Research Paper Series

  • Title
  • Author(s)


Departments: Marketing, GREGHEC (CNRS)

An important challenge for many firms is to identify the life transitions of its customers, such as job searching, being pregnant, or purchasing a home. Inferring such transitions, which are generally unobserved to the firm, can offer the firm opportunities to be more relevant to its customers. In this paper, we demonstrate how a social network platform can leverage its longitudinal user data to identify which of its users are likely job seekers. Identifying job seekers is at the heart of the business model of professional social network platforms. Our proposed approach builds on the hidden Markov model (HMM) framework to recover the latent state of job search from noisy signals obtained from social network activity data. Specifically, our modeling approach combines cross-sectional survey responses to a job seeking status question with longitudinal user activity data. Thus, in some time periods, and for some users, we observe the “true” job seeking status. We fuse the observed state information into the HMM likelihood, resulting in a partially HMM. We demonstrate that the proposed model can not only predict which users are likely to be job seeking at any point in time, but also what activities on the platform are associated with job search, and how long the users have been job seeking. Furthermore, we find that targeting job seekers based on our proposed approach can lead to a 42% increase in profits of a targeting campaign relative to the approach that was used at the time of the data collection.

Keywords: Hidden Markov Models, Data Fusion, Targeting, Customer Analytics


Departments: Marketing, GREGHEC (CNRS)

Consumers gain choice closure when they perceive a sense of finality over a past decision and limit comparisons between the selected and the forgone options. We investigate consumers’ ability to make strategic use of choice closure to enhance outcome satisfaction. Seven studies show that consumers experience greater satisfaction when they achieve choice closure with an inferior outcome and when they do not achieve choice closure with a superior outcome; however, they expect to be more satisfied by avoiding choice closure with an inferior outcome and by seeking it with a superior outcome. We provide a rationale for this experience–expectation contrast based on rule overgeneralization. Consumers form their expectation on an implicit rule learned and internalized in a context in which it is appropriate and advantageous: when they aim to increase satisfaction with a future choice; however, consumers erroneously apply the same implicit rule to a different context, one in which they aim to increase satisfaction with a past choice. We conclude that consumers are unlikely to be able to make strategic use of choice closure to enhance satisfaction with the outcome of a decision they have made.

Keywords: choice closure, outcome valence, satisfaction, prediction error, rule overgeneralization


Departments: Marketing, GREGHEC (CNRS)

People—be they politicians, marketers, job candidates, product reviewers, bloggers, or romantic interests—often use linguistic devices to persuade others, and there is a sizeable literature that has documented the effects of numerous linguistic devices. However, understanding the implications of these effects is difficult without an organizing framework. To this end, we introduce a Language Complexity × Processing Mode Framework for classifying linguistic devices based on two continuous dimensions: language complexity, ranging from simple to complex, and processing mode, ranging from automatic to controlled. We then use the framework as a basis for reviewing and synthesizing extant research on the effects of the linguistic devices on persuasion, determining the conditions under which the effectiveness of the linguistic devices can be maximized, and reconciling inconsistencies in prior research.

Keywords: Linguistics, Attitudes and Persuasion, Automatic and Controlled Processes, Language


Departments: Marketing, GREGHEC (CNRS)

This paper studies the impact of consumer resistance, which is triggered by deviations from a psychological reference point, on optimal pricing and cost communication. Assuming that consumers evaluate purchases not only in the material domain, we show that consumer resistance reduces the pricing power and profit. We also show that consumer resistance provides an incentive to engage in cost communication when consumers underestimate cost. While cheap communication does not affect behavior, persuasive communication may increase sales and profit. Finally, we show that a firm can benefit from engaging in operational transparency by revealing information about features of the production process.

Keywords: Price Fairness, Cost Communication, Operational Transparency


Departments: Marketing, GREGHEC (CNRS)

While single-brand reward programs encourage customers to remain loyal to that one brand, coalition programs encourage customers to be “promiscuous” by offering points redeemable across partner stores. Despite the benefits of this “open relationship” with customers, store managers face uncertainty as to how rewards offered by partners influence transactions at their own stores. We use a model of multi-store purchase incidence to show how the value of points shared among partner stores can explain patterns in customer-level purchases across them. The model is used to empirically test hypotheses on how reward spillovers among partners are driven by: (1) differences in policies on reward redemption, (2) the overlap in product categories between stores, and (3) geographic distance between stores within a city. In addition, we leverage variation generated by a natural experiment, i.e., a devaluation of the program's points, to demonstrate how the value of points influences the positioning of partner stores within the coalition and the purchasing patterns across them. We conclude by delineating some managerial implications for the design of a coalition's reward policies, including a simulation showing that customer-centric targeted rewards can be an effective strategy to compensate for the devaluation.

