ECON file expert ONLY - 24 hrs due
vzan0903
SampleProposal.pptxMarketing Research Project Proposal
Problem: Potential Inefficiency Lack of Pricing Coordination
Cake Mix
Cake Frosting
Week 1
Cake Mix
$1.99
Cake Mix
$1.99
$1.59
Cake Mix
$1.99
$1.59
Cake Mix
$1.99
Frosting
$2.19
Frosting
$2.19
$1.89
Frosting
$2.19
Frosting
$2.19
$1.89
Week 2
OR
Question:
What do we know about the preferences of our customers for the bundle of our cake mix and our frosting?
Hypothesis (stemming from exploratory research):
Our customers are willing to pay a price premium in order to purchase products that share the same brand name.
Some Evidence from the Secondary Data
Why do consumers want to match brand names?
Diderot effect – “a force that encourages the individual to maintain a cultural consistency in his/her complement of consumer goods.”
Denis Diderot (1713-1784), “Regrets on Parting with My Old Dressing Gown.”
Some Evidence from the Secondary Data
Why do consumers want to match brand names? Evidence from Online Forums
I usually match…but I think it’s just because I like things to be uniform.
…I think there have to be some chemicals that help each other out in the same brand’s products, making them more effective.
No matter how much I try to convince myself that it’s nothing but marketing schemes and shallow aesthetics to match my bottles, I always match.
About 50-50 split between matchers and nonmatchers
Some Evidence from the Secondary Data
October 22, 2007
Washington, DC – According to the warning issued by the Food and Drug Administration Monday, a generous amount of Suave Naturals Juicy Green Apple Conditioner should always be applied evenly and massaged into wet hair after washing with Suave Naturals Juicy Green Apple Shampoo.
Some Evidence from the Secondary Data
“This is absolutely essential for optimal shine, shimmer, and texture,” said FDA spokeswoman Linda Mergens,… “Consumers should never under any circumstances mix Suave Naturals Juicy Green Apple Conditioner with Pert Plus, as it may impair luster.”
the ONION
Academic Literature
Do customers pay a premium for matching brand names
Mulhern and Leone (1991), Walters (1991)
Simonin and Ruth (1995)
Experiment
Customers will be selecting a cake mix/cake frosting bundle
Betty Crocker (BC) and
Duncan Hines (DH)
Experiment (three types of questions)
Four Endowment Questions:
Consider the following promotion:
Buy one package of frosting, get Duncan Hines Cake Mix free. Taking note of the prices charged for each item, please circle the frosting that you would buy:
Duncan Hines Frosting
$1.69
Betty Crocker Frosting
$1.69
Experiment
Analysis of the endowment data;
Simple summary statistic:
# of matches vs. # of nonmatches
Experiment (three types of questions)
Eight Valuation Questions:
Please circle the number which corresponds to the value that you ascribe to each of the following items:
Duncan Hines Cake Mix 1 2 3 4 5 6 7 8 9
Betty Crocker Cake Mix 1 2 3 4 5 6 7 8 9
Duncan Hines Frosting 1 2 3 4 5 6 7 8 9
Betty Crocker Frosting 1 2 3 4 5 6 7 8 9
Experiment (three types of questions)
Eight Valuation Questions (cont.):
Duncan Hines Cake Mix 1 2 3 4 5 6 7 8 9
& Duncan Hines Frosting
Duncan Hines Cake Mix 1 2 3 4 5 6 7 8 9
& Betty Crocker Frosting
Etc. (total of four combinations)
Experiment
Analysis of the valuation data;
OLS: regress the valuation of each bundle on the valuations of separate components
Experiment (three types of questions)
Eight Discrete Choice Questions:
Four products: BC Mix, BC Frosting, DH Mix, DH Frosting;
Two prices: one regular and one sale price for each product
Total of 16 combinations (full factorial design);
Each subject responds to 8 possible scenarios
Experiment (three types of questions)
Discrete Choice Questions:
In each of the following rows, take note of the prices charged for each item. Sale prices are listed in bold. Please circle the frosting and the cake mix which you would buy in each scenario.
Duncan Hines Frosting
$2.59
Betty Crocker Frosting
$2.69
Duncan Hines Cake Mix
$2.39
Betty Crocker Cake Mix
$2.29
etc. for a total of 16 combinations (8 for each subject)
Experiment
Analysis of the discrete choice data;
Multinomial Logit: regress the bundle choice data on the price of each bundle and bundle-specific constants.
Copies of the surveys are available on TritonEd.
Note that there are four sets of instructions (with different order of product presentation) and four sets of survey (with different order of questions and different discrete choice questions)
