serving the two cultural groups. Chinese supermarkets have substantially lower prices across a range of food products than mainstream American supermarkets. These differences ranged from 37% for packaged goods of the same brand and size to more than 100% for meats and seafood of the same type and description. These differences are similar across a span of five years. We argue that differences in culture provide the most likely explanation for the differences in prices between the two types of super markets.

Pricing, Cross Cultural, Retailing

Abstract:
A common perception in the field of innovation is that large, incumbent firms rarely introduce radical product innovations. Such firms tend to solidify their market positions with relatively incremental innovations. They may even turn away entrepreneurs who come up with radical innovations, though they themselves had such entrepreneurial roots. As a result, radical innovations tend to come from small firms, the outsiders. This thesis, which we term the incumbent's curse, is commonly accepted in academic and popular accounts of radical innovation. This topic is important, because radical product innovation is an engine of economic growth that has created entire industries and brought down giants while catapulting small firms to market leadership. Yet a review of the literature suggests that the evidence for the incumbent's curse is based on anecdotes and scattered case studies of highly specialized innovations. It is not clear if it applies widely across several product categories. The authors reexamine the incumbent's curse using a historical analysis of a relatively large number of radical innovations in the consumer durables and office products categories. In particular, the authors seek to answer the following questions: (1) How prevalent is this phenomenon? What percentage of radical innovations do incumbents versus nonincumbents introduce? What percentage of radical innovations do small firms versus large firms introduce? (2) Is the phenomenon a curse that invariably afflicts large incumbents in current industries? Is it driven by incumbency or size? and (3) How consistent is the phenomenon? Has the increasing size and complexity of firms over time accentuated it? Does it vary across national boundaries? Results from the study suggest that conventional wisdom about the incumbent's curse
may not always be valid.

Radical innovation, incumbency, market leadership

Abstract:
Faced with increasingly competitive markets and higher media costs, advertising managers keep looking for research findings that can tell them exactly how often to run an ad campaign. Two schools of thought have emerged on this issue: minimalists who assert that one exposure is enough and repetitionists who believe that repetitive advertising is necessay. Which view is correct?. This paper argues that neither view is correct. Effective frequency depends on three factors rather than on a single exposure level. These three factors are brand familiarity, message complexity, and message novelty. The opposing views in the literature can be explained by differences in research context on these three factors.

advertising, frequency, effectiveness

Abstract:
Growth is one of the most compelling goals of managers today. This paper addresses the following questions about the international growth of new products in Europe: Does the pattern of growth differ across countries? If so, does culture or economics explain the differences? What are the implications of these results for new product strategy? The results show that the pattern of growth differs substantially across European countries. These differences are explained mostly by economic wealth and not by culture. The study addresses the implications of these results for: (a) the choice of a waterfall versus sprinkler strategy for the introduction of a new product; (b) the global versus local marketing of a new product; and (c) managing a firm's expectations about new product growth.

New product growth, International marketing, International diffusion

Abstract:
A firm's ability to compete in new product markets is vital to its profitability and long-term survival. Therefore, it is important to understand the development and growth of these markets. Following a pioneering study by Bass (1969), diffusion models have traditionally provided this understanding in marketing. The great appeal of the Bass model is that it is a simple one that fits the data very well and provides parameters that have an intuitive behavioural interpretation. The model suffers from three well-known limitations: (1) it does not include marketing variables that could infuence new product diffusion and sales; (2) the model's parameters are unstable; and (3) the model's forecasts are inaccurate before the sales peak and especially prior to the point of inflection. Subsequent research has made progress especially in extending the Bass model to include marketing variables. However, the extensions have come at the cost of simplicity: the new models are far more complex than the simple Bass model. We propose an alternate simple model of new product growth for consumer durables, based on the concept of affordability rather than on diffusion. We compare this model with the diffusion model in terms of fit, stability and validity of parameters, and forecasting ability. The alternate model is a little inferior to the diffusion model in fit, but superior in terms of the stability and validity of parameters and forecasting ability. We discuss the limitations and implications of our model.

diffusion of innovations, new products, forecasting

Abstract:
The Bass (1969) model has been a standard for analyzing and predicting the market penetration of new products. The authors demonstrate the insights to be gained and predictive performance of Functional Data Analysis (FDA), a new class of non-parametric techniques that has shown impressive results within the statistics community, on the market penetration of 760 products drawn from 21 products and 70 countries. The authors propose a new model called Functional Regression and compare its performance to over several models including the Classic Bass model, estimated means, last-observation projection, a meta-Bass model and an augmented meta-Bass model for predicting eight aspects of market penetration. Results a) validate the logic of FDA in integrating information across categories b) show that Functional Regression is superior to the above models and c) product specific effects are more important than country-specific effects when predicting penetration of an evolving new product.

