Modeling Within- and Across-Customer Association in Lifetime Value with Copulas

Recent advances in linking Recency-Frequency-Monetary value (RFM) data to Customer Lifetime Value (CLV) in non-contractual settings rely on the assumption of independence between the transaction and spend processes. We propose to model jointly the inter- and intra-customer dependency between both processes using copulas, hereby accounting for the double correlation within and across customers. Applied to a unique data set of securities' transactions, we nd that modeling both associations enhances the accuracy of CLV predictions, thus improving customer valuation and selection tasks.Association;Copula;Customer Lifetime Value;Across and Within Customers

Assessing Value in Product Networks

Traditionally, the value of a product has been assessed according to the direct revenues the product creates. However, products do not exist in isolation but rather influence one another's sales. Such influence is especially evident in eCommerce environments, where products are often presented as a collection of webpages linked by recommendation hyperlinks, creating a largescale product network. Here we present the first attempt to use a systematic approach to estimate products' true value to a firm in such a product network. Our approach, which is in the spirit of the PageRank algorithm, uses easily available data from large-scale electronic commerce sites and separates a product’s value into its own intrinsic value, the value it receives from the network, and the value it contributes to the network. We apply this approach to data collected from Amazon.com and from BarnesAndNoble.com. Focusing on one domain of interest, we find that if products are evaluated according to their direct revenue alone, without taking their network value into account, the true value of the "long tail" of electronic commerce may be underestimated, whereas that of bestsellers might be overestimated1

Generalizations on consumer innovation adoption: A meta-analysis on the drivers of intention and behavior

http://hdl.handle.net/1871/3241

Essays on dynamic demand, pricing and investment

My dissertation develops and applies empirical structural models to study consumers’ dynamic adoption of durable goods, and firms’ dynamic research and development (R&D) investment and pricing strategies. In Chapter 2, I study consumer purchase dynamics for a new technology good, the digital single-lens-reflex (DSLR) camera, where consumer learning and switching costs across brands are present. Using a unique dataset that tracks individual DSLR camera ownership history, I find that low-end DSLR cameras are gateway products that most consumers buy initially. When some consumers choose to repurchase, they are more likely to buy high-end DSLR cameras from the same brand as the initial purchases. Combining individual camera ownership data with aggregate sales data, I develop and estimate a dynamic demand model that incorporates consumer learning and switching costs. The estimated demand model implies a dynamic complementary relationship between high- and low-end products that are produced by the same firm. In Chapter 3, I further empirically investigate the influence of consumer purchase dynamics on forward-looking firms’ pricing strategies. Supply-side simulations imply that firms have incentives to invest in their customer bases using low-end products and to harvest the resolved uncertainty of valuation and switching costs using high-end products. In Chapter 4, I explore the nature of uncertainty in innovation production through firms’ R&D investment. Utilizing a rich dataset that tracks Spanish manufacture firms’ R&D activities and innovation outcomes for up to 17 years, I build and estimate a dynamic model of firms’ R&D investment incorporates the uncertainties in innovation

Modeling the Dynamic Decision of a Contractual Adoption of a Continuous Innovation in B2B Market

A continuous service innovation such as Cloud Computing is highly attractive in the business-to-business world because it brings the service provider both billions of dollars in profits and superior competitive advantage. The success of such an innovation is strongly tied to a consumer’s adoption decision. When dealing with a continuous service innovation, the consumer’s decision process becomes complicated. Not only do consumers need to consider two different decisions of both whether to adopt and how long to adopt (contract length), but also the increasing trend of the service-related technological improvements invokes a forward-looking behavior in consumer’s decision process. Moreover, consumers have to balance the benefits and costs of adoption when evaluating decision alternatives. Consumer adoption decisions come with the desire to have the latest technology and the fear of the adopted technology becoming obsolete. Non-adoption prevents consumers from being locked-in by the service provider, but buying that technology may be costly. Being bound to a longer contract forfeits the opportunity to capitalize on the technological revolution. Frequently signing shorter contracts increases the non-physical efforts such as learning, training and negotiating costs. Targeting the right consumers at the right time with the right service offer in the business-to-business context requires an efficient strategy of sales resource allocation. This is a “mission impossible” for service providers if they do not know how consumers make decisions regarding service innovation. In order to guide the resource allocation decisions, we propose a complex model that integrates the structural, dynamic, and learning approaches to understand the consumer’s decision process on both whether or not to adopt, and how long to adopt a continuously updating service innovation in a B2B context

