Download or read book Heterogeneous consumer preferences for product quality and uncertainty written by Wolfgang Maennig and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Consumer Heterogeneity Uncertainty and Product Policies written by Song Lin and published by . This book was released on 2015 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays on the implications of consumer heterogeneity and uncertainty for firms' strategies. The first essay analyzes how firms should develop add-on policies when consumers have heterogeneous tastes and firms are vertically differentiated. The theory provides an explanation for the seemingly counter-intuitive phenomenon that higher-end hotels are more likely than lower-end hotels to charge for Internet service, and predicts that selling an add-on as optional intensifies competition, in sharp contrast to standard conclusions found in the literature. The second essay examines how firms should develop product and pricing policies when customer reviews provide informative feedback about improving product or service quality. The analysis provides an alternative view of customer reviews such that they not only can help consumers learn about product quality, but also can help firms learn about problems with their products or services. The third essay studies the implications of cognitive simplicity for consumer learning problems. We explore one viable decision heuristic - index strategies, and demonstrate that they are intuitive, tractable, and plausible. Index strategies are much simpler for consumers to use but provide close-to-optimal utility. They also avoid exponential growth in computational complexity, enabling researchers to study learning models in more-complex situations.

Download or read book Quality Differentiation and Heterogeneous Consumer Preferences written by Daniel Toro González and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three independent but related papers. All of them are devoted to estimate demand functions in presence of unobservable product attributes, such as quality, using different identification strategies. The first two exercises are based on a discrete choice model using the product-market approach developed by Berry (1994) with aggregate data information for gum and beer consumption. The third paper uses a control function approach as an identification strategy in order to estimate the choice model using disaggregated (micro level) data on household choices. These exercises reveal the importance of controlling for price endogeneity due to the existence of unobservable product attributes incorporating substantial bias in the coefficients when ignored.

Download or read book Preference Heterogeneity and Willingness To Pay for Organic Food Products in Germany written by Rebecca Illichmann and published by Cuvillier Verlag. This book was released on 2014-03-07 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the last decade, the market for organic food products in Germany has grown steadily, as consumers become increasingly aware of credence characteristics of food products. The primary goal of this study is to integrate psychometric data into a choice experiment to examine preference heterogeneity among consumers and their willingness-to-pay for organic products. In particular, the role of trust and gender are considered in analysing both preferences and willingness-to-pay for organic products. The results of the mixed logit models reveal significant heterogeneity in preferences among consumers for the products examined. The second focus of this study is the effect of starting point bias on the willingness-to-pay estimates obtained. The use of different prices in the first choice set results in different distributions of choices and significantly different preferences and willingness-to-pay estimates in two otherwise identical choice set designs. The results of the latent class models indicate that consumers’ trust perceptions tend to significantly influence their preferences for organic food products. The findings of this study indicate that some consumer groups are willing to pay high price premiums for specific organic food products and, to some extent, for locally produced food. As there is consumer segmentation based on varying levels of trust and due to the heterogeneous preferences of the consumers, organic food marketing should increase its use of suitable communication strategies concerning quality attributes.

Download or read book Economics of Customer and Provider Information in Digital Platforms written by Murat Tunc and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the strategic implications of rating schemes in online marketplaces and peerto-peer platforms. In traditional online marketplaces, multi-dimensional rating scheme is superior to the single-dimensional rating scheme in reducing consumers’ uncertainty about the value of a product when consumers have heterogeneous preferences regarding the product quality attributes. However, we show that, when sellers respond to product ratings by adjusting their prices, the multi-dimensional rating scheme does not always benefit consumers. The main driver of the results is that the multi-dimensional ratings amplify the consumers’ perceptions of any underlying differentiation in the attributes of competing products, while simultaneously exposing the similarity between the products if they are homogeneous. Therefore, the rating scheme alters the heterogeneity in consumer perceptions and utility, which, in turn, affects the upstream price competition. In peerto-peer markets, many platforms use a bilateral review scheme in which both consumers and providers rate each other, unlike the more prevalent unilateral review scheme in which only consumers rate providers. We show that if the proportion of the low-cost consumers is less than a threshold, consumers are better off, the platform is worse off, and the providers are worse off under the bilateral review scheme than the unilateral review scheme. The key driver for these results is that the price competition between providers for the low-cost consumers can be fundamentally different under the different review schemes; the price competition affects the consumer preference for a provider and hence the match between consumers and providers, which ultimately determines the payoffs to participants and the social welfare. Our findings also contribute to the adverse selection literature by identifying the critical role played by demand and supply conditions on the impact of adverse selection

