A macro-economic indicator-based risk management strategy for the small property investor

ABSTRACT Risk to small property investors manifests in the cash flow of the investment and it should thus also be managed in the cash flow. From a practical point of view it is logical that that risk management strategies be incorporated into a property investment at the inception stage of the investment. The cash flow of a property thus needs to include applicable risk management strategies as part of the feasibility study of the investment. The chief manner in which small property investors deal with risk in an investment, is by making conservative allowances in the projected cash flow of the investment. Internal risk is thus managed to a degree, but the small investor is still vulnerable to market risk which originates from outside the investment. Market risk however, is relatively successfully managed by the Institutional Sector of the property market through the application of Modern Portfolio Theory and the use of the portfolio as a vehicle to diversify internal risk. The portfolio vehicle also allows the quantification of external- or market risk, thus creating the opportunity for effective management. It is however believed that the same principles of Modern Portfolio Theory as applied in the institutional sector of the property market, may be applicable to small direct property investments, to formulate an investment risk management strategy, which is embedded in the conceptual stages of the investment and thus reduce the reliance on often, ineffective, active management and remedial strategies during the holding period. The main obstacle however, is that the application of Modern Portfolio Theory requires an industry bench mark or index, which is representative of the market and against which performance may be measured measured. The application of such an index to the small direct property investment is however extremely limited due to a difference between the scale at which small investments function and the scale of the market that an index represents. A substitute for a benchmark to act as a market indicator is thus required, which must be reflective of the market within which the small investment operates. This report investigates the possibility of deriving an investment-specific benchmark or a hypothetical return curve, based on the relationships that exist between the macro-economy and the property market. If it is indeed possible to establish the credibility of such an alternative market indicator, it would therefore become possible for small property investors to apply the risk management principles inherent to portfolio investing and incorporate these principles in the feasibility cash flows of small direct property investments

Kwaliteitsperceptie van voedingsmiddelen (II)

Door SWOKA is in 1981 het project 'Kwaliteitsperceptie van voeding' in het programma opgenomen, waarvoor met name van de kant van het Ministerie van Landbouw en Visserij belangstelling bestond. De centrale vraagstel1ing van dit project was: 'Op basis van welke elementen beoordelen consumenten de kwaliteit van voedingsmiddelen en welke betekenis heeft de factor kwali tei t in het beslissingsproces ten aanzien van de keuze van een bepaald voedingsmiddel'. Naar aanleiding hiervan is door de Werkgroep Consumentengedrag van de Landbouwhogeschool een globaal projectvoorstel geformuleerd. De uiteindelijke onderzoeksopzet is op basis van Iiter atuurstudie en een kwali tatief vooronderzoek tot stand gekomen

Measuring Short- and Long-run Promotional Effectiveness on Scanner Data Using Persistence Modeling

The use of price promotions to stimulate brand and firm performance is increasing. We discuss how (i) the availability of longer scanner data time series, and (ii) persistence modeling, have lead to greater insights into the dynamic effects of price promotions, as one can now quantify their immediate, short-run, and long-run effectiveness. We review recent methodological developments, and illustrate how the analysis of numerous brands and product categories has resulted in various empirical generalizations. Finally, we argue that persistence modeling should not only be applied to traditional performance metrics such as sales, but also to metrics such as firm value and customer equity

The Impact of Business-Cycle Fluctuations on Private-Label Share

This study investigates the cyclical dependence of private-label success in four countries. The results show that private-label share behaves countercyclically. Moreover, asymmetries are present in both the extent and speed of up- and down-ward movements in private-label share over the business cycle. Finally, part of private-labels’ share gain during contractions is found to be permanent

Competitive Reactions and the Cross-Sales Effects of Advertising and Promotion

How do competitors react to each other's price-promotion and advertising actions? How do these reactions influence the net sales impact we observe? We answer these questions by performing a large-scale empirical study of the short-run and long-run reactions to promotion and advertising shocks in over 400 consumer product categories, over a four-year time span. Competitive reaction can be passive, accommodating or retaliatory. We first develop a series of expectations on the type and intensity of reaction behavior, and on the moderators of this behavior. These expectations are assessed in two ways. First, vector-autoregressive models quantify the short-run and long-run effect of a promotion or advertising action on competitive sales and on competitive reactions. By cataloging the numerical results, we are able to formulate empirical generalizations of reaction behavior ("how do they react?"). Second, we estimate structural models of reaction intensity, in function of various market and competitive characteristics ("what are the drivers of reaction?"). Finally, by comparing our findings on reaction behavior with those on promotion and advertising effectiveness, we are able to evaluate competitive reaction behavior ("are they reacting as they should?"). A major finding is that competitive reaction is predominantly passive. When it is present, it is usually retaliatory in the same instrument, but accommodating or retaliatory in a different instrument. There are very few long-run consequences of any type of reaction behavior. We also report on several moderating effects that are in line with expectations, and that support the presence of a certain amount of rationality in competitive reaction behavior. The net impact of the over-time effects of advertising and price-promotion attacks, competitive reactions and the sales effectiveness of each, is that competitors' sales are generally not affected, and especially not in the long run. We weigh the evidence that this sales neutrality is "natural" (i.e., due to the nature of consumer response) versus "managed" (i.e., due to the vigilance and effectiveness of competitors), and conclude in favor of the former

Consumer Behavior Research in Emerging Consumer Markets: The Case of the Optimum Stimulation Level in South Africa

More than two-thirds of the world's consumers live in emerging consumer markets and transitional economies (ECMs). A fuller understanding of consumer behavior and further advancement of consumer research as an academic discipline require that the validity of theories and models of consumer behavior developed in the Western cultural context be examined in ECMs as well. In this paper, we examine the measurement invariance and nomological relations involving OSL in one of Africa's most important ECMs - South Africa. Our research setting presents an especially stringent context for testing consumer behavior theories. Many respondents are challenged severely economically and educationally, many have probably never had a job and some are illiterate. Nevertheless, the results provide evidence on the cross-cultural generalizability of OSL and exploratory consumer behavior theory. We found a high degree of stability in the OSL structure across these four major ethnic groups in South Africa. Meaningful and theoretically predictable nomological relations are obtained with values, sociodemographics, and exploratory consumer behavior. Suggestions for future research on OSL and for consumer behavior research in general in ECMs are discussed.http://deepblue.lib.umich.edu/bitstream/2027.42/39636/3/wp251.pd