Title :
This paper is great! or achieving the optimal balance between investment in quality and investment in self-promotion
Author :
Clemons, Eric K.
Author_Institution :
Wharton Sch., Pennsylvania Univ., Philadelphia, PA, USA
Abstract :
When producers of goods (or services) are confronted by a situation in which their offerings no longer perfectly match consumer preferences, they must determine the extent to which the advertised features of the product reflect the product´s actual attributes. We find that the two important determinants of sellers´ advertising strategy are the Repeg cost ratio, R/sub p/, and the Repeat Sales Coefficient, R/sub s/. The interplay of these two factors give rise to four possible strategic scenarios. We show that sellers´ strategy is clearly explainable in three out of these four scenarios. In this ambiguous fourth scenario, we show that sellers´ strategy for information production goods will differ considerably from physical consumption and durable goods. Further, we show how network effects can play a significant role in determining sellers´ strategy in the case of some physical durable goods.
Keywords :
DP industry; advertising; cost-benefit analysis; information services; investment; retailing; R/sub p/; R/sub s/; Repeat Sales Coefficient; Repeg cost ratio; advertised features; advertising strategy; consumer preferences; durable goods; information production goods; network effects; optimal balance; physical consumption; producers; quality investment; self-promotion investment; seller strategy; strategic scenarios; Advertising; Cost function; Customer satisfaction; Database systems; Investments; Marketing and sales; Portfolios; Production;
Conference_Titel :
System Sciences, 2001. Proceedings of the 34th Annual Hawaii International Conference on
Conference_Location :
Maui, HI, USA
Print_ISBN :
0-7695-0981-9
DOI :
10.1109/HICSS.2001.927171