Assessing Value in Product Networks

Traditionally, the value of a product has been assessed according to the direct revenues the product creates. However, products do not exist in isolation but rather influence one another's sales. Such influence is especially evident in eCommerce environments, where products are often presented as a collection of webpages linked by recommendation hyperlinks, creating a largescale product network. Here we present the first attempt to use a systematic approach to estimate products' true value to a firm in such a product network. Our approach, which is in the spirit of the PageRank algorithm, uses easily available data from large-scale electronic commerce sites and separates a product’s value into its own intrinsic value, the value it receives from the network, and the value it contributes to the network. We apply this approach to data collected from Amazon.com and from BarnesAndNoble.com. Focusing on one domain of interest, we find that if products are evaluated according to their direct revenue alone, without taking their network value into account, the true value of the "long tail" of electronic commerce may be underestimated, whereas that of bestsellers might be overestimated1

인터넷 검색 대중화가 소비자 구매의사결정에 미치는 영향 분석

학위논문 (박사)-- 서울대학교 대학원 : 협동과정 기술경영·경제·정책전공, 2014. 2. 이종수.The purpose of this study is to examine the influence of the internet searches on consumer purchasing decisions for new products and services. To this end, this study considered the TV advertising effects on the consumer decision-making process in terms of awareness and preference, and then it examined the search query volume as the new consumer behavioral pattern. In this way, the study develops an integrated model to analyze various factors of the advertising effects. The proposed model analyze TV advertising sales effects along with changes in consumer behavioral patterns, specifically the consumer decision-making process, caused by exposure to TV advertising. Empirical analysis is conducted by three econometric methods. Two of them are the simultaneous equation model and path analysis. These methods address the endogeneity and causality relationship issues of various advertising measures. The other method is random utility model. This model deal with internet search query data as aggregate level of consumer demand. These models identify the major variables of the advertising effects in the consumer decision-making process. The estimation results proved that internet searches for product information influences purchase decisions, which marks a change in the consumer behavior pattern. Also, TV advertising and the search query volume are closely related. Examining each variables effectiveness has strategic implications to maximize the advertising effects in the consumer decision-making process. This study showed that changes in consumer behavioral patterns should be considered in measuring advertising effectiveness. This approach could be a step toward understanding Internet searches influence on consumers purchase decisions. Finally, this study could be used to formulate companies advertising strategies and government advertising regulations because consumers might base their purchasing decisions on Internet search results rather than TV advertisements.Abstract iv Contents vi List of Tables viii List of Figures x Chapter 1. Introduction 1 1.1 Research Background 1 1.2 Research Objectives 5 1.3 Research Framework 9 1.4 Outline of the Study 11 Chapter 2. Literature Reviews 12 2.1 Consumer Behavior in Decision Making Process 12 2.2 Advertising-Sales Response 25 2.3 Advertising and Consumer Behavior 37 2.4 Limitations of Previous Literatures and Significance of the Study 46 Chapter 3. Models 50 3.1 Measurement of the Advertisement Effects 52 3.2 Endogeneity and Causal-relationship in TV Advertising Effects with Sales 55 3.2.1 Simultaneous Equation Model 57 3.2.2 Structural Equation Model: Path Analysis 67 3.3 Behavioral Model for Aggregate Demand and Consumer Preference 79 3.4 Characteristic Comparison of Models 85 Chapter 4. Empirical Analysis 87 4.1 Data Description 87 4.2 Estimation Results and Empirical Findings 96 4.3 Behavioral Model for Aggregate Demand and Consumer Preference 108 Chapter 5. Conclusions 120 Bibliography 125 Appendix A: The Results of Stationary Test 133 Abstract (Korean) 141Docto

Investigating Consumer Purchase Behavior in Related Technology Product Categories

We present a framework of durable goods purchasing behavior in related technology product categories that incorporates the following aspects unique to technology product purchases. First, it accounts for consumers' anticipation of declining prices (or increasing quality) over time. Second, the durable nature of technology products implies that even if two categories are related as complements, consumers may stagger their purchases over several periods. Third, the forward-looking consumer decision process, as well as the durable nature of technology products, implies that a consumer's purchase in one category will depend on the anticipated price and quality trajectories of all categories. As a potential aid to future researchers, we also lay out the data requirements for empirically estimating the parameters of our model and the consequences of not having various elements of these data on our ability to estimate the parameters. The data available for our empirical analysis are household-level information on -level first-time decisions in three categories—personal computers, digital cameras, and printers. Our results reveal a strong complementary relationship between the three categories. Policy simulations based on a temporary price decrease in any one category provide interesting insights into how consumers would modify their adoption behavior over time and also across categories as a consequence of the price decrease.technology products, consumer adoption, complementary products, forward-looking consumers, econometric models