Download or read book Three Essays on Consumer Behavior Under Uncertainty written by Koichi Yonezawa and published by . This book was released on 2014 with total page 191 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is well understood that decisions made under uncertainty differ from those made without risk in important and significant ways. Yet, there is very little research into how uncertainty manifests itself in the most ubiquitous of decision-making environments: Consumers' day-to-day decisions over where to shop, and what to buy for their daily grocery needs. Facing a choice between stores that either offer relatively stable "everyday low prices" (EDLP) or variable prices that reflect aggressive promotion strategies (HILO), consumers have to choose stores under price-uncertainty. I find that consumers' attitudes toward risk are critically important in determining store-choice, and that heterogeneity in risk attitudes explains the co-existence of EDLP and HILO stores - an equilibrium that was previously explained in somewhat unsatisfying ways. After choosing a store, consumers face another source of risk. While knowing the quality or taste of established brands, consumers have very little information about new products. Consequently, consumers tend to choose smaller package sizes for new products, which limits their exposure to the risk that the product does not meet their prior expectations. While the observation that consumers purchase small amounts of new products is not new, I show how this practice is fully consistent with optimal purchase decision-making by utility-maximizing consumers. I then use this insight to explain how manufacturers of consumer packaged goods (CPGs) respond to higher production costs. Because consumers base their purchase decisions in part on package size, manufacturers can use package size as a competitive tool in order to raise margins in the face of higher production costs. While others have argued that manufacturers reduce package sizes as a means of raising unit-prices (prices per unit of volume) in a hidden way, I show that the more important effect is a competitive one: Changes in package size can soften price competition, so manufacturers need not rely on fooling consumers in order to pass-through cost increases through changes in package size. The broader implications of consumer behavior under risk are dramatic. First, risk perceptions affect consumers' store choice and product choice patterns in ways that can be exploited by both retailers and manufacturers. Second, strategic considerations prevent manufacturers from manipulating package size in ways that seem designed to trick consumers. Third, many services are also offered as packages, and also involve uncertainty, so the effects identified here are likely to be pervasive throughout the consumer economy.

Download or read book Consumption Flexibility Product Configuration and Market Competition written by Liang Guo and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: When purchase and consumption decisions are separated in time and when future utility is state dependent, consumers may desire to pursue consumption flexibility by purchasing different products together (multiple buying). This paper analyzes the effects of consumption flexibility on competing firms' marketing mix decisions, in a model in which future preference uncertainty exists and consumers differ in their preferred product location on a horizontal attribute. The analysis shows that the nature of price competition in such markets is dependent upon whether consumer multiple buying (and thus primary demand) is endogenously induced. When preference uncertainty is important, the firms are involved in a flexibility trap in which primary demand is expanded but profits decrease with the spread of consumer heterogeneity. This counter-intuitive result is caused by the firms being induced to over-cut prices to increase primary demand when consumption flexibility is important. In response to this, the firms may configure their products to alleviate the adverse effect of consumer heterogeneity. For example, if preference uncertainty is important, the firms may choose to minimize differentiation on the horizontal attribute, or extend the current product line, to deal with the flexibility trap. The implications of allowing for positive salvage value, uncertainty heterogeneity, preference correlation, and state-dependent preference configuration are also investigated.

Download or read book Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics written by Patrick Bajari and published by . This book was released on 2001 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the identification and estimation of preferences in hedonic discrete choice models of demand for differentiated products. In the hedonic discrete choice model, products are represented as a finite dimensional bundle of characteristics, and consumers maximize utility subject to a budget constraint. Our hedonic model also incorporates product characteristics that are observed by consumers but not by the economist. We demonstrate that, unlike the case where all product characteristics are observed, it is not in general possible to uniquely recover consumer preferences from data on a consumer's choices. However, we provide several sets of assumptions under which preferences can be recovered uniquely, that we think may be satisfied in many applications. Our identification and estimation strategy is a two stage approach in the spirit of Rosen (1974). In the first stage, we show under some weak conditions that price data can be used to nonparametrically recover the unobserved product characteristics and the hedonic pricing function. In the second stage, we show under some weak conditions that if the product space is continuous and the functional form of utility is known, then there exists an inversion between a consumer's choices and her preference parameters. If the product space is discrete, we propose a Gibbs sampling algorithm to simulate the population distribution of consumers' taste coefficients.

