Published by De Gruyter

Volume 1 Issue 1

January 2003

Issue of Review of Marketing Science

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Contents
Journal Overview

Article

August 7, 2003

The Economic Viability of Frequency Reward Programs in a Strategic Competitive Environment

Praveen K Kopalle, Scott A Neslin

Article number: 0000102202154656161002

Abstract

We examine the conditions that enhance the economic viability of frequency reward programs in a strategic competitive environment. We focus particularly on conditions related to consumer behavior, namely the extent to which consumers value the future benefits offered by the reward, the expandability of the category, and consumers preferences for competing brands. Consumers maximize utility over a long-term time horizon, taking into account the value of the reward. Two firms maximize profits over a long-term time horizon. They first decide between implementing a frequency reward program or a traditional pricing policy (a constant price), and then decide on the specific prices. We numerically solve for the sub-game perfect equilibrium for this two-stage game. We find that a brand is more likely to find reward programs to be viable strategies if consumers value future benefits, if reward programs can expand the market, and if the brand has a higher preference. The market expandability finding is particularly interesting. If the sales increases generated by reward programs represent category growth, the power of frequency reward programs makes them an effective vehicle for generating profits. However, if gains come mainly from competitors, the power of frequency reward programs precipitates a strong competitive response that erodes profits in a classic prisoners dilemma. We use the airline industry to explore our market expandability finding. We find evidence that the major airlines introduced reward programs to counter-act a stronger outside category (new entrants), and in doing so, they expanded their market.

August 7, 2003

Measuring National Brands' Equity over Store Brands

Raj Sethuraman

Article number: 0000102202154656161000

Abstract

In this paper, we provide an approach to measuring the overall brand equity of national brands based on customers reservation price differential and perceived quality differential between national brand and store brand. Our approach draws upon a utility framework and develops an econometric model for measuring national brands equity over store brand and decomposing it into Quality Equity and Non-Quality Equity.. We then employ the approach and estimate brand equity using data on 20 product categories from 132 consumers and explore some demographic and category antecedents. Our research offers several useful insights. First, it suggests that brand equity is a dominant component of consumers willingness to pay a premium for national brands than for store brands. In fact, nearly 80% of the premium that consumers would pay for national brands over store brands can be attributed to brand equity. Second, a significant portion (over 80%) of national brand equity comes from non-quality equity or brand image. Finally, our study identifies several category and consumer characteristics such as advertising, purchase price, income, and age that are significant antecedents of brand equity. The managerial implications of these findings for both national brand manufacturers and retailers are discussed.

August 7, 2003

Competitive Entry and Pricing Responses to Product Innovation

Barry Bayus, Pradeep Chintagunta

Article number: 0000102202154656161001

Abstract

In this paper, we study competitive response to a product innovation. We consider the dynamic interaction between a Defender (a firm with a first generation product) and an Attacker (a firm with a second generation product). The second generation product entry decision of the Defender, as well as the pricing decisions of both firms, are analyzed. Analytical results are derived by developing a 3-period pricing game, and studying closed-loop policies for a Nash equilibrium. These results allow us to identify strategies in which the Attacker can prevent (or delay) a competitive response by the Defender. Some empirical support for our analytical results is also provided by pricing data and information on the timing of successive product generation introductions in the semiconductor and personal computer industries.

About this journal

Objective

The Review of Marketing Science (ROMS) is a peer-reviewed journal whose mission is wide and rapid dissemination of cutting-edge quantitative research in marketing science and related disciplines.The journal’s focus is on topics and approaches in marketing science. Marketing science as a discipline places high value on approaches rooted in mathematics, economic theory, econometrics, statistics, and data-driven approaches.

The journal particularly encourages interdisciplinary and cross-disciplinary work from diverse fields, as long as they are related to marketing science and generate insights that can be useful to marketing academics, managers or practitioners.

ROMS emphasizes substantive results that stimulate other researchers as they pursue their work. ROMS is especially interested in papers that are on topics that are under-represented in marketing and economics journals, topics and methods that might be considered controversial or too cutting-edge for other outlets, papers that report early but potentially underdeveloped results of substantial and time-sensitive nature, and papers that offer a broad overview of new and innovative topics or approaches that do not as of yet have an established base in the literature.

The journal values two-directional rapid feedback between the editors and authors. While the review process is strictly double-blind, authors are encouraged to contact the journal, through the journal’s email link, with questions regarding fit of papers and topics to the journal, questions seeking guidance, and communication pertaining to substance and methodology of technical nature. Young researchers will find a sympathetic hands-on non-adversarial editorial team that is deeply committed to their research objectives and success. Serious research will be met with sympathetic and helpful guidance.

Senior researchers should view this journal as a community platform to promote under-represented research topics and approaches of substantial promise. Specifically, the journal strongly encourages proposals by senior researchers in marketing, social sciences, behavioral disciplines, and business disciplines for special issues, as well as workshops, symposia, or special sessions that would yield a crop of related peer-reviewed papers on topics of importance.

Practitioners with cutting edge quantitative approaches, who have been finding academic publications to be impenetrable, will find an eager editorial team that will provide guidance and assistance in making substantial methodological contributions suitable for academic readership.

Topics

Marketing Science
Marketing Management
Economics
Statistics
Quantitative Consumer Research
Behavioral Marketing and Economics Research
Experimental Marketing and Economics Research

Article formats
Original research papers, special issues

Information on Submission Process