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Abstract:
We study the effect of brand name selection on consumer perceptions and adoption of next-generation product innovations. In four experiments, participants evaluated next-generation offerings whose brand names either continued or interrupted the existing naming sequences. The first set of results show that while consumers anticipate enhanced performance on existing product features (i.e., alignable improvements) irrespective of the branding decision, a name change triggers significantly higher expectations of new features (i.e., nonalignable improvements). Next, we examined the implication of this finding for purchase intentions. The added layer of innovation inferred from a brand name change led participants to believe they were exposed to greater risk as well as greater reward. As a result, in the last two experiments we found that situational and dispositional factors influencing the relative salience of these conflicting beliefs ultimately determined whether a particular naming option stimulated or hindered demand.

Next-generation product innovation, brand name selection, branding, structural alignment theory, consumer inference

Abstract:
This two-part case study discusses some of the key marketing decisions faced by Eric Baker and the rest of his management team immediately before and after the launch of viagogo in the United Kingdom (UK) and other European markets. Viagogo is an online marketplace where sellers and buyers can exchange live event tickets (sports, entertainment, etc.) in a legal and secure manner. The underlying business model replicated the one introduced by StubHub in the United States, a company founded by Eric Baker and a fellow Stanford MBA a few years earlier. The first part of the case is set in June 2006, just two months before the official launch of the website. At that time, the case protagonists faced important decisions with respect to the company’s revenue model. In particular, they had to determine what level of commission to charge, how to split this commission across sellers and buyers, and what pricing mechanism(s) to use (i.e., fixed price, auction, and/or declining price). Eric was also considering a potential partnership with a major football club in the UK. A deal was expected to generate considerable exposure for viagogo but, on the other hand, required significant investment and likely constrained the company’s promotional options. The second part of the case takes place in early 2008. Following a brief review of viagogo’s initial performance, a series of new challenges are introduced: (a) how to deal with increasing competition, (b) how to improve the general perception of secondary ticketing in the marketplace, (c) and how to scale the business up from start-up to middle-sized enterprise. Overall, the case highlights common challenges when launching a new business venture. It also questions the common belief that a successful business model in one country can be easily replicated in another. Finally, the case allows for a discussion of how business models tend to change as industries “mature” and new opportunities arise.

Abstract:
Consumers confronted with a product that offers an unexpected benefit are often uncertain whether the benefit is relevant to them. They might choose (or not) to reduce this uncertainty by thinking more about the offered benefit's relevance to their life. This paper argues that such heightened involvement depends on the price posted by the firm as well as on such other factors as level of uncertainty, magnitude of the offered benefit, and effort of thinking. It is shown that a profit-maximizing firm that takes into account the effect of price as a stimulus to think should sometimes price 'above' or 'below,' but not 'at,' a consumer's initially revealed willingness to pay. These pricing strategies are respectively termed transgressive and regressive pricing. Conditions congruent with these strategies are identified and the impact of the strategies on entry decisions is analyzed. Entry opportunities are shown to be potentially profitable even when the differentiating firm faces a high cost handicap. Additionally, firms that view price as a stimulus to think should develop preferences about the consumer's cost of thinking. Conditions are explored under which it is in the firm's best interest (or not) to empower consumers through activities aimed at reducing the cost of thinking (e.g., education, product trials, projective advertising). Finally, analysis is extended to the converse case in which a firm, instead of offering an additional benefit, simplifies a product thereby generating consumer uncertainty about the relevance of the withdrawn benefit. Consideration is given to conditions under which such product simplification should be accompanied by either a light or deep discount. Analysis predicts that the prescribed discounts can ease market entry. Moreover, firms with a product simplification strategy will often seek to make thinking more costly to discourage consumers from thinking about the relevance of withdrawn benefits.

product differentiation, marketing strategy, consumer behavior, pricing, cost of thinking, entry decision, consumer empowerment

Abstract:
The research presented in this paper provides evidence that add-on features sold to enhance a product can be more than just discretionary benefits. We argue that consumers draw inferences from the mere availability of add-ons, which in turn lead to significant changes in the perceived utility of the base good itself. Specifically, we propose that the improvements supplied by add-ons can be classified as either alignable or nonalignable and that they have opposing effects on evaluation. A set of four experiments with different product categories confirms this prediction. In addition, we show that the amount of product information available to consumers and expectations about product composition play important moderating roles. From a practical standpoint, these results highlight the need for firms to be mindful of the behavioral implications of making add-ons readily available in the marketplace.

Add-Ons, product design, consumer inference, structural alignment, price discrimination

Abstract:
Existing evidence suggests that preferences are affected by whether a price is presented as one all-inclusive expense or partitioned into a set of mandatory charges. To explain this phenomenon, we introduce a new mechanism whereby price partitioning affects a consumer’s perception of the secondary (i.e., non-focal) benefits derived from a transaction. Four experiments support the hypothesis that a partitioned price increases the amount of attention paid to secondary attributes tagged with distinct price components. Characteristics of the offered secondary attributes such as their perceived value, relative importance, and evaluability can therefore determine whether price partitioning stimulates or hinders demand. Beyond its descriptive and prescriptive implications, this theory contributes to the emerging notion that pricing can transform, as well as capture, the utility of an offer.

Consumer behavior, pricing, price partitioning, attention, information processing, framing effects, multi-attribute utility

Abstract:
It's 2009 and Paul Williamson, Head of Ticketing, must finalize ticket prices for the 2012 London Olympic Games. Yet, there are many criteria to consider. First, given the importance of ticketing to the Games' bottom line, he has a strong incentive to maximize revenues. Second, because the entire world will be watching, he wants to maximize attendance - not just at the Opening Ceremony and swimming finals, which are easy sells, but also at events such as handball and table tennis, which are not. Third, he wants to fill seats with the right people - knowledgeable fans who add to the energy and atmosphere of the event. Finally, tickets had to be accessible not only to the world's elite but also to average Londoners, many of whom lived around the corner from the Olympic Park.