On Sales
Production Enjoyment Asymmetrically Impacts Buyers' Willingness to Pay and Sellers' Willingness to Charge
Anna Paley et al.
Journal of Marketing, forthcoming
Abstract:
With the rise of social media and the peer-to-peer economy, sellers can easily tell potential buyers about themselves and their process of producing products and services. This research investigates the influence of a central aspect of the production process that sellers can communicate-their production enjoyment. Buyers are willing to pay a higher price, are more likely to click on ads, and are more likely to choose a product or service when the seller signals that they enjoy producing it. In contrast, sellers are willing to accept lower prices, and actually charge less, for products and services they enjoy producing. Both buyers and sellers make the inference that production enjoyment leads to higher quality products/services, but only buyers rely on this inference when forming their pricing judgments relative to sellers. Nine studies illustrate these effects across a wide variety of products and services, participant samples, and operationalizations of production enjoyment. They show that signals of production enjoyment can influence buyers more than other established signals (e.g., effort) and demonstrate contexts where these effects are more and less likely to occur. These findings offer practical recommendations for both buyers and sellers as well as a variety of theoretical contributions.
Fast-food stores with a drive-through recovered post-pandemic; Stores without did not
Partha Sarathi Mishra, Sunil Chopra & Ioannis Stamatopoulos
Northwestern University Working Paper, April 2024
Abstract:
We document a profound, permanent change in the US fast-food consumer demand after the COVID-19 pandemic. In short, after a big pandemic slump, visits to drive-through stores almost recovered to pre-pandemic levels, but visits to non-drive-through stores stayed permanently suppressed. We use store-visit data between 2018 and 2022 from McDonald's, Starbucks, and Dunkin' Donuts, accounting for about 10% of all US fast-food stores. Comparing December 2019 to December 2022, average monthly visits to drive-through stores changed by a moderate -4.43% (CI: [ -6.46%, -2.40%]). Meanwhile, non-drive-through-store visits changed by a massive -48.14% post-pandemic (CI:[-52.33%, -44.17%]). Consistent with drive-through usage being the operating mechanism, this differential recovery pattern was driven by a 9.36% increase in short-duration visits at drive-through stores (CI: [ 7.15%, 11.55%]). These results' magnitudes survive a more thorough difference-in-difference analysis as well as matching on store observables, and their statistical significance survives placebo inference. For perspective, the effects we document are analogous to a migration of 25% of all Starbucks' customers and 50% of its total revenue from non-drive-through stores to drive-through stores.
Attention Spillovers from News to Ads: Evidence from an Eye-Tracking Experiment
Andrey Simonov, Tommaso Valletti & Andre Veiga
Journal of Marketing Research, forthcoming
Abstract:
The authors investigate the impact of online news content on the effectiveness of display advertising. In a randomized online experiment, participants read news articles randomly paired with brand advertisements. Leveraging non-intrusive eye-tracking technology, the authors measure individual attention to both articles and ads. The authors then measure ad recall, and participants make choices between cash and brand-specific vouchers. Heightened attention to articles results in "spillover" attention to ads on the same page which, in turn, increases both brand recall and purchase probability. The authors also consider the effect of news content type, differentiating between "hard" and "soft" news. They find that advertising next to hard news is at least as effective as advertising next to soft news. This provides evidence against the blunt implementation of "block lists" for sensitive news topics by advertisers. The authors discuss the implications of attention spillovers for firms contemplating investments in engaging news content within the digital advertising landscape.
High-Status Teammates: Award Evaluation in the National Basketball Association
Dominika Kinga Randle & Letian Zhang
Organization Science, forthcoming
Abstract:
Social evaluations proceed in stages. First, judges filter a broad pool of candidates and pick a subset for detailed assessment. Then, the chosen group undergoes a closer examination, during which winners are selected. At both stages of the process, judges are susceptible to bias. Bias is especially commonplace when contenders work in teams because each team member's merit can be hard to distinguish from that of others. Our paper investigates evaluation bias originating in intrateam status asymmetries. Using the National Basketball Association's data, we explore how high-status teammates are associated with their colleagues' chances of winning awards. We find that bias stemming from high-status teammates' presence is beneficial to their colleagues in the first stage of evaluations because high-status actors increase their team members 'visibility to judges. However, our results also show that in the second stage of evaluations, the presence of high-status teammates could decrease their colleagues' chances of winning awards because lower-status actors might seem less worthy of awards when evaluated alongside high-status individuals.
Does Corporate Social Responsibility Always Result in More Ethical Decision-Making? Evidence from Product Recall Remediation
Alfred Liu et al.
Journal of Business Ethics, May 2024, Pages 443-463
Abstract:
Recent research suggests that committing to corporate social responsibility (CSR) can induce moral licensing among employees, resulting in unethical behaviors. We extend this line of research and develop a theoretical framework to study how CSR influences managerial decision-making in crisis management. We test this theory in the context of product recall remediation. We examine under what circumstances CSR induces morally consistent or morally dubious recall remedial decisions and factors moderating this effect. We focus on two product recall remedial decisions that differ in ambiguity -- full versus partial compensation and proactive versus passive recall. We predict and show that a company's strong prior CSR performance increases the likelihood of full compensation but decreases the likelihood of a proactive recall. This finding suggests that CSR can induce moral licensing behavior at the highest corporate level when a decision is morally difficult to diagnose. Further analysis reveals that consumer harm and institutional ownership moderate the relationship between CSR and these two remediation strategies. Together, our findings provide important insights into when CSR leads to moral licensing in crisis remediation and how the link can be mitigated, and thus shed light on when CSR yields consistent and meaningful ethical business decisions.
Marketing, Other Intangibles, and Output Growth in 61 United States Industries
Leo Sveikauskas et al.
Review of Income and Wealth, forthcoming
Abstract:
Experts in the System of National Accounts (SNA) recently considered whether marketing could be included as a capital asset in the national accounts and later recommended that marketing should be an intangible in the 2025 SNA (IMF, 2022, 2023). This paper prepares macroeconomic measures of the United States marketing stock and develops similar measures within 61 industries. We find that, from 1987 to 2020, marketing capital contributed approximately as much to output growth (0.18 percentage point per year) as R&D (0.15) or software (0.19) did. Software grew more rapidly, but marketing had a larger factor share. Marketing contributes even more to output growth if quality is adjusted to allow for the better targeting associated with digital advertising. There is a close relationship between data flows, software, and digital marketing and national accountants will have to allocate expenditures among these categories.
Target Firm Advertising and Firm Value
Eliezer Fich, Laura Starks & Anh Tran
Management Science, forthcoming
Abstract:
Consistent with hypotheses underlying firm advertising, we find that targets with pretakeover advertising obtain higher premiums, whereas their acquirers earn lower announcement returns. These economically significant effects suggest that through advertising, targets increase their profile and negotiating power. Further, targets that advertise are more likely to initiate their takeovers, attract multiple bidders, receive enhanced bids, capture more merger rents, and even in failed acquisitions, experience a 1% permanent revaluation. The latter result differentiates between information asymmetry and behavioral explanations for the target advertising. Overall, the results support the hypothesis that management advertises to transmit information to investors and potential acquirers.