2018-2019 BBA Marketing Seminar

This year the Marketing Department partnered up with the following undergraduate student organizations: American Student Marketing Association, Alpha Kappa Psi, Delta Sigmna Pi, and Mu Kappa Tau. 

The Impact of Product Claims about Magic Ingredients on Consumer Choice

Image Modified

Anchor
wu-kaiyang wu-kaiyang

Kaiyang Wu, Doctoral Student, Wisconsin School of Business, University of Wisconsin-Madison

Synopsis

Companies constantly introduce ingredients (termed as magic ingredients) whose efficacy is ambiguous but not scientifically refuted, in order to compete in the lucrative self-care markets (e.g. supplement, hair care, body care). Yet, marketing claims of those ingredients are poorly regulated by the US government, putting vulnerable consumers at physical and financial risk. The purpose of this research is to not only demonstrate the effect of product claims about magic ingredients on consumer choice, but also identify consumers who are vulnerable to such claims.

...

Image Added

Anchor
rafieian-

Image Removed

Anchor
rafieian-omid rafieian-omid

Optimizing User Engagement through Adaptive Ad Sequencing 

...

Anchor
he-cheng he-cheng

The End of the Express Road for Hybrid Vehicles: Can Governments' Green Product Incentives Backfire?

Image ModifiedSynopsis

In response to growing environmental concerns, governments have promoted products that are less harmful to the environment—green products—through various incentives. We empirically study the impact of a commonly used non-monetary incentive, namely the single-occupancy permission to high-occupancy vehicle (HOV) lanes, on green and non-green product demand in the U.S. automobile industry. The HOV incentive could increase unit sales of green vehicles by enhancing their functional value through time-saving. On the other hand, the incentive may prove counterproductive if it reduces the symbolic value (i.e., signaling a pro-environmental image) consumers derive from green vehicles. Assessing the effectiveness of green-product incentives is challenging given the endogenous nature of governments' incentive provisions. To identify the effect of the HOV incentive on unit sales of green and non-green vehicles, we take advantage of incentive changes at the county level, and we employ a multitude of quasi-experimental methods, including difference-in-differences with Coarsened Exact Matching, border strategy, and regression discontinuity in time. Unlike previous studies that only examine the launch of the HOV incentive and find an insignificant association between incentive launch and green vehicle demand, we concentrate on its termination. We find that the termination of the HOV incentive decreases unit sales of vehicles covered by the incentive by 14.4%. We provide suggestive evidence that this significant negative effect of HOV incentive termination is due to the elimination of the functional value the incentive provides: time-saving. Specifically, we find that the negative effect is more pronounced in counties where consumers value time-saving more (i.e., counties with a longer commute to work and higher income). Additionally, in line with prior literature, the launch of the HOV incentive is not found to have a significant effect on green vehicle sales. Combined, our findings reveal that the effect of termination is not simply the opposite of that of launch, implying that governments' green product incentives could backfire.

Keywords: sustainability, green products, public policy, government incentives, climate change, technology adoption, policy evaluation, quasi-experiments, difference-in-differences, coarsened exact matching

Alex Burnap, Doctoral Student, MIT Sloan

...

Schooasl of Management

Image Modified

Anchor
burnap-alex burnap-alex

Design and Evolution or Product Aesthetics: A Human-Machine Hybrid Approach 

Synopsis

Aesthetics are critically important to market acceptance in many product categories. In the automotive industry in particular, an improved aesthetic design can boost sales by 30% or more. Firms invest heavily in designing and testing new product aesthetics. A single automotive "theme clinic" costs between $100,000 and $1,000,000, and hundreds are conducted annually. We use machine learning to augment human judgment when designing and testing new product aesthetics. The model combines a probabilistic variational autoencoder (VAE) and adversarial components from generative adversarial networks (GAN), along with modeling assumptions that address managerial requirements for firm adoption. We train our model with data from an automotive partner — 7,000 images evaluated by targeted consumers and 180,000 high-quality unrated images. Our model predicts well the appeal of new aesthetic designs — 38% improvement relative to a baseline and substantial improvement over both conventional machine learning models and pretrained deep learning models. New automotive designs are generated in a controllable manner for the design team to consider, which we also empirically verify are appealing to consumers. These results, combining human and machine inputs for practical managerial usage, suggest that machine learning offers significant opportunity to augment aesthetic design.

Tommaso Bondi, Doctoral Student, New York Stern School of Business

Image Added

Anchor
bondi-tommaso bondi-tommaso

Alone, Together: Product Discovery Through Consumer Ratings

Synopsis

Consumer ratings have become a prevalent driver of choice. I develop a model of social learning in which ratings can inform consumers about both product quality and their idiosyncratic taste for them. Depending on consumers’ prior knowledge, I show that ratings relatively advantage lower quality and more polarizing products. The reason lies in the stronger positive consumer self-selection these products generate: to buy them despite their deficiencies, their buyers must have a strong taste for them. Relatedly, consumer ratings should not be used to infer product design: what is polarizing ex-ante needs not be so among its buyers. I test these predictions using Goodreads book ratings data, and find strong evidence for them. Moreover, social learning appears to serve mostly a matching purpose: tracking the behaviour of Goodreads users over time shows that they specialize as they gather experience on the platform: they rate books with a lower average and number of ratings, while focusing on fewer genres. Thus, they become less similar to their average peer. Taken together, the findings suggest that consumer ratings contribute to both the long tail and, relatedly, consumption segregation. For managers, this illustrates, counterintuitively, the reputational benefits of polarizing products, particularly early in a firm’s lifecycle, but only when paired with the ability to match with the right consumers.

The good, The Bad and The Picky: Consumer Heterogeneity and The Reversal of Movie Ratings

Synopsis

We explore the consequences of consumer heterogeneity on online word of mouth. Consumers differ in their experience, which has two effects. First, experience is instrumental to choice: experts purchase and review better products than non-experts. Second, because of their superior choices, experts endogenously form higher expectations, and thus post more stringent ratings given quality. Combined, these two forces imply that the better the product, the higher the standard it is held to, the more stringent its rating. Thus, relative ratings are biased: low quality products enjoy unfairly high ratings compared to their superior alternatives. When this bias gets large, reputation needs not be increasing in quality. The bias needs not disappear, and can worsen, over time: products with unfairly high ratings mostly attract unexperienced consumers, reinforcing their advantage. We test our theory by scraping data from a well known movie ratings website. We find strong evidence for both of our hypotheses, and that this bias is quantitatively important. We then debias the ratings, and find that the new ones better correlate with the opinions of external critics.

Sam Maglio, Professor, University of Toronto Scarborough 

Image Added

Anchor
maglio-sam maglio-sam

Choice Protection for Feeling-Focused Decisions

Synopsis

Consumers live life in the present while also anticipating and choosing for the future. This everyday experience assumes that the present and the future are distinct, successive periods in time. But when do consumers think one ends and the next begins? Intuitively, 5 years forward in time departs sufficiently from right now to fall well within the future in a way that 5 seconds forward does not. The ambiguity can be illustrated in considering 5 days forward, which might be considered part of the present or as belonging to the future. This research first documents that the felt duration of the present varies naturally between individuals and also responds to interventions that manipulate it. Appraisals of the present, in turn, are shown to color far-sighted judgment and decision making using a series of incentive-compatible experiments and field studies. Specifically, seeing the present as relatively short and the future as starting sooner causes consumers to act more generously (e.g., to save money rather than spend it) in the interest of their future selves.

Anchor
2019marketingcamp 2019marketingcamp

2019 Marketing Camp

...