Download or read book Online Product Reviews written by Murat M. Tunc and published by . This book was released on 2019 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Product review platforms in online marketplaces differ with respect to the granularity of product quality information they provide. While some platforms provide a coarse single overall rating for product quality (also referred to as single-dimensional rating scheme), others provide a more granular rating - a separate rating for each individual quality attribute (also referred to as multi-dimensional rating scheme). A multi-dimensional rating scheme is superior to a single-dimensional rating scheme, ceteris paribus, in reducing consumers' uncertainty about product quality and value. However, we show that, when sellers respond to product ratings by adjusting their prices, compared to the single-dimensional rating scheme, the multi-dimensional rating scheme does not always benefit consumers, nor does it necessarily benefit the sellers or the society. The uncertainty associated with quality attribute rating and the extent of differentiation between competing products determine whether a fine-grained multi-dimensional rating scheme is superior to the coarse-grained single-dimensional rating scheme from the consumers', sellers' or a social planner's perspective. The main driver of the results is that the more (less) granular and less (more) uncertain information exposes (hides) underlying differentiation, or lack of it, between competing products, which, in turn, alters the upstream price competition in the presence of heterogeneous consumer preferences. The results demonstrate that focusing on the information transfer aspect of rating schemes provides only a partial understanding of the true impact of rating schemes.

Download or read book Intertemporal Pricing Supply Chain Design and Consumer Behavior written by Wenbo Cai and published by . This book was released on 2012 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation explores the interaction between consumer behaviors and the design, pricing and management of products and services. The dissertation is comprised of four chapters. The first chapter studies how a seller's pricing strategy can be affected by behaviors of non-fully rational consumers. These consumers are dynamically inconsistent and exhibit probabilistic decision making behaviors, which have been documented in experimental studies in economics and marketing literature. I show that consumers' dynamic inconsistency can explain why flexible pricing plans are offered by service providers. Moreover, when fully rational consumers and non-fully rational consumers co-exist, a single pricing scheme is optimal. Such a result complements existing literature in mechanism design, as classic models suggest the seller should use a menu of pricing plans to differentiate the consumers. Numerical results are provided to demonstrate that the same result hold when both types of consumers non-fully rational and under mild conditions. The second chapter examines how a seller should design the prices and qualities of products sold through his direct and indirect channels. I show that under the revenue sharing scheme, the seller's optimal design depends on consumers' sensitivities to price and quality. If the consumers are sufficiently sensitive, the seller should provide the product exclusively in the direct channel. If the consumers are sufficiently insensitive, the seller is better off providing a high quality product at a premium price in the direct channel while offering a low quality product in the indirect channel. Such quality differentiation can be eliminated in a profit sharing scheme. I also demonstrate that even when consumers are heterogeneous with privately observed sensitivities, offering a menu to induce self-selection may not be optimal for the seller's profit. In the third chapter, I use a two-period model to show that demand uncertainty can be the sole driver for the common practice of intertemporal pricing in the travel industry. Moreover, both increasing and decreasing pricing patterns can emerge as optimal strategies. I also identify the intrinsic incentive for service providers to deliberately create capacity shortage to induce early purchases. In the extended model, new arrivals are permitted in the second period enhance the competition. Contrary to intuition, the service provider's expected profit is hurt since the additional arrival exacerbates his price commitment issue and results consumers strategically delay their purchases. The last chapter investigates the effect of consumers' limited knowledge of products on their purchasing behavior. Though online retailers put intense effort in improving web functionalities over the years, some product attributes (product quality, user friendliness, fit to consumers' taste) cannot be communicated using the internet and must be examined physically by the consumers. Thus, their product valuations are not fully revealed until after they make the purchase. I show that when consumers are subject to both valuation uncertainty and future price uncertainty, their purchasing decisions are largely influenced by the return policies. A generous refund policy induces high-valued consumers to purchase early. However, it also invites some consumers to wait for the returns. This suggests that capacity rationing can be dampened. On the other hand, since neither the seller nor consumers can predict how many products will be returned, allowing consumer returns strengthens the seller's credibility in not committing to pre-announced prices. This implies that the additional source of valuation uncertainty can be desirable for the seller when dealing with forward-looking consumers. A rationale for retailers do not actively engage in recertifying or remanufacturing returned products is also provided: when returns are perceived as low-quality products, the retailers can facilitate market segmentation without creating new product lines.