Essays on Complementary Products and Strategies

Complementary products contribute significantly to the growth and sustenance of primary products and platforms in many high technology product markets. Although different literatures have investigated issues related to complementary products, our understanding on this topic is limited. This dissertation aims to address some of the questions in the growing literature on complementary products. Following the literature review, the third chapter develops the conceptual underpinnings of product complementarity and examines commonly specified definitions to clarify the dimensions of product complementarity. The fourth chapter addresses the boundary question from the perspective of a primary product firm. The theoretical model identifies the antecedents of the internalization decision emphasizing the influence of type of product complementarity and key environmental contingences, viz., technological and market demand uncertainty. The fourth and fifth chapters of the thesis examine the role of type of complementarity in predicting the governance choices of 31 public businesses over a time frame of 26 years in the PC industry, a setting where complementary products have significantly influenced the competitive and technological landscape. The study findings reveal that type of complementarity along with environmental contingences influence a firm's choice of internalization, alliances or complementor make. Market demand uncertainty influences the choice of strategy towards complementary product for moderately increasing levels of uncertainty while technological uncertainty predicts the governance choices for both low and moderately increasing levels of uncertainty. In addition, in accordance with emerging literature in the Transaction Cost Economics logic (Leiblein & Miller, 2002; Jacobides, 2005) the findings highlight the role of firm capabilities. The dissertation attempts to contribute to the strategy literature by explicating the importance of nature of complementary products, so far not addressed in traditional TCE work.Ph.D., Business Administration -- Drexel University, 201

Disseny d'un model d'avaluació de resultats de l'activitat de màrqueting per a empreses competint al mercat català i amb relació contractual amb els seus clients

L’objectiu de la tesi doctoral és el de desenvolupar un model que permeti valorar de forma objectiva les actuacions en matèria de màrqueting portades a terme per una organització. Aquest model està constituït per un conjunt de variables descriptives i quantitatives, anomenades variables de control, juntament amb una metodologia de càlcul i un sistema d’indicadors integrat que facilita la traçabilitat de les inversions de màrqueting i explicita la relació causa-efecte entre aquestes i el valor generat per a l’organització. El model s’utilitza per a valorar dades reals d’organitzacions que operin al mercat català i que compleixin la condició de basar la relació amb els seus clients en un model contractual (com veurem més endavant, és inviable aplicar un model comú per a tot tipus d’empresa). L’objectiu, doncs, és la valoració de l’acompliment dels seus objectius en relació als seus actius de mercat (marca i valor de client) i la creació d’un model específic, no generalitzable, per a aquest tipus d’empreses. Un segon objectiu d’aquest treball és l’anàlisi de les principals publicacions especialitzades referents des d’un punt de vista global i local, proposant en primer lloc una terminologia clara en relació a l’activitat de màrqueting, l’acompliment dels seus objectius i la conceptualització d’actius de mercat, i analitzant, en segon, l’impacte d’aquests àmbits i la seva evolució en els últims quinze anys. Alguns estudis previs (Llonch et al., 2002; Ambler i Xiucun, 2003; entre d’altres) es centren a comparar empreses per sectors, funcionalitats i països. És probable, com apunta Llonch et al. (2002) al fer això, que casuístiques atribuïbles a diferències geogràfiques i nacionals es tractin erròniament com a empresarials. A tal efecte, aquest estudi elimina la variabilitat per país i sector (parcialment, aquest darrer), proposant un model acotat, tal com recomanen Ambler et al., (2001), Llonch et al (2002), entre d’altres, que pugui servir de referència en la metodologia i en la validesa conceptual, i no tant en els resultats del model en un context més genèric. Pauwels (2009) demostra la relació entre la creació d’un model predefinit de variables i la millora del càlcul de l’eficiència en la despesa en màrqueting, pel que la creació d’aquest model integrat té l’objectiu d’esdevenir una eina de Gestió del Rendiment Corporatiu (GRC, en endavant1) (Bauer, 2004) aplicada a la gestió de màrqueting i els seus actius. Aquesta particularització del GRC rep el nom de Gestió del Rendiment de Màrqueting (GRM, en endavant2) (Ambler, 2000) i el seu objectiu és el d’augmentar la usabilitat i faciliti la generació d’informació per a la presa de decisions de la línia directiva de les organitzacions. L’abast de la tesi és el de crear el model des d’una perspectiva d’avaluació de l’activitat de màrqueting per part de la línia directiva, i no pas el desenvolupament informàtic d’una eina de suport a la presa de decisions ja que això, com apunten diversos autors (Dover, 2004; Schiff, 2008) i es tractarà amb més profunditat en el capítol 5, implicaria un nivell de personalització per cada empresa que no és objectiu d’aquesta tesi.The thes is aims to develop a practical model to asses m arketing perform ance within an organization. The model is basically structured around control metrics both from a qualitative and quantitatve approach, together with an integrated system of key performance indicators that enables marketing accountability through different organisational divisions, thus stating a solid cause/effect relationship between marketing activities and the value created for the organisation. The aformentioned model is used to assess marketing activites for catalan com panies with a contract-based customer relationship. Final assessment includes also a dynamic valuation of the company's market as sets . A second objective of the thes is is to review the current state of the art of marketing assessment literature from specialized journals both from a global and a local pers pective, defining a comprehensive list of related terms about marketing performance measurement, market-asset description and valuation and an accurate analysis about its evolution throughout the last 15 years.Postprint (published version