Global Market Penetration, Diffusion, Bass Model, Functional Data Analysis, Functional Principal Components, Generalized Additive Models, Functional Clustering, Spline Regression, New Products

Abstract:
The Internet has enabled consumers to make more informed decisions more conveniently with apparently more efficient price-clearing mechanisms than was available before its advent. One such mechanism is the name-your own-price auction. The authors study the extent to which decisions made in such an auction are rational in relation to an economic model. The results from two independent markets show that a large number of consumers do not exhibit rational decision making.

Internet Auctions, Pricing

Abstract:
We propose a model that seeks the optimal timing and depth of retail discounts with the optimal timing and quantity of the retailer's order over multiple brands and time periods. The model is based on an integration of consumer decisions in purchase incidence, brand choices and quantity with the dynamics of household and retail inventory. The major contribution of the model is that it shows how the optimum depth and timing of discount varies with key demand characteristics such as consumer stockpiling, loyalty, response to the marketing mix, and segmentation. In addition, the optima also vary with key supply characteristics such as retail margins, depth and frequency of manufacturer deals, retail inventory, and retagging costs. The most valuable contribution of the model is that it can provide an optimal discount strategy for multiple brands over multiple time periods.

Promotions, Retailing, Consumer Response, Discount Timing, Mathematical Modeling

Abstract:
The introduction of really new products creates many dilemmas for managers. Initially, they must develop a launch strategy in the face of great uncertainty about the product's potential. After launch, they need guidance about whether to pull the plug on a new product with lackluster sales (prior to takeoff) or persist with a product that could ultimately be a failure. Our results and model of the takeoff in sales of new products provide some guidance on these complex managerial decisions. Prior to our study on sales takeoff, a manager's only recourse to analyzing new product growth would have been diffusion models. However, these models have typically used new product sales beginning at or around the takeoff, have assumed takeoff, and have not explicitly modeled it. In contrast, our model addresses the time from commercialization until takeoff, thus providing insights during the period of greatest uncertainty. Whirlpool Corporation used our model to guide their decision making in the testing and launch of a completely new consumer durable, the Personal Valet.

sales takeoff, new product growth, product management, sales forecasting, market response models, innovation

Abstract:
Sales takeoff is vitally important for the management of new products. Limited prior research on this phenomenon covers only the United States. This study addresses the following questions about takeoff in Europe:

1) Does takeoff occur as distinctly in other countries, as it does in the United States?
2) Do different categories and countries have consistently different times-to-takeoff?
3) What economic and cultural factors explain the intercountry differences?
4) Should managers use a sprinkler or waterfall strategy for the introduction of new products across countries?

We gathered data on 137 new products across 10 categories and 16 European countries. We adapted the threshold rule for identifying takeoff (Golder and Tellis 1997) to this multinational context. We specify a parametric hazard model to answer the questions above. The major results are as follows:

1) Sales of most new products display a distinct takeoff in various European countries, at an average of six years after introduction.
2) The time-to-takeoff varies substantially across countries and categories. It is four times shorter for entertainment products than for kitchen and laundry appliances. It is almost half as long in Scandinavian countries as in Mediterranean countries.
3) While culture partially explains intercountry differences in time-to-takeoff, economic factors are neither strong nor robust explanatory factors.
4) These results suggest distinct advantages to a waterfall strategy for introducing products in international markets.

International New Product Growth, New Product Takeoff, New Product Growth, International Diffusion, Diffusion of Innovations

Abstract:
The authors study how ad cues attect consuMer behavior in new versus well-established markets. The authors use theoretical insights from consumer information processing to argue that the same ad cues can have different ettects on consumer behavior, depending on whether the market is new or old. The authors then test these hypotheses in the context of a toll-free referral service, using a highly disaggregate econometric model of advertising response. The results indicate that argument based appeals, expert sources, and negatively framed messages are particularly effective in new markets. Emotion-based appeals and posítively framed messages are more efFective in older markets than in new markets.