Keywords: loyalty programs, rewards, retailing, Bayesian estimation


Departments: Marketing

We utilize household production theory to address the problem of micro-level demand estimation across complementary goods. According to this theory, consumers buy inputs and combine them to produce final goods from which they derive utility. We use this idea to build a structural model of demand for complements that can be estimated on purchase data in the presence of corner solutions and indivisible packages. We find that, even when reusing the same functional form as some previous models of demand for substitutes, the model can accommodate very different patterns of consumer preferences over complements and lead to a flexible demand system from perfect complementarity to no complementarity. We estimate the model on purchase data from a panel of consumers and show how it can be used to increase the profitability of couponing strategies by taking into account the spillover effect of coupons on demand for complementary categories.

Keywords: Utility Theory, Multicategory Demand Models, Bayesian Estimation


Departments: Marketing, GREGHEC (CNRS)

Empirical demand functions (based on experimental studies, such as Choice Based Conjoint) are critical to many aspects of marketing, such as targeting and segmentation, setting prices and evaluating the potential of new products. While considerable work has been done on developing approaches for ensuring that research subjects are both honest and engaged, the reduced cost associated with collecting data in an online setting has driven many studies to be collected under conditions which leave researchers unsure of the value of the information content provided by each subject. Objective measures related to how the subject completes the study, such as latency (how quickly answers are given), can only be tied to other objective measures (such as the fit of the model or consistency of the answer) and ultimately have questionable relationship to the subject's utility function.In response to this problem, we introduce a mixture modeling framework which clusters subjects based on variances in a choice based setting (multinomial logit models). This model naturally groups subjects based on the internal consistency of their answers, where we argue that a higher level of internal consistence (hence lower variance) reflects more engaged consumers who have sufficient experience with the product category and choice task, to have well-formed utilities. This approach provides an automated way of determining which consumers are relevant. We discuss both the modeling framework and illustrate the methods using data from several commercial conjoint studies.

Keywords: Multinomial Logit, Conjoint Analysis, Data Quality, Finite Mixture Models


Departments: Finance, Marketing

Online crowdfunding is a popular new tool for raising capital to commercialize product innovation. Product innovation must be both novel and useful (1-4). Therefore, we study the role of novelty and usefulness claims on Kickstarter. Startlingly, we find that a single claim of novelty increases project funding by about 200%, a single claim of usefulness increases project funding by about 1200%, and the co-occurrence of novelty and usefulness claims lowers funding by about 26%. Our findings are encouraging because they suggest the crowd strongly supports novelty and usefulness. However, our findings are disappointing because the premise of crowdfunding is to support projects that are innovative, i.e. that are both novel and useful, rather than projects that are only novel or only useful.

Keywords: Crowdfunding, Entrepreneurship, Innovation


Departments: Marketing, GREGHEC (CNRS)

Although choosing from large assortments has often been found to be demotivating, a robust finding in the marketing literature is that consumers generally prefer larger product assortments. Standard explanations for this preference for larger assortments have focused on reason-based considerations revolving around large assortments enabling potentially “better” choices. This paper offers a different and novel, affect-based explanation. We argue that the relative preference for larger assortments is driven in part by the greater experience utility that consumers derive from reviewing such assortments. Because most products are carriers of positive affect, consumers tend to derive greater experience utility from reviewing larger assortments compared to smaller assortments. Support for this general proposition was found across four experimental studies using different strategies to document the role of affect-based experience utility in driving the preference for larger assortments. Theoretical and substantive implications are discussed.

Keywords: assortment size, affect, emotion, consumer decision making


Departments: Marketing, GREGHEC (CNRS)

Engaging in risky consumption behaviors (cigarettes, alcohol, etc.) is an acute societal problem that can have severe consequences for adolescents, and businesses in particular have been accused of making such consumption particularly appealing and accessible. However, the causes of risky behaviors are not well understood and research on the causes has been mixed. In this research, we investigate the effects of loneliness on adolescents’ adoption of risky behaviors. We test the proposition that adolescent loneliness affects the adoption of risky behaviors, but that this effect depends on the strategies that adolescents adopt to cope with their loneliness. In a large-scale study (n = 409) of adolescents (ages 13-18), we show support for a sequential mediation model in which active and passive coping strategies both mediate the effect of loneliness on risky behaviors, but with opposite effects. Active coping strategies reduce the adoption of risky behaviors, whereas passive coping strategies increase the adoption of risky behaviors. In addition, we show that active and passive coping strategies can be executed through consumption practices. Active coping strategies are positively associated with the sharing of possessions, whereas passive coping strategies are positively associated with product acquisition. We shed new light on both the bright and dark sides of materialism and risky behaviors, and provide practical implications for research on loneliness and business ethics.

Keywords: Loneliness, Coping strategies, Risky Behaviors, Adolescent consumers, Materialism, Sharing


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