Download or read book Channel Strategies and Marketing Mix in a Connected World written by Saibal Ray and published by Springer Nature. This book was released on 2019-12-14 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book aims to revisit the “traditional” interaction between channel strategies and the marketing mix in a connected world. In particular, it focuses on the following four dimensions in this context: Consumers, Products, Value Proposition and Sustainability. Keeping in mind the growing digitalization of business processes in the retail world and the move towards omni-channel retailing, the book introduces the state-of-the-art academic and practitioner studies along these dimensions that could enhance the understanding of the potential impact that new technologies and strategies can have on practice in the near future. When launching a new product/service to market, firms usually consider various components of the marketing mix to influence consumers’ purchase behaviors, such as product design, convenience, value proposition, promotions, sustainability initiatives, etc. This mix varies depending on the specific channel and consumer niche that the firm is targeting. But this book shows how channel strategy also influences the effectiveness in utilizing the marketing mix to attract potential customers.

Download or read book Heterogeneous Consumption Experience written by Juin K. Chong and published by . This book was released on 1998 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Handbook of Cultural Economics Third Edition written by Ruth Towse and published by Edward Elgar Publishing. This book was released on 2020-03-28 with total page 552 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cultural economics has become well established as a subject of interest for students and teachers of courses ranging from economics to arts administration as well as for policy-makers and practitioners in the creative industries. Digitisation has had a tremendous impact on many areas of the creative economy and the third edition of this popular book fully reflects it.

Download or read book Consumer Preferences for Differentiated Food Products written by Vugar Ahmadov and published by . This book was released on 2008 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Consumer Preferences and Acceptance of Food Products written by Derek V. Byrne and published by MDPI. This book was released on 2020-12-01 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt: The acceptance and preference of the sensory properties of foods are among the most important criteria determining food choice. Sensory perception and our response to food products, and finally food choice itself, are affected by a myriad of intrinsic and extrinsic factors. The pressing question is, how do these factors specifically affect our acceptance and preference for foods, both in and of themselves, and in combination in various contexts, both fundamental and applied? In addition, which factors overall play the largest role in how we perceive and behave towards food in daily life? Finally, how can these factors be utilized to affect our preferences and final acceptance of real food and food products from industrial production and beyond for healthier eating? A closer look at trends in research showcasing the influence that these factors and our senses have on our perception and affective response to food products and our food choices is timely. Thus, in this Special Issue collection “Consumer Preferences and Acceptance of Food Products”, we bring together articles which encompass the wide scope of multidisciplinary research in the space related to the determination of key factors involved linked to fundamental interactions, cross-modal effects in different contexts and eating scenarios, as well as studies that utilize unique study design approaches and methodologies.

Download or read book Quality of Mass Goods and the Problem of the Representative Consumer written by Mariano Moszoro and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most economic models assume the existence of a representative consumer with mean preferences, which is an obvious simplification. Consumers unveil their heterogeneous preferences through continual choices over goods and their characteristics. However, there is a limit to product segmentation: marketing costs and production costs related to diseconomies of scale. Moreover, mass goods must yield the same quality for the same price for a large number of consumers in a given market. Therefore, the key is to know the consumers' preferences to properly address the product mix. This article explores what quality is from the economic point of view and how difficult it is to set the appropriate quality-price bundle. One can think of voting over plausible outcomes of quality and price. However, if there are three or more consumers with different preferences over two or more variables, stable equilibrium may be impossible to achieve (impossibility theorem), since there will always be a majority in favor of change (paradox of voting). A viable solution to approach the optimum product mix can be the use of interactive methods for multi-criteria optimization.

Download or read book The Dark Side of Innovation written by Alex Coad and published by Routledge. This book was released on 2022-02-24 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a reaction to popular assumptions that innovation is always a force for good. While the popular press and politicians often take the view that "the more innovation, the better", the chapters in this edited volume reflect on the harmful effects of innovation on society and the environment. The book begins with a broad discussion of the dark side of innovation, followed by contributions by various experts in the area. It is a critical reply to the innovation optimists, complementing the list of indicators that show steady human progress with a list of indicators that show sustained deterioration (largely due to innovation). The volume outlines some relevant dimensions of harmful innovation, before distinguishing between the types of harm brought on by innovation. The various contributed chapters focus on the following themes: a bibliometric analysis of the scientific literature on the harmful consequences of innovation; harmful side-effects from solar photovoltaic waste; harmful consequences of process innovations on working practices in areas such as accountancy; the difficulties of transferring innovations from research to practice in clinical healthcare; and the harmful consequences of social innovations. The chapters in this book were originally published as a special issue of the journal Industry and Innovation.