Advertising messages, evolving markets, consumer behavior

Abstract:
Ads of stocks and mutual funds typically tout their past performance, despite a disclosure that past performance does not guarantee future returns. Are consumers motivated to buy or sell based on past performance of assets? More generally, do consumers (wrongly) use sequential information about past performance of assets to make suboptimal decisions? Use of this heuristic leads to two well-known biases: the hot hand and the gambler's fallacy. This study proposes a theory of hype that integrates these two biases; that a positive run could inflate prices, while a negative run could depress them, although the pattern could reverse on extended runs. Tests on two experiments and one event study of stock purchases strongly suggest that consumers dump "losers" and buy "winners." The latter phenomenon could lead to hyped-up prices on the stock market for winning stocks. The authors discuss the managerial, public policy, and research implications of the results.

heuristics and biases, financial products, behavioral decision theory, judgment and decision making

Abstract:
The abundance of highly disaggregate data (e.g., at 5 second intervals) raises the question of the optimal data interval to estimate advertising carryover. The literature assumes that 1) the optimal data interval is the inter-purchase time, 2) too disaggregate data causes a disaggregation bias and 3) recovery of true parameters requires assumption of the underlying advertising process. In contrast, we show that 1) the optimal data interval is the inter-exposure time. 2) Too disaggregate data does not cause any disaggregation bias, and 3) recovery of true parameters does not require assumption of the advertising process but only data at the inter-exposure time. These results hold for any linear dynamic model linking sales with current and past advertising.

Advertising carryover, Data Interval, Econometric Models

Abstract:
Researchers disagree about the critical drivers of success in and efficiency of high-tech markets. On the one hand, a few researchers assert that high-tech markets are efficient with best quality brands dominating. On the other hand, many authors suspect that network effects lead to perverse markets in which the dominant brands do not have the best quality. We develop scenarios about the relative importance of these effects and the efficiency of markets. Empirical analysis of historical data on 19 categories shows that while both quality and network effects affect market share flows, markets are generally efficient. In particular, market share leadership changes often, switches in share leadership closely follow switches in quality leadership, and the best quality brands, not the first to enter, dominate the market. Network effects enhance the positive effect of quality.

Network Effects, Tipping, Path Dependence, Quality, High-Tech Products

Abstract:
Economists argue that, despite cognitive limitations, economic agents arrive at optimal choice rules by learning. The assumption is that consumers, for example, are adaptively rational. Adaptive rationality raises a host of issues. We address three of these in the context of experimental markets: do consumers differ on the basis of learning; how do these differences, when aggregated, affect market efficiency; and how do consumers learn. Analysis of our experimental data reveals the following. First, multiple segments of consumers exist on the basis of learning. Second, the largest segment consists of subjects who do not learn despite timely feedback and motivation. Third, although some consumers do learn to make optimal choices, the effect of this segment on market efficiency is cancelled by an equal number of subjects who 'learn' false relations. Finally, although subjects do not learn strict rationality even with experience, they are in the aggregate not so irrational as to allow highly suboptimal brands to survive. Further analysis of how consumers learn, specifically on the cues (signals) and the rules consumers employ in making choices over time leads to the following two conclusions. First, some signals make learning more easy than others: for example, providing market share information improves learning but not as much as providing quality information does. Second, people employ different rules depending upon the type of information
they have. For example, consumers making decisions based only on price information are more likely to use a heuristic like 'buy a medium-priced product provided it has not failed in the past'. Consumers making decisions based on price and quality information may employ a heuristic such as 'buy top quality products regardless of price'. We discuss the implications of these findings for theory and practice

rationaIity, Iearning, market efficiency

Abstract:
When faced with sequential information, consumers tend to fall prey to one of two well-known heuristics: the hot (or cold) hand and the gambler's fallacy. The authors relate these two traditionally separate heuristics to differences in accepting (buy) versus rejecting (sell) decisions. They identify trend length as a contextual moderating
variable and show an asymmetry between buying and selling frames. When applied to a stock market context, a consistent finding is that consumers prefer to buy past winners and sell past losers even when neither should be preferred. This behavior violates the normative rule of buy low and sell high.

consumer behavior, markets, informational biases

Abstract:
An emerging consensus in marketing is that consumers respond to price relative to some standard or reference price. Most researchers modeling brand choice have reasoned that this standard is based on past prices of the brand. The authors argue that consumers do use reference prices, but one that is also based on context- other prices in the store-rather than on past prices alone. An analysis of households' brand choices in two subcategories and over three cities support this premise. Within context, the lowest price seems to be an important cue for reference price, whereas within time, a brand's own past prices seem to be the most important cue. Households' use of a contextual reference price also varies predictably across some consumer characteristics. Though their model can be applied to other categories, the findings have important managerial implications: Managerial focus on temporal reference prices could lead to an everyday high price, whereas focus on contextual reference prices could lead to an everyday low price. Only the inclusion of both contextual and temporal reference prices justifies variable pricing.

