The Effects of Imbalanced Competition on Demonstration Strategies

This paper analyzes the effect of competition on product demonstration decisions. Pre-purchase product demonstration enables marketers to differentiate products that are ex-post differentiated but are judged according to perceived fit, rather than actual fit, due to pre-purchase consumer uncertainty. Imbalanced competition accompanied by fit uncertainty motivates the follower to offer demonstrations to avoid a price war. This paper explores the conditions that lead the leader to retaliate. In addition to effects on quantity, competition may increase the quality of demonstrations offered by the leader. We analyze a business case, showing that competition may increase the demonstration intensity and that the leading manufacturer’s response to changes in competition is stronger than the responses of the followers. Our research has the potential to aid mangers in formulating demonstration strategies and in responding to competitors’ demonstration efforts.Imbalanced competition, product demonstration, differentiation, test-drive, price war, Political Economy, Production Economics,

The value of economic research:

Economic research generates a wide array of benefits. These include information, technological change, and improved policy. There are few quantitative studies of the benefits of economic research, and some benefits may be misattributed to biological and physical research. To be productive, economic research must be transmitted and the user must be able to use it. Therefore, investment in extension outreach and economic literacy are important to improve its impact. Even casual observation suggests that economic research is valuable, but noneconomists must be convinced of this. Since benefits are likely to be concentrated in a small number of successful projects, a useful approach to the assessment of the benefits of research is to identify these projects and their results. The analysis must recognize that the accuracy of any estimates of benefits is uncertain. In addition, the argument behind the estimates should be transparent, relying on documentation and testimony from users, policymakers, and noneconomists. Assessments of the benefits of economic research provide information that can be used both to justify support for economic research and to allocate monies among lines of research.Research Economic aspects., Impact assessment,

Book Reviews

Reviews of : Wansink, B. Marketing Nutrition: Soy, Functional foods, Biotechnology and Obesity Urbana and Chicago: University of Illinois Press, 2005; Motzafi-Haller, P. (ed.) Women in Agriculture in the Middle East Aldershot, England: Ashgate Publishing, 2005Teaching/Communication/Extension/Profession,

Choosing Brands: Fresh Produce versus other Products

This study presents a framework to analyze how uncertainty about product attributes affects consumers' WTP for brand name products over generic ones, incorporating key elements of a random utility model and product attribute models. We found that in comparison to electronics, clothing, and processed food, consumers buy brand name vegetables and fruits mainly because of quality uncertainty, and they can easily reduce uncertainty of product quality of fresh vegetables and fruits by seeing, touching, smelling, and tasting. Hence, consumers are less willing to pay for brands of fresh vegetables and fruits. However, simulation results show that brands of fresh fruits and vegetables may have a similar price premium as other products, but they lack the market share. Thus, the main challenge in building brands of fresh produce is to establish a critical mass. We also find that demographic information such as education and gender does affect consumers' WTP for brands.Consumer/Household Economics,

THE INCREASING ROLE OF AGRIBUSINESS IN AGRICULTURAL ECONOMICS

While the demand for traditional agricultural economics is diminishing, there is a growing need for the economics and management of the food sector and the environment. Departments of agricultural economics have shown great flexibility in including agribusiness in their Bachelor's and Master's teaching programs. Ph.D and research programs appear to adjust more slowly to changing demand. Although agricultural economics programs are providing a variety of service course offerings, opportunities for joint programs with biological, physical, and natural sciences, particularly resource management, are not being exploited. If business schools decide to compete for agribusiness students in the future, missed opportunities with other departments and schools may become very costly. If this profession is to remain viable in the long run, it must continue to evolve, developing opportunities with biological, physical, and natural disciplines, in order to meet the demands of a changing market.agribusiness, agricultural economics, education, extension, research, Agribusiness, Teaching/Communication/Extension/Profession,

The Effects of Framing on Consumers' Choice of GM Foods

In this article, we explore the effect of framing statements on perceptions and choices of genetically modified vegetables (GMVs). In two experiments, consumers were exposed to either positive or negative statements about GMVs; asked to indicate the extent to which they agree or disagree with these statements; and, finally, choose between genetically modified (GM) and conventionally grown vegetables. We show that consumers are affected quite easily by the framing (positive/negative) of statements."The authors acknowledge the funding support from the Binational Agricultural Research and Development Fund (BARD) under the project US-4096-08. This research was supported by The Israel Science Foundation (grant No. 1040/11) and also the Davidson Center for Research in Agribusiness and the Center for Research in Agricultural Economics.

Consumers ’ Willingness to Purchase Genetically Modified Products with Superior Benefit when the Conventional Alternative is Risky, and Its Relationship to GM Food

Scholars believe that in order to increase the acceptance rate of GM food products that offer higher value relative to non-GM alternatives, marketers need to sell them at an introductory price, and only after consumers get used to consuming them can their price be raised. This recommendation is consistent with consumers ’ demand for discounts on GM food products. This study analyzes whether the opposite strategy—which begins at building a starting point of high risk, and then at a second stage choices between GM and conventional food products are made—is an efficient tactic in introducing biotechnology. Starting high and ending at a lower point is termed the reverse foot-in-the-door tactic. We test the effectiveness of reverse footin-the-door when applied to GM products by using an experimental survey design wherein consumers are asked first to choose between purchasing two hypothetical biotechnology products—moisturizer and a pill that supports weight loss—and then GM and conventional vegetables, and comparing the results to previous findings taken from the literature. We also identify the variables of the consumers who are willing to purchase both GM beauty-enhancing products and show that these can be used to profile consumers with high willingness to purchase GM food products

Positioning GM Food Product : Benefits, risk and loss aversion considerations

Labeling of genetically modified (GM) food products in the EU is considered to be the reason for the decline in the export of soybeans from the US to the EU. Debate about content labeling (free of GM ingredients/contains GM material) is an example of the importance attributed to labeling formats that affect choice. Labeling regulations currently act as an active import barrier to US export of potatoes, corn, and soybeans among other products. However, labeling of GM products can also be used to inform consumers about product benefits and could increase GM food acceptance rather than blocking it. In this study, we analyze the effectiveness of four different positioning tactics in inducing adoption using four new types of GM potatoes that vary in their benefits: improved taste; high-temperature, which reduces the risk of cancer; low-calorie that reduces the risk of diabetes and cardiovascular diseases; and antioxidant varieties, comparing them with traditionally grown potatoes. While it has been shown that consumers are willing to pay a price premium for genetically modified (GM) food products if such products are designed to enhance wellbeing, information on biotechnology’s capacity to reduce health risks is likely to reduce the acceptance rate. It is argued that information on lower risk may actually increase consumers’ accessibility to health hazards increasing the likelihood of rejecting upfront the new technology despite its advantages. Our results indicate that given the right positioning, the majority of consumers are willing to purchase GM foods that either reduce risk or increase benefits. While the acceptance of GM food was higher when the benefit was better taste, and lowest when it primed lower hazard of illness, more than 65% of consumers were willing to pay a price premium even for the less desirable positioning. Results and managerial implications are discussed

The economics of demonstrations: The effect of competition on demonstration and pricing strategies

Demonstrations, Duopolistic competition, Non-price competition, Pre-purchase product trial, Test-drive,