The authors document that approximately 5% of product reviews on a large private label retailer's website are submitted by customers with no record ever purchasing the they reviewing. These significantly more negative than other reviews. They also less likely to contain expressions describing fit or feel items and linguistic cues associated deception. More 12,000 firm's best have written without confirmed transactions. On average, these each made 150 purchases from firm. This makes it...

When a firm allows the return of previously purchased merchandise, it provides customers with an option that has measurable value. Whereas to merchandise leads increase in gross revenue, also creates additional costs. Selecting optimal policy requires balancing both demand and cost implications. In this paper, we develop structural model consumer's decision purchase item nests extant choice models as special case. The enables measure value consumers balance costs benefits different policies....

There is now an extensive theoretical literature investigating optimal inventory policies for retailers. Yet several recent reviews have recognized that these models are rarely applied in practice. One explanation the paucity of practical applications difficulty measuring how stockouts affect both current and future demand. In this paper, we report findings a large-scale field test measures short- long-run opportunity cost stockout. The confirm adverse impact stockout extends to other items...

We use the results of three large-scale field experiments to investigate how depth a current price promotion affects future purchasing first-time and established customers. While most previous studies have focused on packaged goods sold in grocery stores, we consider durable through direct mail catalog. The findings reveal different effects for Deeper discounts period increased purchases by customers (a positive long-run effect) but reduced negative effect). Overall, show evidence several...

Managers often state that they are reluctant to vary prices for fear of "antagonizing customers." However, there is no empirical evidence antagonizing customers through price adjustments reduces demand or profits. We use a 28-month randomized field experiment involving over 50,000 investigate how react if buy product and later observe the same retailer selling it less. find by making fewer subsequent purchases from firm. The effect largest among firm's most valuable customers: those whose...

Standard models of competition predict that firms will sell less when competitors target their customers with advertising. This is particularly true in mature markets many relatively undifferentiated products. However, the authors present findings from a large-scale randomized field experiment contrast sharply this prediction. The measures impact competitors' advertising on sales at private label apparel retailer. Surprisingly, for substantial segment customers, advertisements increased...

We analyze a large-scale field test conducted with mail-order catalog firm to investigate how customers react premium prices for larger sizes of women's apparel. find that who demand large unfavorably paying higher price than small sizes. Further investigation suggests these consumers perceive the is unfair. Overall, pricing led 6% 8% decrease in gross profits.

We consider a general model of monopoly price discrimination and characterize the conditions under which is not profitable. show that an important condition for profitable percentage change in surplus (i.e., consumers' total willingness to pay, less firm's costs) associated with product upgrade increasing pay. refer this as differences relate it many known results marketing, economics, operations management literatures.

When a multichannel retailer opens its first retail store in state, the firm is obligated to collect sales taxes on all Internet and catalog orders shipped that state. This article assesses how opening affects demand. The authors analyze purchase behavior among customers who live far from but must now pay purchases. A comparable group of neighboring state serves as control. results show decrease significantly, are unaffected. Further investigation indicates difference these outcomes partly...

A leading explanation in the economic literature is that monetary policy has real effects on economy because firms incur a cost when changing prices. Using unique database of and retail price changes, we find variation menu costs results up to 13.3% fewer increases. We confirm these are allocative have persistent impact both prices unit sales. provide evidence channel operates only increases small magnitude, which consistent with theory provides first empirical boundary conditions.

Marketers often stress the importance of treating customers as partners. A fundamental premise this perspective is that all parties can be weakly better off if they work together to increase joint surplus and reach Pareto-efficient agreements. For marketing managers, implies organizing activities in a manner maximizes total surplus. This logic theoretically sound when agreements between partners are limitless costless. In most consumer contexts (business-to-consumer), typically not true. The...

Many consumers across the world struggle to gain access credit because of their lack scores. This paper explores potential a new alternative data source, grocery transaction data, for evaluating consumers’ creditworthiness. Our analysis takes advantage unique, individual-level match card and supermarket loyalty data. By developing scoring algorithms that either exclude or include we illustrate both incremental value decisions its boundary conditions. We demonstrate signals from can improve...

Sale signs increase demand. The apparent effectiveness of this simple strategy is surprising; sale are inexpensive to produce and stores generally make no commitment when using them. As a result, they can be placed on any products, as many prefer. If place or all their why effective? We offer an explanation for the by arguing that inform customers about which products have relatively low prices, thus helping decide whether purchase now, visit another store, perhaps return same store in...

We use a controlled field experiment to investigate the dynamic effects of retail advertising. The experimental design overcomes limitations hindering previous investigations this issue. Our study uncovers advertising that have not been considered in literature. find current does affect future sales, but surprisingly, effect is always positive; for firm’s best customers, long‐run outcome may be negative. This finding reflects two competing effects: brand switching and intertemporal...

Packaged goods manufacturers spend in excess of $75 billion annually on trade promotions, even though their effectiveness has been hotly debated by academics and practitioners for decades. One reason this ongoing debate is that empirical research limited mostly to case studies, managerial surveys, data from one or two supermarket chains a single market. In paper, we assemble unique set containing information prices, quantities, promotions throughout the entire channel category. Our study...

Previous academic research on the expansion of dominant retailers such as Wal-Mart has examined implications for incumbent retailers, consumers, and local community. Little is known, however, about Wal-Mart's influence suppliers' performance. Manufacturers suggest that uses its power to squeeze their profits. In this article, authors study validity claim. They investigate underlying mechanisms may cause changes in manufacturer profits following market entry. The data contain information...

We study the pass-through of wholesale price changes onto regular retail prices using an unusually detailed data set obtained from a major retailer. model as two-stage decision process that reflects both whether well how much to change price. show is strongly asymmetric with respect increases versus decreases. Wholesale are passed through 70% time while decreases only 9% time. Pass-through also magnitude change, affecting response but not Finally, we covariates such private label national...

We analyze data from a variety of sources, including historical women's clothing catalog, field study in that survey responses to catalog stimuli, and grocery store for frozen juice, toothpaste, tuna. The analysis yields three conclusions. First, sale signs are less effective at increasing demand when more items have them. Second, total category sales maximized some but not all products signs. Third, placing sign on product reduces the perceived likelihood will be available lower price...

The term `stakeholder' has become ubiquitous. By almost any definition, employees are stakeholders in the firm. But what implications for to be classified as stakeholders? expression carries a connotation of social responsibility; however, identification persons remains controversial. This paper addresses significant labelling employed which have not been fully explored extant literature: homogenising and unifying employee interests; construction their roles; undermining employment...

In this article, the authors use an economic model to show that it may be optimal lower retail price during a coupon event when marginal consumers have moderate hassle costs of redemption. Results from offer predictions on relationships among redemptions, shelf price, and face value. The test these large data set hundreds events across six packaged goods categories. small value is offered, likely reduced. They also find efficiency increases there price. results are interest managers planning...