The diffusion of a new service: Combining service consideration and brand choice

We propose an individual-level model of a two-stage service diffusion process. In the first stage, customers decide whether to "consider" joining the service. This (Consideration) stage is modeled by a hazard model. Customers who decide to consider the service move on to the Choice stage, wherein they choose among the service alternatives and an outside No Choice option. This stage is modeled by a conditional Multinomial Logit model. The service provider does not observe the transition in the first stage of potential customers who have yet to choose a brand. Such potential customers may have started to consider joining the service, yet chose the outside alternative in each period thereafter. One of the main contributions of the model is its ability to distinguish between these two non-adopter types. We estimated the model using data on the adoption process of newly introduced service plans offered by a commercial bank. We employed the hierarchical Bayes Monte Carlo Markov Chain procedure to estimate individual as well as population parameters. The empirical results indicate that the model outperforms competing models in breadth of analysis, model fit, and prediction accuracy

Assessing the sales impact of plain packaging regulation for cigarettes: Evidence from Australia

© 2019 The Author(s). We assess the impact of legislation mandating the plain packaging of cigarettes in 2012 in Australia on both primary and secondary demand. We first examine the causal impact of the legislation at the cigarette category level by comparing the changes in sales before and after legislation with the corresponding changes in sales in a comparable market, New Zealand, where the plain packaging mandate (PPM) was not imposed. Our results suggest a decline in sales due to the PPM of around 67 million units (sticks) per month, representing around 7.5% of the market. Our results on the mechanism using brand-level sales data from Australia suggest reduced differentiation after the PPM, with higher price sensitivity. Premium and mainstream brands’ price sensitivities are most affected after the PPM, but we also find channel-specific differences, with grocery (convenience) channels showing an increase (a decline) in post-PPM short-term price sensitivity. Because the government has some control over price through excise taxes, understanding changes in price sensitivities provides guidance to health authorities on the relative impacts of price-and non-price-related policy on cigarettes sales. We also explore other public policy implications of our results, such as the expected reduction in sales per month we might see in New Zealand due to their instituting a PPM

Advertising coordination games of a manufacturer and a retailer while introducing a new product

Advertising, Market segmentation, Distribution channel, Nash equilibrium, Stackelberg equilibrium, 49N90, 90B60,