Joel H. Steckel

When Do Purchase Intentions Predict Sales

Marketing managers routinely use purchase intentions to predict sales. The purpose of this paper is to identify factors associated with an increased or decreased correlation between purchase intentions and actual purchasing. In two studies, we examine data collected from a wide range of different settings that reflect the real world diversity in how intentions studies are conducted. The results indicate that intentions are more correlated with purchase: 1) for existing products than for new ones, 2) for durable goods than for non-durable goods, 3) for short than for long time horizons, 4) when respondents are asked to provide intentions to purchase specific brands or models than when they are asked to provide intentions to buy at the product category level, 5) when purchase is measured in terms of trial rates than when it is measured in terms of total market sales, and 6) when purchase intentions are collected in a comparative mode than when they are collected monadically.

Using Capital Markets as Market Intelligence: Evidence from the Pharmaceutical Industry

Financial theory posits that capital markets convey through stock prices their expectation of the firms future performance. We use concepts from principal-agent theory and prospect theory to provide a theoretical explanation for the role stock price variation plays in managerial decision making. We then empirically investigate what specific decisions managers undertake in response to stock price variation. We perform our empirical analyses in the context of the pharmaceutical industry. We find that drug firms whose stock underperformed the industry react differently than drug firms with high-performing stocks. Specifically, laggards tend to implement more changes to their current product portfolio and distribution than high-performing firms. The more laggards underperform, the more they implement acquisitions aimed to produce immediate improvement in the firms product portfolio. In contrast, drug firms whose stocks outperform the industry tend to make fewer changes to their current portfolio and distribution. Instead, they focus more on long-term research and development and marketing of existing products. We interpret these findings in light of industry key success factors.

Group process and decision performance in a simulated marketing environment

Abstract This article presents an exploratory study designed to investigate which factors in a group process relate to effective marketing decision making. The study was conducted with 20 teams playing Markstrat, a marketing-simulation game. Results indicate that decision performance is positively related to the attitudes of the group members toward their task, the level of effort they exert, and the degree to which the more effective decision makers emerge from the group process.

A Heterogeneous Conditional Logit Model of Choice

Aggregate forecasts using McFaddens conditional logit model of discrete choice harbor the unrealistic implicit assumption of a random-utility distribution that is homogeneous across both alternatives and individuals. This article relaxes that assumption. A choice model is developed that describes the random-utility component as a probability-mixture model. Some numerical results illustrate that the derived model is not constrained by the independence-of-irrelevant-alternatives property. An experimental test of visual perceptions demonstrates the potential superiority of the model.

A Polarization Model for Describing Group Preferences

This article develops a model for describing the preferences of a group of its individual members. The model incorporates the empirically observed group-polarization phenomenon. It Is interesting that the resulting group preference evaluation is essentially a weighted linear model of individual preferences with the addition of an intercept term. The polarization model is empirically tested in two experimental contexts, faculty-candidate and restaurant selection. For both experimental situations, the polarization model performed better for the majority of groups tested in predicting a holdout sample than did either the more common weighted linear model without an intercept (with weights summing to one) or the multilinear model. Copyright 1991 by the University of Chicago.

The Max-Min-Min Principle of Product Differentiation

We analyze two and three-dimensional variants of Hotellings model of differentiated products. In our setup, consumers can place different importance on each product attribute; this is measured by a weight in the disutility of distance in each dimension. Two firms play a two-stage game; they choose locations in stage 1 and prices in stage 2. We seek subgame-perfect equilibria. We find that all such equilibria have maximal differentiation in one dimension only; in all other dimensions, they have minimum differentiation. An equilibrium with maximal differentiation in a certain dimension occurs when consumers place sufficient importance (weight) on that attribute. Thus, depending on the importance consumers place on each attribute, in two dimensions there is a max-min equilibrium, a min-max equilibrium, or both. In three dimensions, depending on the weights, there can be a max-min-min equilibrium, a min-max-min equilibrium, a min-min-max equilibrium, any two of them, or all three.

Prospects and Problems in Modeling Group Decisions

This paper summarizes some of the major issues related to group decision modeling. We briefly review the existing work on group choice models in marketing and consumer research. We draw some generalizations about which models work well when and use those generalizations to provide guidelines for future research.

Effective advertising in industrial supplier directories

Abstract This article discusses the relative effectiveness of various advertisement characteristics in industrial supplier directories. Correlations and regressions on ad characteristics and response data indicate that ad space (size and/or number) and logos have a positive impact while the impact of pictures can be negative.

Consumer Strategies for Purchasing Assortments within a Single Product Class

Abstract Different uses, users, and usage occasions for a given product category give rise to the possibility of multiple preference contexts within individuals and households. Each context is assumed to have a unique preference structure, and hence the consumption utility for a given alternative will be context dependent. If the most preferred alternative in one context is not the same as the most preferred in another, consumers will need to fill their “shopping baskets” with assortments of goods. In this paper, we hypothesize an Assortment Valuation Model that describes how people assemble assortments within a single product class. The basic premise is that consumers evaluate varying assortments based on the anticipated, but probabilistic, consumption utilities of the items within the assortment. Using a three-phase experiment, we provide a preliminary test of the proposed model. We then discuss the results and introduce possible directions for future research.

Preference aggregation and repeat buying in households

Marketing researchers have long used brand switching analyses and Markov transition matrices to gain insights into managerial problems. Almost without exception, this work makes (inappropriate) inferences about individual consumers by analyzing household-level data. This paper presents a procedure based on the distribution of run lengths in household level panel data that allows more insights into the choice behavior of the individuals in the household. We test these procedures in a large simulation study by attempting to recover the underlying (known) structure of the process generating a string of panel data. Finally, we use the procedure to classify the purchase behavior, with respect to powdered soft drinks, of a set of households in a panel. Our results show that marketing scientists have the potential to learn and test more hypotheses about the individuals in a household by examining the distribution of run lengths.