Pricing, Contextaul Price, Temporal Price, Consumer Response

Abstract:
Advertising is a rich, multidimensional phenomenon that has been studied in several disciplines. This research has led to an emerging body of findings and some potential generalizations. Even then, misconceptions about advertising persist, and important aspects of the phenomenon have not been adequately researched. Despite advertising's apparent weakness it is essential for free markets.

Advertising, Free Markets

Abstract:
Networks are an important and very interesting phenomenon, which is increasingly prevalent in contemporary high-tech markets. Many papers in the literature have explored how network effects can lead to perverse markets. Contrary to this position, Tellis, Yin and Niraj (2009) suggest that quality is important even in the presence of network effects, which enhances rather than overwhelms the role of quality. The insightful commentaries of Brown and Morgan (2009), Ratchford (2009), Rossi (2009), Reibstein (2009), and Shugan (2009) seem to concur that the evidence of Tellis, Yin and Niraj (2009) is persuasive. However, the commentaries raise a number of important issues that enrich the meaning of the constructs and the interpretation of the findings. They provide a wealth of directions for future research.

Network effects, Quality, Path dependance, Tipping

Abstract:
Despite extensive research on consumer innovativeness, the literature does not contain a parsimonious construct that has been validated for use across countries, demographics, and categories. This study attempts to fill this gap by studying consumer innovativeness across 15 major world economies. The key results are that four negatively-valenced items constitute a good construct of innovativeness that seems reasonably applicable across most countries. While this construct of innovativeness varies systematically from country to country, common demographic antecedents emerge across countries. Within these commonalities, a measure of innovativeness shows some distinct category - demographics and category - country differences.

Global innovation, consumer innovativeness, cross-cultural differences, new product adoption, cross-category differences

Abstract:
Based on an extensive review of research on advertising in a recession, the authors identify over 40 related studies. Ten of these studies involve original empirical analyses of cross-sectional or time series data. The rest are theoretical discussions, reviews, cases, or opinions. The studies may be classified into four groups based on the dependent variable analyzed: 1) Sensitivity of advertising expenditures to the economy; 2) Sensitivity of brand versus private label share to economic expansions and contractions; 3) Impact of advertising in a recession to sales or market share during or after a recession; 4) Impact of advertising in a recession to profits during and after the recession. The authors critically review these studies and synthesize the major findings.

Advertsing, recession, branding, private label, advertsing elasticity

Abstract:
Product quality is probably under-valued by firms because there is little consensus about appropriate measures and methods to research quality. The authors suggest that published ratings of a product's quality are a valid source of quality information with important strategic and financial impact. The authors test this thesis by an event analysis of abnormal returns to stock prices of firms whose new products are evaluated in the Wall Street Journal. Quality has a strong immediate effect on abnormal returns, which is substantially higher than that for other marketing events assessed in prior studies. In dollar terms, these returns translate into an average gain of $500 million for firms that got good reviews and an average loss of $200 million for firms that got bad reviews. Moreover, there are some important asymmetries. Rewards to small firms with good reviews of quality are greater than those to large firms with good reviews. On the other hand, large firms are penalized more by poor reviews of quality than they are rewarded for good reviews. The authors discuss the research, managerial, investing, and policy implications.

Stock market returns, Abnormal Returns, Quality, Published reviews, New products

Abstract:
We critically examine alternate models of the diffusion of new products and the turning points of the diffusion curve. On each of these topics, we focus on the drivers, specifications, and estimation methods researched in the literature. We discover important generalizations about the shape, parameters, and turning points of the diffusion curve and the characteristics of diffusion across early stages of the product life cycle. We point out directions for future research.

diffusion, product life cycle

Abstract:
The abundance of highly disaggregate data (e.g., at 5-second intervals) raises the question of the optimal data interval to estimate advertising carryover. The literature assumes that 1) the optimal interval is the inter-purchase time, 2) too disaggregate data causes a disaggregation bias, and 3) recovery of true parameters requires assumption of the underlying advertising process. In contrast, we show that 1) the optimal data interval is what we call the unit exposure time, 2) too disaggregate data does not cause any disaggregation bias, and 3) recovery of true parameters does not require an assumption of the advertising process but only data at the unit exposure time. These results hold for any linear dynamic model linking sales with current and past advertising.